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UBS seeks China digital bank licence as part of plan to turbocharge growth and slash costs
- UBS sees mainland China’s digital bank rules in place by June or July
- The Swiss lender is targeting 200,000 wealthy clients within two years after securing a digital bank licence
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Swiss bank UBS aims to create a digital banking platform that could slash costs and spur growth, but its plan hinges on securing a licence in mainland China to kick-start the project.
Edmund Koh, who heads UBS in the Asia-Pacific region, sees China’s framework digital banking rules in place by June or July. At which point, he hopes that the lender’s application for a nationwide, majority-owned digital bank licence will gain traction.
If UBS succeeds, it will join the likes of Tencent Holdings’ and Alibaba Group Holding’s banking affiliates in providing low-cost financial services online across China, where two new billionaires emerge every week.
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“We need scale, and I’m going to get that scale for UBS, working together with the Chinese authorities,” said Koh, who plans to incubate the platform in China, then take it global.
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Private banking has been one of the more profitable areas of financial services in recent years, but cost-to-income ratios across the industry have remained stubbornly high, at about 70 per cent to 80 per cent. Digital banks, offering lower-margin products without the expense of maintaining branches, combined with the potential to scale, provide an attractive solution.
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