The report struck a generally positive tone, with a few reservations concerning the intersection of cyber threats and AI to banks.

Strong wealth management and IPO pipelines will support the growth of Hong Kong’s banking sector this year, while the sector must stay alert to evolving risks, such as how cybersecurity could be challenged by AI, a report says.

KPMG’s latest report, the Hong Kong Banking Outlook 2026, expects Hong Kong banks to capitalise on the strong wealth management pipeline and a revitalised IPO market. 

Hong Kong’s IPO market vibrancy has been one of the more notable features of the city in the past year. According to figures, as of 19 December 2025, IPOs via Hong Kong Exchanges and Clearing Limited (HKEX) were HK$274.6 billion ($35 billion) from 106 new listings, with four companies in the world's top 10 IPOs of 2025. Companies listed on HKEX raised $66 billion in follow-on offerings. Figures from KPMG early last December showed that there were more than 300 active IPO applications in the pipeline at 7 December, including 92 active A+H listing applicants.

IPOs are important forgers of new HNW individuals and liquidity events that wealth managers, private banks and advisors track. 

For more than five years, Hong Kong has also been part of the Wealth Connect capital and investment regime hooking up the city with mainland China and Macao as part of the Greater Bay Area. According to Boston Consulting Group, Hong Kong is getting close to overtaking Switzerland as the world’s largest cross-border financial centre.

“As we enter 2026, KPMG is more optimistic about Hong Kong’s banking sector. The strong performance of Hong Kong’s equity market in 2025 has significantly lifted sentiment,” Paul McSheaffrey, senior banking partner, Hong Kong, KPMG China, said. “Recent policy initiatives, including efforts to strengthen the city’s fixed-income market and to support Chinese mainland enterprises in ‘going global’ through Hong Kong, provide further confidence in the future. We expect increased bank investment and hiring to follow.”

The city competes to some extent with Singapore as a financial and wealth management hub. Singapore has been looking at how to revive its listings regime, for example, and continues to fine-tune its Variable Capital Companies (VCC) funds regime.

Cybersecurity and AI challenges
To a large extent, the report sees AI helping Hong Kong’s banks remain competitive. 

“Banks are increasingly focused on productivity gains, on measuring ROI, and on embedding AI across operations in a way that delivers tangible benefits. In corporate banking, this shift may finally see paper, physical signatures, and batch processing phase out,” Jianing Song, head of banking and capital markets, Hong Kong, KPMG China, said.

KPMG said it expects “threat actors” to use AI and automation increasingly to detect where people and institutions can be attacked faster and more accurately. It will be even more important for banks to tighten cybersecurity and for boardrooms to give this high priority.

The report added that tokenizing investments via distributed ledger technology – aka blockchain – will go more mainstream, and become an important area for Hong Kong’s financial services. 

Banks are carrying out “real-world" transactions using tokenized deposits via the Hong Kong Monetary Authority’s Project Ensemble. 

“A wave of stablecoin licence applications is also underway, and tokenized gold is being issued. Looking ahead to 2026, KPMG expects traditional banks and the digital-asset ecosystem to move closer together,” it said. “Banks will likely begin offering services such as digital-asset custody and a broader range of tokenized products as the regulatory framework becomes clearer.”