Five-year low for Hong Kong deals & Industry experts shed light on AI’s role for finance

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Industry experts shed light on AI’s transformative role in finance

While many see generative AI as the superpowered technology stack that can do everything, it might be better placed to serve as the orchestrator for other systems.

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Research highlight

Hong Kong's FinTech deal activity in 2023 sees lowest levels in past five years despite subsidies in 2022

Key Hong Kong FinTech investment stats in Q1-Q3 2023:

? Hong Kong FinTech deal activity is on track to reach 28 transactions in 2023, a 46% reduction YoY

? Hong Kong FinTech investment is expected to total at $159m in 2023, a 50% drop from 2022

? WealthTech was the most active FinTech subsector in Q1-Q3 2023 with seven deals, a 33% share of all transactions

Hong Kong’s FinTech sector has not remained unscathed from the global drop in funding during 2023. In 2023, Hong Kong's FinTech deal activity is poised to reach 28 deals, marking a significant 46% decrease compared to the previous year. Hong Kong FinTech companies combined investments for 2023 are estimated to amount to $159m, reflecting a substantial 50% decline from the figures in 2022.

OneDegree, a digital general insurance company, had the largest FinTech deal in Hong Kong during Q1-Q3 2023 after raising $27m in their latest venture funding round. Hailstone Labs, a Hong Kong based Web3 venture studio, has announced a strategic investment in OneDegree Group. Hailstone Labs and the OneDegree Group have partnered to establish standards, drive blockchain innovation, and nurture talent in the Web 3.0 sector. Over the past two years, they collaborated with the Society of Actuaries (SOA) to conduct essential research on Web 3.0 risk taxonomy, aiming to transform the digital asset insurance industry. Due to recent policy developments in Hong Kong's blockchain and Web 3.0 sectors, insurance has become mandatory for centralized digital asset firms to maintain regulatory compliance. The OneDegree Group's digital asset insurance line, supported by their cybersecurity experts at OneInfinity, will offer customized risk management solutions for digital asset service providers to mitigate various security incidents.

WealthTech was the most active FinTech subsector in Q1-Q3 2023 with seven deals, a 33% share of deals. Blockchain & Digital asset technologies were the second most active with five deals, a 24% share of deals. InsurTech was the third most active with three deals, a 14% share of deals.

The Hong Kong Government is addressing the financial challenges associated with technological innovation by offering subsidies and grant schemes through organizations like Cyberport and HKSTP to support FinTech solution providers in accessing funding and attracting investors. These grant schemes have a dual purpose: (1) assisting FinTech solution providers in realizing their business ideas, and (2) promoting FinTech adoption among users to stimulate demand. Examples of these initiatives include Cyberport's Creative Micro Fund, which began in 2009 and provided grants of HK$100,000 for new startup projects and HK$200,000 to support startups participating in overseas exhibitions through its Overseas/Mainland Market Scheme. Additionally, in 2021 and 2022, the PoC Subsidy Scheme allocated funds of up to HK$150,000 to institutions to various subsectors of the FinTech industry.

Weekly FinTech deal roundup

$140m BlueVoyant deal steals headlines in this week’s FinTech funding rounds

A $140m investment secured by cyber security firm BlueVoyant stole headlines in this week’s FinTech funding rounds.

Read the full story here .

RegTech news

• The rise of money mules in UK fraud: Prevention and detection – Fraud in the UK has become a significant concern, with 40% of crimes being fraudulent. Money muling is at the forefront, where fraudsters utilise synthetic or real mule accounts for financial gain. The UK government, recognizing the seriousness, plans to publish an action plan to combat this issue.? Read the full story here .
• The four pillars shaping the future of risk management - In the dynamic realm of risk management, pivotal factors are reshaping the role of risk executives. Financial crime compliance, a pivotal aspect of risk management, necessitates vigilance and innovative strategies. Among these, four key factors—revenue, cost, ethics, and regulation—stand as paramount forces propelling risk leaders into the future.?Read the full story here.
• Navigating KYC and AML in 2023: Trends and challenges in the banking sector - 2023 has brought forward unique challenges and trends in the KYC (Know Your Customer) and AML (Anti-Money Laundering) landscape, as revealed in a survey conducted by Fenergo . Read the full story here.

