The virtual banking race is on for different regions across the globe, and the Hong Kong Monetary Authority (HKMA) has put its hat in that race with the virtual banking license, as part of a larger plan to turn Hong Kong into a smart city.

To that end, HKMA announced three recipients of the coveted license that allows licensees to offer a full-range of banking services without needing to set up any physical branches.

However, Hong Kong’s iteration of this license is not without its controversy.

Now, another rejected applicant for Hong Kong’s virtual banking license has broken their silence over it.

Airwallex, A Fintech Unicorn, Didn’t Make The Cut

Tencent-backed Airwallex has very recently acquired the status as a fintech unicorn, but despite strong financial backing they have also failed to also acquire a coveted spot in the final shortlist of eight virtual banks in Hong Kong.

Jack Zhang, co-founder and chief executive of Airwallex said:

 

“We are disappointed with the HKMA’s decision. The HKMA’s licence requirements are too restrictive which could affect our ability to offer new banking products and services.”

Airwallex was founded in Melbourne, but set up its headquarters in Hong Kong in August last year as it was preparing to submit its virtual banking license bid ahead of the deadline.

Jack elaborated that if HKMA continues to be quite rigid, the company would consider moving their core operations to other markets that may be more friendly to new startups, like the USA or the UK.

Jack’s sentiments echo a statement previously made by Neat’s David Rosa, who in their explanation for why they would not be going the virtual banking license route in Hong Kong, criticised the license as “only good for the big boys”.

Airwallex’s current recourse is to instead attempt the Stored Value Facilities (SVF) license, so it can offer bank card services to its customers. However, this may prove difficult as according to Jack, the HKMA has not issued new SVF licenses in two years.

Jack Zhang elaborated that they are also considering a potential merger or acquisition with an existing bank to access Hong Kong’s banking sector.

HKMA Won’t Consider New Applicants for One Year

Interactive Brokers, another disappointed applicant of the virtual banking license, is now looking at other markets outside of Hong Kong due to what seems to be a one-year cooldown period once current licensees are operational.

In the meantime, Interactive Brokers’ operations in Hong Kong will continue as usual.

Featured image via Airwallex