Hong Kong’s banking institutions are modernising to take advantage of opportunities in the Greater Bay Area.

Outbreaks of Covid-19 infections in Hong Kong have raised doubts about whether the city’s initiatives to participate in the development and integration of the Greater Bay Area (GBA) will succeed. Nevertheless, Hong Kong’s banking institutions are readying themselves for opportunities in the region.

China’s GBA plan will transform Hong Kong, Macau and nine mainland cities in Guangdong into a technology and innovation hub akin to Silicon Valley.

Experts describe the region as fertile ground for the expansion of the financial services industry. Today, the industry is concentrated in Hong Kong. However, considering the city-state has a population of only about 8 million people, but is home to almost 200 authorised banking institutions, banks are being urged to explore opportunities across the GBA where there are about 70 million people.

Senior Consultant at PeopleSearch Hong Kong, Angie Fung who specialises in executive search and recruitment for the Corporate and Investment Banking industry, looks into how recent developments are shaping human capital and career strategies.

Senior Consultant at PeopleSearch Hong Kong, Angie Fung.

In spite of concerns over Covid-19, Hong Kong’s Chief Executive, Carrie Lam mentioned the GBA several times in her annual policy address in November last year. She encouraged using the GBA as an entry point to explore growing business opportunities on the mainland.

Lam announced nine measures pertaining to various aspects of insurance, healthcare, transportation, education and employment that will be implemented to enhance cross-border infrastructure and to better integrate GBA cities. Her goal is for Hong Kong to play “the dual role of domestic participant and international facilitator” to lend positive momentum to Hong Kong’s economy.

According to the Bank of China’s GBA Wealth Index report, by the end of the first quarter of 2020, the number of financial institutions in the GBA had increased by 1.03% year-on-year.

The momentum of wealth creation in the area has been particularly robust. As such financial institutions are eyeing the wealth management space. By the end of the first quarter of 2020, savings per capita in the GBA had increased by 9.17% year-on-year.

The GBA is also home to a larger and more diverse population. This means banks have the perfect opportunity to offer customers more varied investment options.

Market researchers and data analysts are in great demand at the moment. This is chiefly because in order to come up with innovative products and services, banks need data-driven insights into customer behaviour and preferences.

PILOT SCHEMES LAUNCHED

Because Hong Kong is still struggling to control the Covid-19 pandemic, a more convenient cross-border travel model remains elusive. While this has hurt cross-border business and Hong Kong’s integration with other GBA cities, technology is being used to bridge the gaps. Several key initiatives have been launched.

For example, last year the People’s Bank of China, the Hong Kong Monetary Authority, and the Monetary Authority of Macau jointly announced the launch of Wealth Management Connect, a cross-boundary wealth management pilot scheme targeted specifically at the GBA. It guarantees mutual access to wealth management products issued in Guangdong province, Hong Kong, and Macau and facilitates cross-border investments by GBA residents.

Both Hong Kong and Chinese regulators are also working on further expanding a pilot scheme designed to significantly streamline bank account opening administration in the GBA and enable Hong Kong and Macau-based banks to remotely set up GBA bank accounts for their clients. The scheme eliminates the need for individuals to physically travel to the Chinese mainland to complete compliance checks.

AN URGENT NEED TO MODERNISE

For Hong Kong banks, investments in digital transformation and remote banking technology will become more crucial than ever before if they want to maintain and increase market share.

Generally, Chinese consumers prefer to use digital platforms rather than physically going to a bank branch. They conduct many other transactions – retail shopping, ordering food, booking rides – digitally as well.

In light of this, Hong Kong banks will have to modernise their business models in order to thrive in the region. Many are already transforming their digital applications, moving from mainframe into more agile configurations. They are also concentrating on automating banking process.

“Open banking” driven by open Application Programming Interfaces (API) is enabling innovative financial services involving integration with third-party apps. Technology such as Robotic Process Automation is being used to increase efficiency and customer onboarding.

All of this has increased the demand for FinTech and IT professionals. People who can develop, operate and maintain software and systems are urgently needed.

Going forward, in order to fully capitalise on opportunities in the GBA marketplace, Hong Kong banking entities and professionals will undoubtedly face a steep learning curve in terms of familiarising themselves with new regulations. They will also have to be prepared to go up against competitors who may already have a better understanding of Chinese markets.

Nevertheless, considering the maturity of Hong Kong’s banking entities, they really shouldn’t ignore the region.

PROFESSIONALS NEED TO STEP UP

Professionals from mainland China will continue to be in great demand because they possess language proficiency and a better understanding of the GBA ecosystem.

Hong Kong banking professionals will need to step up considerably in order to compete.

More importantly, candidates who have a track record of operating successfully in challenging markets and can demonstrate confidence, resilience, resourcefulness and adaptability will stand out.

At this point, banks are competing for top mainland Chinese talent. Our advice is to strengthen your employer brand in order to attract the best.

But as banks compete for such talent, we envisage a talent shortage. This is actually the perfect opportunity for other candidates to acquire the knowledge, hard skills and soft skills necessary to get noticed by employers in this landscape. We are beginning to see such talent emerge and continue to advise candidates to augment their capabilities.

Business entities must also continually invest in employee training and coaching in order to boost their capabilities in the long run.

For bespoke human capital advice, get in touch with us.