Rather than compete directly with others as a traditional lender, Ping An intends to use its virtual banking license for more innovative purposes including as a platform provider to share its risk technology to enable and generate revenue from banks.
Ping An’s «OneConnect Bank» is one of eight firms that were issued virtual banking licenses by the Hong Kong Monetary Authority since March. These virtual banks cannot have any physical branches and can only offer banking services through the internet, mobile phone, computers or ATMs.
According to Ping An Insurance's (Group) co-chief executive Jessica Tan Sin-yin, OneConnect will likely launch by the end of the year and does not aim to compete using a traditional business model in Hong Kong’s crowded banking sector.
“Initially, our virtual bank will directly offer lending to individuals and SMEs to show that our risk assessment models and technology can work,” said Tan, in an «SCMP» report.
«After we have showcased them, we will sell these models and technology to other banks for a fee. We can then create a platform for SME loans which will allow Ping An and other lenders to earn money together.»
Traditional Banking Too Crowded
«We used OneConnect to apply for the virtual bank license here because we did not want to come in and directly compete with all the other banks,» Tan said, highlighting the decision to forgo applying through its banking arm Ping An Bank or its fintech arm Lufax. «There are 160 banks in Hong Kong, which is a lot for a small region like Hong Kong.»
OneConnect’s ambitions as a technology provider in Hong Kong is not without a track record. The firm already provides tech to more than 3,700 financial companies in mainland China and also boasts agreements with 27 financial institutions in 10 overseas markets including Hong Kong, Singapore, Indonesia and Philippines to provide blockchain, artificial intelligence and cloud computing support.
And despite recent unrest in Hong Kong, Tan remains optimistic about its potential, citing Ping An’s vote of confidence through five separate companies set up in the financial center this year.
«It is a great time to enter [the] Hong Kong market as the HKMA has promoted fintech while there are huge opportunities in the Greater Bay Area where Ping An is based,» she added.
