Three virtual banks to open for business this year

March 28, 2019 15:36
HKMA deputy chief executive Arthur Yuen said five more virtual bank applications are being reviewed. Photo: HKEJ

The Hong Kong Monetary Authority (HKMA) has granted banking licenses to three virtual banks that will only offer services online, the Hong Kong Economic Journal reports.

The three are Livi VB Ltd., SC Digital Solutions and ZhongAn Virtual Finance Ltd.

They are expected open for business in about six to nine months from now, or as soon as the third quarter.

“The introduction of virtual banks in Hong Kong is a key pillar supporting Hong Kong’s entry into the smart banking era and it is a major milestone in reinforcing Hong Kong’s position as a premier international financial center," HKMA chief executive Norman Chan Tak-lam said in a statement.

He said the virtual banks will not only help drive financial technology and innovation but also bring new customer experience and further promote financial inclusion in Hong Kong. 

“As virtual banks will have no physical branches, they will rely on the internet for customer acquisition and for the delivery of banking services," Chan said.

"I believe that virtual banks will have to offer innovative and customer-centric services in order to attract customers.”

HKMA deputy chief executive Arthur Yuen Kwok-hang said the three virtual banks will concentrate on retail operations in Hong Kong and they must get approval for overseas expansion.

There’s still a lot of preparation work to be done by the three successful applicants, including system testing, risk management implementation, setting up the procedures for remote account opening, and anti-money laundering measures, Yuen added.

Livi VB Ltd., with an initial capital investment of HK$2.5 billion, is set up by BOC Hong Kong (44 percent), JD Digits (36 percent) and Jardines (20 percent).

SC Digital Solutions’ shareholders include Standard Chartered (65.1 percent), PCCW and HKT (25 percent) and Ctrip Financial (9.9 percent). Its initial capital investment is estimated to be around HK$1.6 billion.

ZhongAn Virtual Finance, which has an initial capital of HK$1.6 billion, is a joint venture between ZhongAn Online, which has a 51 percent stake, and Sinolink Group, which holds the rest.

Yuen revealed there are five other virtual banks whose applications are being reviewed by the HKMA. The results will be unveiled as soon as possible but there is no guarantee that all of them will be approved.

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