Interviewee: T.C. Chan

• Senior Advisor of Bank of East Asia, CVC Capital Partners
• Independent Non-Executive Director of HKEx
• Non-executive directors of several companies
• Former President of Citibank in Taiwan and President of Hong Kong Bank and President of Corporate and Investment Banking in Greater China

Interviewer: Dr. Mark Lee, Research Director of Asia Pacific Institute for Strategy

Date: May, 2019

Mark Sir :  How will you interpret the situation of the financial banking industry in the rapid development of the information technology?

TC : The dramatic change occurs in the past few decades: such as the appearance and application of computerization, ATM teller machines, mobile phone networks, cloud technology and financial technology rules, and the information technology develops rapidly. That’s to say, it is colorful in the smart city, and many industry projects become possible from impossible.

Mark Sir : The scope of the smart city is very wide.

TC : Thanks to the technology innovation, the scope of the smart city is very wide not just in our industry but in the industries of environment, medical care, security, transportation, urban design, etc.; And how to adopt and apply is part of a smart city. For example: driverless, unmanned supermarket and digitalization have changed many traditional industries, and the banking and financial industry will become the paperless industry, which all will happen.

Mark Sir : Would you please analyze the situation?

TC : You can observe the whole situation at front, middle and backstage. It is unnecessary to explain the front stage, which is the current digital technology situation that we saw.

Middle stage: price analysis, risk, marketing, design behind-the-scenes, etc. Risk management such as loans and the dependence on tax bills, food bills, databases, etc. will change.

The traditional database is also out of date, since the database in the Internet is richer and more complete than that in any independent company. In addition, the database of big data can better understand the economic and consumption status of everyone and the data is more complete and effective.

Backstage: such as Blockchain and DLT (Distributed Ledger Technology).

Mark Sir : Is it a risk or opportunity now?

TC : It's a disruptive change, which won't come step by step but instantaneously. It is noted that the disruptive market changes is not necessarily related to technology, let’s take one example of Ricky Wong long distance call 20 years ago: CityTelecom broke the monopoly market for long-distance call. If you can master new technologies and effectively apply them in the industry, it will be a great opportunity.

Mark Sir: How does the current financial and banking industry face the situation?

TC : You must be forward-looking and sensible to face the opportunity, and you must define the accurate focus to place the chip, because these are all money-consuming projects. Besides, the project newly developed has the opportunity to encroach the current industry.

Biased and conservative, the Financial FinTech industry is subject to strict supervision (from the HKMA, insurance bureau, securities supervision, etc.), but the HKMA has begun to issue a virtual banking license/VB to open up new situation. Although it is still in the preliminary phase, it shall be noted.

Historical case: the lesson of decline from over prosperity of Wang Laboratories. We hope that the traditional industry will not be greatly shocked, and the market changes can not be underestimated, since the impact will not be solely in the financial industry.

Mark Sir : Is there any foreign cases can be imitated for this trend, and which country is the most advanced?

TC : UK, US or Europe is not the most advanced. China is developing faster, and the Internet development and application in China is used very well in FinTech, e-Commerce, logistics, big data, etc., which is better than any economy.

Mark Sir: What is the reason for China to develop rapidly?

TC : The reasons are as following: 1. No burden, no traditional regulations and no unfamiliar elements. 2. Regulatory-it is in the groping phase, the rules and regulations can be constantly tried with open attitude. Successful attempt, such as alipay is feasible, and the unsuccessful small amount credit, which was stopped immediately.

The macro method allows the trials. Therefore, there is great room for development without waiting for the mature conditions.

Mark Sir : What is the Chinese model?

TC : Similar to marketization, the domestic economy with non-traditional financial affairs has two characteristics as following: 1. The government supports; 2. Develop orderly. The government opens the window for the suitable enterprise to develop, and the advantage is that it will be aggregated instead of too scattered. And if there are too many participants, some unhealthy competition is indirectly encouraged.

The aggregation can collect and process the data of new economy. If big data is dispersed, it will be ineffective. China can collect the database with political cooperation, and any other countries cannot do this. For example, we often hear that it is very easy to find a person in China and China is the most advanced in this regard.

Mark Sir : GBA, Great Pearl River Delta and Hong Kong have been communicating for decades. What is the difference now?

TC : It is mainly conducted in different aspects. In the past, China has relied greatly on Hong Kong funds, to develop knowledge, entrepreneurs, etc. It has been profitable for both the buyers and sellers for over 30 years, and the products were cheap and China earned foreign exchange. It is different now and cannot be promoted by labor and low value-added products.

Mark Sir : What will be different in GBA?

TC :There are totally 70 million people in GBA, and the area is over 500 times larger than that of Hong Kong. And different regions, towns, etc. can give play to their own advantages.

Nine+two (nine cities+Hongkong and Macau) shall be replanned to create a common market with new ideas. 1. People flow; 2. Logistics; 3. Information flow; 4. Capital flow. All the four flows need to be connected. In addition, all the legal system, tax system, household registration, property rights, etc. are very important.

Mark Sir : How does Hong Kong cooperate to break out again?

TC :Hong Kong has a lot of burdens, such as the government, the public mentality and politics. However, Hong Kong shall still be optimistic. These major provinces and cities, including Hong Kong/Macau/ Guangzhou/Shenzhen/Zhuhai/ Dongguan/ Huizhou need to be re-planned to give play to different advantages, strengths to solve problems, etc. And the land supply and the manpower in Hong Kong are insufficient, and the market is too fine, therefore, it needs to be better positioned.

Mark Sir : How does the new generation of Hong Kong react to the new trend?

TC :Let’s take the example of the financial industry, there are more and more elite who speak Mandarin in central and western Hongkong. And the domestic new generation with good background, broad network of people and many opportunities for further study abroad are easy to get the superior position in Hong Kong. Hong Kong is a great city and it must attract the most excellent talents by the environment and conditions. Therefore, the local youth of new generation is under great pressure and is easily forced out by the domestic talent.

It is the transition period of Hong Kong, and it will become a greater city, such as New York, after joining with Greater Bay Area, which will be a must phenomenon of market competition. However, the local market is fine and easy to be saturated. And there are many opportunities in the Greater Bay Area, such as Shenzhen and Guangzhou, etc., so talents in Hongkong can consider to get good opportunities there.

Mark Sir : How can the Hong Kong government support the specific project?

TC :Beside the existing development of infrastructure projects, the government can implement measures on a macro manner to encourage the youth to broaden their horizons instead of limit themselves. Practical support is provided for Hong Kong people, e.g. those works in the GBA can enjoy free transportation and enjoy the infrastructure. Pay attention to young people. In addition, the demand of the youth shall be noted, e.g. they focus on the network social culture, etc., and there are restrictions in the domestic/GBA, which is one of the reasons for stepping back and is required to be coordinated and relaxed.

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