Hong Kong’s startup scene is one of the fastest growing in the world, and the global financial centre has been dubbed Asia’s FinTech hub for the explosion of tech solutions for financial services seen there during the last few years. A delegation from the hi-tech megalopolis visited the Skolkovo Foundation on Monday to exchange experience amid an ongoing programme of cooperation.

Professor KC Chan, Hong Kong's Secretary for Financial Services and the Treasury, speaking at the meeting at Skolkovo's Hypercube on Monday. Photo: Sk.ru.

The delegation was led by Professor KC Chan, Secretary for Financial Services and the Treasury of Hong Kong, who outlined how the government there supports the FinTech sector.

“We ask Invest HK [the government organisation tasked with attracting foreign direct investment] to be a one-stop shop for FinTech,” Chan said at a meeting with representatives of the Skolkovo Foundation, which counts nearly 20 FinTech projects among its resident startups.

“Because FinTech isn’t just technology: it involves regulations, the law and the banking environment, and they are different in different countries, so we gave Invest HK an assignment to be a one-stop shop for international companies who want to find out more about how to set up,” he explained.

Once companies have the information they need, their main point of contact for FinTech is Hong Kong’s Cyber Port, the government-owned digital cluster, said Chan, who headed a steering group set up by the Hong Kong government in March 2015 to advise how it could become a FinTech hub.

Russia is home to 150-180 FinTech startups, of which 18 are residents of the Skolkovo Foundation, said Pavel Novikov, head of FinTech within the foundation’s IT cluster. While a number of banks have had their licenses revoked in recent years, the country is still home to 660 banks, meaning there are plenty of opportunities for FinTech startups, he said, adding that Russian companies are strongest in data mining and mobile payments.

The Hong Kong delegation saw presentations by three of the foundation’s FinTech startups: Cashoff, which provides individual users with a way of seeing all their accounts and transactions in one place, and helps banks to improve their service by (anonymously) analysing clients’ cash flows and spending habits; Doubledata, which provides big data solutions for retail banks that allow them to perform credit scoring, fraud detection and other operations, and Cardsmobile, which aims to replace bank, loyalty, transport and other ID cards with a mobile service, eliminating the need for a wallet altogether.

In Russia, following the fall of global oil prices and the collapse of the ruble, investment in the IT sector has dropped from $611 million in 2013 to $206 million in 2015, with just $10 million invested over the last year into six FinTech startups, according to Novikov’s calculations.

Chan examining a model of the Skolkovo Innovation Centre with Dr. Anna Nikina, head of international projects at the Skolkovo Foundation. Photo: Sk.ru.

Real results

While it may have become trickier to secure financing from private investors at home, Skolkovo residents are among those to have benefited from Hong Kong’s flourishing startup ecosystem, Maxim Mikhailov, Skolkovo’s director of acceleration programmes, told the delegation.

“We did our first test of Hong Kong in 2014, when we brought 10 IT companies for the ICT Expo,” said Mikhailov. “That was probably the most successful one-week trip abroad we have made,” he added, explaining that all 10 companies achieved concrete results.

“Two companies [including DigiFLAK] began small-scale production in [the nearby manufacturing hub] Shenzhen,” he said. “Two or three opened an office in Hong Kong, one of them [SiRus] also found a franchising partner, and some of them found foreign partners in the Middle East or India,” he added.

Building on that success, the foundation is now trying to move beyond IT and help companies from its other clusters (biomed, nuclear, energy and space) enter the Hong Kong or surrounding markets, said Mikhailov.

“At some point there was discussion in Hong Kong that all clinical trials done there would automatically be accepted in China, and that would definitely be a big step, not only for Skolkovo,” he said. “That’s what we’re really eager to pursue.”

Skolkovo is also currently building up its relations with mainland China, and is in the process of opening representative offices in Beijing and Shanghai to help Skolkovo residents do business there.

Recipe for success

 Chan and Skolkovo senior vice president Igor Drozdov. Photo: Sk.ru.

The secret of Hong Kong’s success, according to Chan, is its use of the existing commercial environment and universities and its proximity to Chinese channels.

“Number one, we are a leading financial centre, so the business opportunities and network are there,” Chan told Sk.ru, explaining that the government builds on this foundation by encouraging companies to innovate and encouraging international startups to go to Hong Kong or establish partnerships.

“We are also very close to Shenzhen. It’s a wonderful place to do R&D that needs more space. They have good access to prototypes and manufacturing capabilities. So we take advantage of what is there in Shenzhen to help companies in Hong Kong to establish an R&D foothold,” Chan explained.

“The fact that our market is close to the Asian markets really gives companies opportunities,” he added.

Chan said he looked forward to seeing more cooperation between Hong Kong and Russia in innovation projects, as well as exchange programmes between universities.

“What’s most important is the people connection, between people who are working in similar areas, and looking for good ideas and cooperation on the other side of the world. That kind of cooperation is what really sparks innovation,” he said.