Hong Kong Digital Banks Expected to Focus on Mobile Payments and Micro-Loans


Domestic analysts expect Hong Kong’s first cohort of licensed digital banks to commence operation before the end of the year, as well as focus on mobile payments and micro-loans given the respective fintech advantages of their backers.

Since March of this year a total of eight applicants have obtained virtual banking licenses from the Hong Kong Monetary Authority, with official service operation expected to commence within the next six to nine months.

Successful applicants are backed by leading financial institutions and tech companies in the region, and include Ant Financial’s Ant Financial (Hong Kong), Tencent-backed Infinium (贻丰有限公司), Xiaomi-invested Insight Fintech HK Limited (洞见金融科技有限公司) and Ping An’s One Connect (壹账通有限公司), all of which obtained approval in early May.

Other license holders include Livi VB Limited (a joint venture between Bank of China, Jardines and JD.com Tech), SC Digital Solutions Limited (a joint venture between Standard Chartered, PCCW, Ctrip Finance and Hong Kong Telecom), Zhongan Virtual Finance (众安虚拟金融) (a fully invested subsidiary of Zhongan Technology (International) Group); and WeLab Digital Limited, the fully invested subsidiary of WeLab Holdings.

Yang Rong (杨荣), chief banking sector analyst with CSC Financial, said to Securities Journal that the shareholders backing the eight virtual banks include banks, insurers, telecommunications operators, internet giants, mobile phone manufacturers, exchanges and investment institutions, helping to confer them with advantages in key fintech areas from the very get go, such as artificial intelligence, biometrics and blockchain applications.

Yang expects this to achieve a “comprehensive improvement” in customer service, risk control, cost control and operational efficiency.

Dai Zhifeng (戴志锋), chief banking sector analyst with Zhongtai Securities (中泰证券), said that Hong Kong’s new virtual banks will make use of a purely online business model to achieve remote account opening.

In the short-term Dai expects virtual banks to focus on the development of mobile payment and micro-loan services, as well as establish new base-level infrastructure as well as big data and artificial intelligence application algorithms.