HK has taken bold steps in the past year to help realize its global tech hub dream. But, experts warn it will come at a price - users of smart devices are facing a new generation of frauds. Chai Hua reports.

Hong Kong's 2018-19 Budget took the city a step closer to its goal of becoming a global innovation and technology fulcrum, with the pivot on four key areas - biotechnology, artificial intelligence, smart city and financial technology.

The development of these technologies has shaped our lives in the past year and will continue to play a key role in 2019, while new innovations are also emerging to make an impact on the city. But, some are coming on slower than expected, while some have gone on the fast track.

5G network on the horizon

The fifth generation of wireless networking, or 5G, is one that has commanded great attention and is due to debut locally this year, but industry experts say it still needs more time for consumers to actually enjoy its benefits in the near future.

As major economic powers race against time to make the 5G network a reality, Hong Kong authorities have been making positive efforts in that direction. The Communications Authority has decided to assign the first patch of spectrum for 5G services this year, and smartphone freaks may get the first taste of it by April.

Hong Kong Science Park - the city's much-touted estate dedicated to the fostering of high-tech enterprises - has carried out several 5G experiments indoors and outdoors.

"However, it won't be applied on a very large scale until 2020," said Taylor Lam, Deloitte China's national telecommunications, media and entertainment managing partner.

In his view, the existing 4G networks won't be replaced even when 5G services are ready and, in fact, there's unlikely to be a huge difference between the two-generation networks for cellphone users in the short term.

Taking low latency - the time it takes to send a message from a device to the network and get the answer back, one of 5G's major benefits - Deloitte predicts the plausible figure is about 20 to 30 milliseconds on the 5G commercial network - half the average latency of 4G.

"However, for the average consumer or enterprise user, and for most current real-world applications, there's little practical difference," says Deloitte.

The most significant value of 5G is its revolutionary influence on the business models of diversified industries, such as augmented reality, the internet of things, automatic driving and remote surgery, Lam stressed.

As for costs, he notes the technology will also enable telecommunication operators to innovate the way of charging. "In the era of 4G, each user has a fixed monthly plan of data usage but, in future, the payment could be based on the time or scenarios that data are consumed, like preferential charges for video games networks at night."

Realizing the technology's potential, business players in multiple industries will act in advance accordingly, so consumers will see more and more live-streaming websites, AR games and smart gadgets mushrooming in the market.

The IoT will continue to flourish into common experience in Hong Kong.

Benny Kwok Wai-shing - a graphic designer in Hong Kong - is one of the pioneers of IoT. He already uses his mobile phone to control six "intelligent devices" at home and plans to buy automatic curtains and full-set smart fish tank facilities this year.

"I'm addicted to smart things," he said.

Currently, he can monitor the comings and goings at his home through smart cameras linked to his phone; control automatic facilities of a fish tank using a smart socket; or even turn off the lights via his handset if he forgets to do so before leaving for work.

One of the technologies he expects to see the most in 2019 is 5G which, he believes, will bring more convenience to his life as he intends to connect his intelligent devices with the "best networks".

New generation banking

In the financial sphere, compared with 5G, the technology for the new generation of banking is relatively mature and the service could probably be ready faster than expected. Borrowers without adequate guarantees for a loan from traditional banks are expected to benefit most.

One of the technologies with the biggest impact on the finance industry last year was the launch of the Faster Payment System by the Hong Kong Monetary Authority - the city's de facto central bank. It enables faster and easier real-time transfers between banks and e-wallets.

In its first month of operation, the FPS had recorded 1.59 million registrations and processed 1.58 million transactions.

Following the enthusiastic response to the service, the HKSAR government is embracing another novel fintech application - virtual banking - this year, and it's expected to improve overall user experience and allow people easier access to micro-financing products.

The HKMA started receiving applications for virtual bank licenses in May last year, drawing a positive response from leaders in the internet and banking sectors, including the financial arms of Chinese mainland tech behemoths Tencent Holdings and Alibaba Group, Standard Chartered Bank and local online lender WeLab.

The first batch of these licenses is likely to be issued in the first quarter of this year.

Tom Jenkins, partner and head of financial risk management at KPMG China, expects the first virtual banks to begin operating in Hong Kong late this year.

According to a KPMG report, a virtual bank delivers banking services through the internet or other electronic channels instead of physical branches.

