Chong Sing seeks Hong Kong virtual bank licence, targets AI-backed wealth services

The China and Southeast Asia-focused fintech firm seeks expansion in Hong Kong through online banking services and blockchain data backbone

PUBLISHED : Thursday, 02 August, 2018, 6:01am
UPDATED : Thursday, 02 August, 2018, 6:01am

Chong Sing Holdings FinTech, an online lending and payment operator that has been focusing on China and Southeast Asia, will apply for a virtual banking licence in Hong Kong as it seeks to expand into artificial intelligence-backed wealth management services in the city.

Chief executive Phang Yew Kiat said with the licence it hopes to operate a virtual bank based on an open platform concept and make its customers’ data available to third parties, allowing them to offer their own wealth management and private banking solutions upon customers’ consent.

Chong Sing, which has its headquarters in Hong Kong, is also aiming to make its banking operation “100 per cent paperless”, as it is ready to deploy its own private blockchain to process customers and internal records using the distributed-ledger technology.

“With the use of fintech such as artificial intelligence and robo-advisors we are aiming to deliver better returns to our wealth management clients. Our expectation of better returns comes from the fact that AI can advise clients on their asset allocation decisions, and can do so without the costs involved in maintaining a network of branches,” said Phang.

The company, which is listed on the GEM board of the Hong Kong bourse for small to mid-sized companies, is one of at least 50 firms that have so far expressed an interest to the Hong Kong Monetary Authority (HKMA) in the new banking licence.

They include home-grown unicorn WeLab, Standard Chartered Bank, and payment operator Yedpay! The HKMA has set August 31 as the deadline for applications, and new licences are expected to be issued around the end of this year or the first quarter of 2019.

By allowing third parties to directly access clients’ data and manage their investments and use of funds on its open platform, Phang said Chong Sing is effectively embracing the open banking regulations used in the UK, or the Second Payment Services Directive (commonly known as PSD2) of the European Union. Both of these aim to foster more competition and innovation, and to level the playing field for new payment-services providers that have emerged in recent years.

He hopes the virtual bank licence will help Chong Sing to spearhead that trend in Hong Kong too. Apart from wealth management and private banking services, the company also plans to offer payment services, such as cross-border money transfer through the virtual bank.

It plans to acquire its customers through online channels, and support them through smartphone apps and video calls.

Although the virtual banks will only operate online, with no physical branch network, the regulator will require them to have at least one bricks-and-mortar office that can also handle complaints from customers. Phang said it plans to maintain one such customer support centre that will operate for up to 18 hours per day.

In China, Chong Sing Holdings Fintech offers a wide array of online loans, spanning mortgages, consumer loans, and loans for small enterprises. It claims a registered user base of 73 million.

Phang was previously a principal director of Standard Chartered private bank, and had served as deputy CEO at China Bohai Bank, in which Standard Chartered is the second-biggest shareholder.