Don't Miss Out - AML & FinCrime Tech Forum will be hosted on 5th December 2023!

CALLING ALL FINANCIAL CRIME, AML, FRAUD & COMPLIANCE PROFESSIONALS! THE AML AND FINCRIME TECH FORUM IS BACK.

Find out more here.

InsurTech news

• Why CDR matters for London market brokers - The London Market is on the precipice of a digital transformation, and one significant initiative propelling this change is the Core Data Record (CDR). This strategic move aims to standardise and streamline the collection of critical transaction data, marking a pivotal leap in market efficiency. Read the full story here .
• What are the asset and liability management in life insurance trends you need to know? -?In a revealing interview , Hans Sterte, a prominent economist and Senior Partner at House of Reach, recently spoke to WealthTech company Kidbrooke . Read the full story here .
• Building tomorrow’s insurance industry with Hyperexponential -?Digital transformation and innovation are becoming keystones in the insurance sector’s evolution. Caroline Bedford, Chief Executive at EDII, delves into the pivotal role of fostering innovation and future-focused skills in the insurance industry in the latest episode of Hyperexponential ‘s podcast. Read the full story here .

WealthTech news

• Transforming hedge fund operations: The critical role of KYC and KYP in 2023 - In a recent post by Aiviq , the firm highlighted how getting KYC and KYP right can transform the investor experience. Read the full story here .
• Bridging the wealth gap: A new era of financial equality -?The gender pay gap attracts a lot of attention and people around the world are fighting to fix the issue and ensure equality. However, the gender wealth gap is just as important but does not get the same level of publicity. Read the full story here .
• Enhancing wealth management: The critical role of data purity in portfolio systems - In today’s financial world, wealth management requires a strategic, technology-driven approach. A Portfolio Management System is essential, according to WealthArc , an asset management software developer.?Read the full story here .

CyberTech news

• Building your businesses cyber incident response plan - The threat of cyber attacks looms large over businesses today, becoming a question of when rather than if. Safeguarding against these attacks and recovering swiftly is vital to maintaining operational resilience and trust. Cyber risk specialist KYND outlines the essential steps to take if your company faces a cyber attack. Read the full story here .
• How to safeguard your private equity investments in the ransomware age -?Ransomware threats continue to loom large despite forecasts of reduction, with private equity portfolio companies (portcos) finding themselves prime targets post-acquisition. Cyber risk specialists KYND delve into the issue to understand the elevated risks facing portcos and discover essential steps to fortify their cyber resilience. Read the full story here .
• VMware joins Broadcom in landmark $69bn acquisition -?Broadcom and VMware, two prominent players in the tech industry, have recently announced a significant acquisition. Read the full story here .

Don't Miss Out - Data Management Tech Forum will be hosted on 31st January 2024!

Don’t miss the most exclusive data management event where data leaders and tech innovators converge to discuss and debate best practices in data governance and compliance!

Find out more here.

ESG FinTech news

• Unlocking the potential of carbon accounting for CSRD compliance -?Environmental concerns are increasingly pivotal, leading businesses globally to focus on carbon emissions accounting. The CSRD’s recent standards mandate more rigorous, transparent carbon accounting practices. ESG FinTech company Greenomy recently delved into carbon accounting’s essence and its connection with ESRS requirements . Read the full story here .
• Impact investing outshines traditional portfolios: Insights from PEI’s summit - During a recent panel at the PEI’s Impact Investor Summit North America, a remarkable trend was observed: portfolios with an impact investing theme are now outperforming traditional portfolios. Read the full story here .
• S&P study uncovers the huge economic toll of climate change by 2050 -?A recent report by S&P Global Ratings has highlighted the alarming economic implications of climate change. Read the full story here .

Other FinTech news

• Navigating the financial world with LEI: A new era of transparency and efficiency - Legal Entity Identifier (LEI) Worldwide recently took the opportunity to discuss its LEI and Global LEI System (GLEIS) in greater detail. Read the full story here .
• 33% of finance leaders struggle with data utilisation amid recession fears - A Dun & Bradstreet report has highlighted challenges faced by leaders in finance sector organisations regarding the effective use of data. Read the full story here .
• The future of financial compliance: Agile management through automation -?The landscape of financial regulations is ever-changing, posing a significant challenge for compliance in the financial services industry. Read the full story here .