Hong Kong Grants Licenses To Four New Digital Banks Started By Major Tech Firms
Hong Kong has just granted licenses to four new virtual baking firms established by China's largest technology companies. The newly granted licenses are meant to further spur innovation in the sector, which is seen by some as the future of banking in the country.
Three new licenses were given to Ping An Insurance's Ping An One Connect, Xiaomi-AMTD Group's Insight Fintech HK, and Ant Financial Services' Ant SME Services. The fourth license was given to a Fintech company, called Infinium, established by a consortium, which includes the country's own Hong Kong Exchanges and Clearing (HKEX), the Industrial and Commercial Bank of China (ICBC), and Tencent Holdings.
Most of the companies that have established the new digital banks already have various digital banking services available in other countries. Ant Financial currently operated the mobile payment app Alipay, while Infinium's backer Tencent owns WeChat Pay. Other tech companies such as Chinese smartphone maker Xiaomi and AMTD are relatively new, but they do have the financial and technical capabilities to compete with the veterans in the game.
Hong Kong is currently one of the world's best served financial cities, with over 160 licensed banks in active operation. Financial tech and digital banks are also now starting to pop up, further spurring competition in the financial hub with over 7 million residents. According to officials, the increase in the number of virtual banks in Hong Kong will benefit quite a lot of people, thanks to an innovative banking solution, enhanced customer experience, and smart banking initiatives.
Virtual banks have so far disrupted traditional banking services, with countries such as Japan and Mainland China leading the race. China currently has a good number of digital banks, currently being operated by its largest tech firms. Hong Kong aims to catch up with the addition of the four new digital banks, which are all expected to begin operations in six to nine months. Hong Kong issued its first virtual bank license this year, first to online lending firm WeLab and then three other licenses to firms established by ZhongAn Online, Bank of China (Hong Kong), and Standard Chartered Bank.
With the issuance of the new licenses, Hong Kong is set to become a regional hub for Fintech companies in the coming years. While other financial services firms are scrambling to establish their own digital banking brand, some have chosen instead of focus on expanding their traditional banking services. HSBC, for example, announced that it would not be applying for a license anytime soon. Instead, one of the city's largest banks has decided to expand and improve its current digital products.