Hong kong's virtual banking market

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“We believe constructive competition will lead us to keep learning and improving. We hope to work together with other operators in fostering financial technology development in Hong Kong so as to build Hong Kong into a world-class smart city,” – Infinium

Regulation

The Hong kong Monetary Authority (HKMA) has issued a guideline on authorizing Hong Kong’s virtual banks to conduct banking business The applicant must have a concrete and credible business plan setting out how it intends to conduct its business and how it proposes to comply with the authorization criteria on an ongoing basis (as issued by HKMA). According to the regulatory body, virtual banks will promote the application of financial technology and innovation in Hong Kong, while offering a new kind of customer experience. Like the intent of most unbanked regions, Hongkong as well supports the financial inclusion by targeting retail consumers, including small and medium-sized enterprises (SMEs). To review detailed licensing guidelines by HKMA, read Guideline on Authorization of Virtual Banks.

Current scenario

In 2019, post analyzing 29 applications to form virtual banks HKMA grants 8 of them to establish and conduct virtual banking operations. The 8 Hong Kong virtual banks are all set to launch their services in 2020, giving rise to the era of sophisticated, intelligent banking.  

Formerly known as Insight Fintech, a joint venture between Xiaomi (smartphone brand.) and AMTD Group (NBFC which provides capital markets and advisory, asset management, insurance brokerage, and strategic investment services). It aims to create unique virtual banking services, capitalizing on Xiaomi’s network and international capabilities.

A unit of Ant Financial (a subsidiary of Alibaba group) is geared toward offering banking services to SMEs while contributing towards the objective of financial inclusion in the country.

A joint venture formed between Bank of China (Hong Kong), JD Digits (connects financial and physical industries with digital technology), and Jardins. Livi VB is the response outcome of Bank of China’s strategy to support the overall trend of virtual banking. Livi VB will be launched leveraging artificial intelligence (AI), blockchain, big data and smart risk modeling in a bid to create a seamless digital ecosystem.

A consortium formed between Tencent, ICBC Bank (unit of Chinese banking giant ICBC), Hong Kong Exchanges and Clearing (HKEX), Hillhouse Capital (Private equity), and investment from Adrian Cheng. This consortium plans to leverage the respective expertise in the following way:

  1. ICBC will play an advisory role regarding banking operations and management, while HKEX will offer its guidance for operating in Hongkong’s financial market.
  2. Hillhouse Capital will offer a long-term investment management perspective, and Adrian Cheng will provide social resources and financial experience.

It is a consortium between Mainland China’s insurance giant PingAn and OneConnect (Banking Tech company), which plans to leverage its proprietary technology for banking in Hongkong. The bank aims to support the existing SME customer base by creating a platform for disbursing SME loans virtually.

Standard Chartered with a majority stake of 65.1% partnered with telecom companies PCCW, HKT and travel agency Ctrip Hongkong to form SC Digital solutions. SC Digital is expected to offer the ability to open accounts and apply for financial services on-the-go while building a suite of retail financial services and products.

A consortium formed between the technology, media, banking, and private equity giants of APAC, namely TOM Group(Media company), Khazanah Nasional Berhad (Malaysian sovereign wealth fund), International Finance Corporation (a member of the World Bank Group), Alibaba Entrepreneurs Fund, Sequoia Capital, China Construction Bank (International), and ING Bank. It plans to support the businesses and individuals in the following way:

  1. Provide convenient and diversified retail banking solutions and products to Hong Kong retail customers
  2. Offer B2B enterprise solutions by partnering with traditional financial institutions, which utilize WeLab’s technology to offer fintech-enabled services to their customers

Formerly launched as ZhongAn Virtual Finance has created an agile approach to launch a pilot of 24/7 banking services that allow customers to open an account in five minutes using a HongKong identity card. It is the first virtual bank to enter the Hongkong market with its innovative banking offerings in December 2019. To launch its full suite of services officially, ZA Bank is targeting to receive feedback on its pilot program from an N size of 2000 retail users.

Topic:

The Future of Banking

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