HKMA piles pressure on small lenders to digitise as Hong Kong’s virtual banks gain traction with customers
- Hong Kong’s eight virtual banks have accumulated HK$15 billion (US$1.93 billion) worth of deposits and attracted 420,000 customers since their launch last year
- Virtual banks to generate up to HK$76 billion of revenues per year by 2025, capturing a combined market share of 19.3 per year, report says
Hong Kong Monetary Authority is shifting focus from shepherding financial innovation with the launch of the eight virtual banks last year towards chivvying digital laggards among the city’s small and medium-sized lenders to shift operations online, according to the chief executive of the de facto central bank.
Hong Kong’s eight virtual banks have attracted 420,000 customers and HK$15 billion (US$1.93 billion) of deposits since becoming fully operational last year, according to chief executive Eddie Yue Wai-man who has overseen and promoted their expansion.
The authority will require incumbent lenders to report their plans to digitise to the HKMA, including timelines and goals. The HKMA staff will discuss with each bank their digital projects in the next three to five years, while it will help link lenders with start-ups to provide technological support, Yue said.
“If the small players are not doing anything, they may be left out in future,” Yue said.
HKMA has taken pride in the city’s lead in fintech over some other Asian financial hubs, which has enhanced financial inclusion.
“After Hong Kong has successfully launched the virtual banks, Singapore and Malaysia have also issued their virtual bank licenses,” Yue said in a media briefing last week.