The Hong Kong Monetary Authority has granted the first virtual banking licenses to three institutions. According to their business plans, these banks will launch their services within six to nine months.

The three banks that received a license are Livi VB, SC Digital Solutions and ZhongAn Virtual Finance to operate in the form of a virtual bank. The granting of these banking licenses takes effect today, according to a media release on Wednesday.

According to their business plans, these three newly licensed virtual banks intend to launch their services within 6 to 9 months. After the granting of the above banking licenses, the number of licensed banks in Hong Kong will be increased to 155.

Reinforcing Hong Kong's Position

The Hong Kong Monetary Authority (HKMA) is making good progress in the processing of the remaining 5 virtual bank applications, according to further information.

«It is a major milestone in reinforcing Hong Kong’s position as a premier international financial center. I believe that virtual banks will not only help drive fintech and innovation but also bring about brand new customer experiences and further promote financial inclusion in Hong Kong», Norman T.L. Chan, CEO of the HKMA, said.

Targeting the Retail Public and SMEs

«I believe that virtual banks will have to offer innovative and customer-centric services in order to attract customers. Moreover, in targeting the retail public and SMEs as their main client base, virtual banks should help promote financial inclusion in Hong Kong,» he added.

«The U.K. market, where neobanks and digital-only challengers have been around for a while, shows there’s a big chance new players will grab a significant chunk of new financial services revenue in the near future in Hong Kong, but that doesn’t mean all is lost for traditional banks here,» Fergus Gordon, a managing director at Accenture who leads its Banking practice in Asia Pacific and Africa, said.

Some Consolidation Expected

«Virtual banks will need some years to establish themselves, then there will likely be some consolidation among some of the players, and in the meantime, traditional players should continue to rapidly reconfigure their branch networks to become more focused on experiences and use technology to make the transition from digital to physical and back much more seamless,» he added.