Hong Kong hands out virtual bank licences as city catches up with China, Japan in disrupting bricks-and-mortar banking
- Livi VB, SC Digital Solutions and Zhong An Virtual Finance to be the operators of first three licences
- The three are among 33 financial service providers that applied for the virtual banking licence from the HKMA
Hong Kong handed out three virtual banking licences allowing financial institutions to operate branchless savings and loans businesses on Wednesday, as the city catches up with other Asian jurisdictions in disrupting traditional banking.
Livi VB, co-owned by Bank of China (Hong Kong), JD Digits and Jardines, SC Digital Solutions, a joint venture between Standard Chartered, HKT, PCCW and Ctrip, and Zhong An Virtual Finance, a joint venture between ZhongAn Online and Sinolink will be the operators of the first three licences, according to the Hong Kong Monetary Authority (HKMA). The city now has 155 licensed banks.
The licences are aimed at increasing competition. Arthur Yuen, the HKMA’s deputy chief executive, said: “There will be competition between traditional banks and digital banks, but we believe the Hong Kong market can absorb such competitive pressure.”
Two of the winning joint ventures are led by two of Hong Kong’s three note-issuing banks, BOCHK and Standard Chartered.
HSBC has not applied for a virtual bank licence, but the bank said that it has been constantly expanding its digital offerings to enhance customer experience over the past few years.
Yuen said the joint ventures led by BOCHK and Standard Chartered will have to find new users – they cannot access the banks’ client bases without prior consent from clients. Livi VB, which counts Jardine’s as a partner, will not be able to use Jardine’s retail operations such as supermarket Wellcome and 7 Eleven as bank branches.