Hong Kong grants first batch of virtual banking licences

The licenses were awarded to Livi VB, SC Digital Solutions and ZhongAn Virtual Finance.

The Hong Kong Monetary Authority (HKMA) has granted the first batch of virtual banking licences to Livi VB, SC Digital Solutions and ZhongAn Virtual Finance as part of the industry’s dedicated Smart Banking push, an announcement revealed.

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The granting of these banking licences took effect on 27 March. According to their respective business plans, the three newly licenced virtual banks said they intend to launch their services within six to nine months.

Livi VB is co-owned by Bank of China (Hong Kong). SC Digital Solutions is a joint venture of Standard Chartered Hong Kong, PCCW Limited, HKT Trust and HKT Limited and Ctrip Financial Management where the bank holds 65.1% whilst PCCW, HKT and Ctrip Finance will hold 10%, 15% and 9.9%, respectively. Zhong An Virtual Finance is a JV between insurer ZhognAn Online and Sinolink.

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With no need to set up branches, virtual banks deliver the full suite of retail banking services which can range from extending loans, operating savings account, issuing cards and offering payment services through an app or a website - although they are required to maintain a level of physical presence like service desks with which to address customer inquiries and interface with the HKMA.

“The introduction of virtual banks in Hong Kong is a key pillar supporting Hong Kong’s entry into the Smart Banking Era. It is a major milestone in reinforcing Hong Kong’s position as a premier international financial centre. I believe that virtual banks will not only help drive fintech and innovation, but also bring about brand new customer experiences and further promote financial inclusion in Hong Kong,” Norman T.L. Chan, chief executive of the HKMA, said in a statement.

After the granting the three banking licences, the number of licensed banks in Hong Kong will be increased to 155.

The HKMA is reportedly processing five more virtual bank applications. 

Photo from Standard Chartered Hong Kong.