In addition, traditional banks will be pushed to implementing the FPS more actively and improving their digital banking user experience, said Jenkins.

Several license applicants have carried out the business in other locations and their experience could facilitate its development in Hong Kong.

Tencent-backed WeBank, for instance, is China's first private and digital-only bank - a model very similar to Hong Kong's virtual bank. Its flagship product, Weilidai, provides microcredit to users without the need for guarantees or collateral, but is based on Tencent's big data.

The average loan that can be extended to an individual is 8,000 yuan, and 70 percent of the loans are even less than 100 yuan.

The Shenzhen-based bank also has some 200,000 small and micro business clients, mostly without past loan records, and 70 percent of its loans are below 5 million yuan.

Although it's targeting micro-lending, WeBank saw its overall profits soar more than 260 percent year-on-year to 1.4 billion yuan in 2017.

Henry Ma Zhitao, chief information officer at WeBank, said earlier last month virtual banks could fill the gap between clients' demands and traditional banks' services in Hong Kong, such as micro-finance.

AI not that far away

Artificial intelligence, on the other hand, has become a mainstream technology in a wide range of industries, and will become more omnipotent this year. Its tentacles will stretch not only to unlocking phones, but also helping users make important life decisions.

In November last year, three cases came to light that doctors had misread X-rays that showed lung cancer, causing treatment to be delayed. A critical shortage of manpower was blamed for the blunder.

AI is expected to help improve the situation and is actually not very far away - some hospitals have already embedded the technology in their systems.

Union Medical Healthcare in Hong Kong has introduced an AI-aided diagnosis system into its X-ray and other screening facilities. AI can circle out nodules as soon as the screening is completed, adding one more guarantee of diagnose accuracy to that of radiologists and doctors.

One technology partner of the medical group is Imsight Medical Technology - a medical technology startup established in 2017 by a PhD graduate from The Chinese University of Hong Kong's department of computer science and engineering.

By late last year, it had partnered with 53 hospitals and has been in discussions with 100 more in Hong Kong and mainland cities, including Queen Mary Hospital and Prince of Wales Hospital, according to its founder Chen Hao. The number of patients being treated with its products has surpassed 5,000 so far.

AI applications are being actively promoted by Hong Kong's medical institutions. The Hospital Authority has set up the Hospital Authority Data Collaboration Lab to provide a "secured collaboration platform between the HA and researchers from local universities to conduct health data collaboration projects, such as automated detection of diseases using AI prediction models on radiology images", it said.

Besides medical treatment, AI will assist in making financial decisions. KPMG's report predicts that AI, machine learning and data analytics will be "game changers" as progressive banks in Hong Kong may adopt new credit management techniques or facial recognition technology, which are already commonplace on the Chinese mainland.

Hong Kong startup WeLab is already relying on big data analysis to make credit decisions for individual borrowers within seconds and partnered traditional financial institutions to offer fintech-enabled solutions for customers.

Another fintech firm, 8 Securities, has launched an AI-powered robo-adviser to help people choose investment products.

With all these new technologies coming into play, data's role in our daily lives is also expanding. The protection of data privacy and security has become more imperative.

Pushed by the inevitable 5G network, more personal consumption devices will be connected in the IoT era. Besides, public infrastructures will open up more data and be better connected to the digital world as the government promotes smart city blueprints. A most recent effort has been a plan to open up more than 650 free datasets for public use from more than 80 government bureaus and departments this year.

Government Chief Information Officer Victor Lam Wai-kiu said the information offered will help private developers design more useful mobile applications for the public.

A Forbes report predicts there'll be more than 80 billion active smart devices connected to the internet worldwide by 2025 but, while enjoying the benefits of smarter living, users are also facing the growing risk of data breaches.

According to the Breach Level Index by Gemalto Security - a digital security services company - the amount of records breached daily, hourly, or by the minute or second had almost doubled between 2017 and 2018 globally. In Hong Kong, the data records compromised are about 3 billion so far from 2013.

On the Chinese mainland, where internet-based finance services are one step ahead of Hong Kong's, risks are also surging. According to statistics from National Committee of Experts on the Internet Financial Security Technology, the number of financing websites with abnormal activities had reached 31,240, accounting almost half of all internet-based finance platforms the organization had included, by December last year.

The new generation of frauds is also rising along with the development of fintech. Tencent Financial Technology reported last year the most common cases include consumption refunding fraud and users' digital banking accounts being manipulated.