When it comes to the sheer number of startups, Hong Kong can’t compare to the large startup centers in China: Beijing, Shanghai and Shenzhen. For a long time, Hong Kong was considered a technological laggard compared with the so-called Asian Tigers like South Korea and Taiwan. With the rapid rise of new financial technology, though, Hong Kong has a clear advantage.
More than just a financial hub for Asia, Hong Kong serves as an access point to and from China. Thanks to China’s tight regulations in the financial sector, Hong Kong has proven a useful place for new fintech experiments. That made it a good place for Alibaba sister company Ant Financial to debut its new remittance service based on blockchain technology.
The new service works through AlipayHK in collaboration with GCash in the Philippines. It allows the nearly 200,000 Filipino workers in Hong Kong to send money back home for a fraction of the cost of traditional bank wire transfers. The launch of the service is narrow in scope, but the potential could be big.
Ant Financial has been looking for ways to make its mark on in international finance. That’s a tough thing to do for Chinese companies, even though China is a fintech leader by some measures. The company tried to buy the Dallas, Texas-based MoneyGram, but the deal was quashed by the Committee on Foreign Investment in the United States, a committee that investigates national security concerns of foreign investments.
The end of the MoneyGram deal came amid increasing tension between the U.S. and China that has increased scrutiny of Chinese foreign investment, especially in the technology sector. Alibaba co-founder Jack Ma didn’t miss the opportunity to score some political points during the launch even for the new service. “Due to reasons from the U.S. our deal with MoneyGram did not succeed, so I said, ‘Let’s make one better [than MoneyGram]’ that uses the most advanced technology,” Ma said according to the South China Morning Post.
This is a positive development for innovation, provided this blockchain-based remittance solution catches on, and Ant Financial is able to develop it further. Many companies have been investing heavily in blockchain in recent years, too. Walking the floor of a technology trade show today makes this very apparent. More competition is on the way.
Predictions for what will happen with blockchain tech are difficult because there’s a lot of potential and few practical applications so far. Payment transfers have always been one of the more obvious use cases. No company has yet made a big play to capture this part of the market, perhaps in part because the companies best positioned to take advantage of it are the large financial institutions that are satisfied with the status quo.
These companies aren’t resting on their laurels, though. They have been pouring resources into developing their own applications for blockchain tech. If Alipay’s remittance service get popular enough, other competitors may feel compelled to respond.
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