The Bank of East Asia (BEA), which is celebrating its 100th anniversary this year, has been a mainstay of the Hong Kong banking industry.
Its development in the next 100 years will depend on financial technology (fintech), bank chairman David Li Kwok-po said.
“Moving forward, the gameplay in the banking sector will be completely different,” Li told the Hong Kong Economic Journal in an interview.
Li, who joined the city’s largest family-run bank in 1969, said BEA will not focus on cooperating with peers in the future, but will instead strengthen its partnership with internet and fintech firms as it expands into digital retail banking and commercial business.
BEA previously planned to expand into the mainland by merging with another family-run bank, Li said, as a bank must have an asset capital of at least US$20 billion to expand its branch network across the border.
The bank had approached several local family-run banks, but they were reluctant to sell to a local peer as they didn’t want to leave a negative impression on the public.
Li sees collaboration with internet and tech firms as the way forward to ensure BEA’s development in the future.
The bank has teamed up with WeBank, backed by internet giant Tencent Holdings (0700.HK), as well as online travel provider Ctrip.
It is also partnering with Tencent-backed payment operator Airwallex and Sequoia Capital China to secure a virtual banking license with its sights on small and medium-scale enterprises, according to BEA deputy chief executive Adrian Li Man-kiu.
A wave of technological innovation has brought changes to the banking sector in recent years. In response to the evolving market environment, David Li said BEA will focus on digital retail banking and commercial business, adding that the bank will boost investment in digitalizing operations and financial technology.
“We hope BEA will become a prominent bank, both in terms of business scale and service standard,” the bank chairman said.
A long-time constituent of the benchmark Hang Seng Index, BEA lost its spot in the blue-chip gauge in August. Li said it was inevitable, “it’s just a matter of time”, as he cited the surge of mainland-based companies listing on the Hong Kong stock market.
He expects only HSBC (00005.HK) will remain in the index, whose constituents are weighted by free-float market capitalization.
On concerns over the Sino-US trade war, Li admits it will affect both the mainland and Hong Kong markets, yet the impact on Hong Kong will be relatively less. He believes the conflict could last one or two years.
In particular, the trade tensions will bear down on the global currency market. The Chinese yuan may fall further, but the downtrend will not be too sharp, Li said.
He believes it will only be a matter of time before the Hong Kong dollar, which is currently pegged to the US dollar, links to the renminbi.
If that happens, Hong Kong’s inflation problem will ease and local property prices will stabilize,he said.
The Chinese currency will remain only partially convertible in the next 10 years, Li said, adding that the Hong Kong dollar will not disappear even if it is eventually pegged to the yuan.
The full article appeared in the Hong Kong Economic Journal on Nov 14
Translation by Ben Ng with additional reporting
[Chinese version 中文版]
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