To date, Hong Kong has issued eight virtual-banking licenses. This new form of financial institution has been under the market spotlight. Ceajer Chan Ka-keung, senior adviser and chairman of local fintech startup WeLab, one of the eight licensed firms, said every bank had its own strategy but it was unlikely to trigger a price war.
Including these eight virtual banks, there now are 160 licensed banking groups in Hong Kong. How to sustain their businesses in a highly competitive market is the first challenge for virtual banks. Chan stressed that banks cannot make profits in the beginning because of technology and labor costs. However, based on his company’s business model, Chan is confident that his firm will meet its targets.
Chan said WeLab was granted its virtual-banking license more than a month ago and was now making preparations to go into operation, including strategic development and talent recruitment. He said WeLab would commence operations six to nine months after it was granted the license.
WeLab is the first virtual banking institution founded by a local financial-technology firm in Hong Kong, while the other seven players are backed by technology or financial firms. When asked about competitors, Chan said every bank in the city had its own interest rates and strategies, so engaging in a price war was the last thing they wanted to do. He believes virtual banks will jointly create a healthily competitive market and bring the best user experience to customers.
Before WeLab, Chan was the secretary of the Financial Affairs and Treasury Bureau of the Hong Kong government. He said the regulation on virtual banks was the same as that on traditional banks.
Talking about the Greater Bay Area, he said it would be good to increase the connectivity among different cities in the area, especially in the virtual-banking and fund-management sectors under China’s capital-account policies. He hopes financial institutions will be able to provide more cross-border services to corporate and individual customers in the area.
Launched in February, the Outline Development Plan for Guangdong-Hong Kong-Macau-Greater Bay Area highlighted Hong Kong’s role in the innovative technology sector. As a global financial hub, Hong Kong has been accelerating its development of financial technology over the past few years, contributing to the development of the Greater Bay Area, Chan said.
In the Greater Bay Area, there are the “one country, two systems” policy, three currencies and three tax systems, which caused some people to worry about the problems related to cross-border regulations.
As there will be more and more financial services in the Greater Bay Area, Hong Kong’s fintech sector can play an important role in helping solve regulatory problems, Chan said. It is also an important opportunity for Hong Kong’s financial industry.
This article was first published on ATimesCN.com and was translated by Kamaran Malik.