The First 3 Recipients of HKMA’s Virtual Banking License Have Been Announced

The Hong Kong Monetary Authority (HKMA) announced today that three companies have been granted virtual banking licences: Livi VB, SC Digital, and ZhongAn Virtual Finance.

As rumoured in our previous report, some of the companies granted licenses are joint ventures that include ZhongAn Online (tied with ZhongAn Virtual Finance), Bank of China (co-owner of Livi VB) and SC Digital (Standard Chartered)

According to their business plans, these three newly licensed virtual banks intend to launch their services within 6 to 9 months, and thus, bring the grand total of licensed operational banks in Hong Kong to 155.

The virtual bank license was announced by HKMA’s chief executive Norman Chan Tak-lam in September 2017 as part of an overall smart city ambition. Its key aim is to help promote financial inclusion by leveraging on banks’ IT platforms that would lower the incremental cost in taking in additional customers.

Virtual banks are not a new concept in Hong Kong, a notable example being Neat, which is targeted towards SMEs. In fact, Neat made a notable stance by declaring that the virtual banking license is not for them after noting that the HK$300 million minimum capital requirement was too steep for their offering, among other issues.

The HKMA is now processing 5 more virtual bank applications for approval, which is a much lower number than the supposed 19 companies left once 10 out of the rumoured 29 hopefuls were culled back in December.