Asia's largest wealth manager UBS said its plan the launch of a digital bank if it can secure a license in mainland China.
Edmund Koh, head of UBS’ Asia-Pacific division, said China’s framework digital banking guidelines should be available by June or July of this year, according to report in Hong Kong's daily «South China Morning Post». If UBS’ application is successful, then it will be joining Chinese tech giants such as Tencent Holdings’ and Alibaba Group Holding’s banking units.
«We need scale, and I’m going to get that scale for UBS, working together with the Chinese authorities,» he said to the newspaper. Digital banks aim to offer lower-margin products and services without the requirement of operating physical branches. Neobanks are also easier to scale because they operate in a more efficient manner when compared to incumbents.
Expanding Customer Base
Koh revealed that acquiring a wealth management customer costs about $25,000. UBS’ management believes they can significantly reduce such expenses if they operate an all-digital bank. The UBS banker added that the Swiss firm plans to expand its user base from currently around 30,000 customers in Asia to 200,000 in the coming years.
Koh believes China is the ideal place to establish a digital banking platform, because of the nation’s expertise in artificial intelligence (AI). The bank said it wants to serve China’s growing middle class, which might have anywhere between $100,000 to$200,000 to deposit at a bank
Based in Qianhai
China has already granted 18 licenses for privately run banks since 2014, including those to Tencent-backed WeBank, Alibaba’s affiliate MYbank and aiBank, whose investors include Baidu. These are online-only banks and the new digital banking rules will govern them as well.
The digital bank would be based in Qianhai. It would serve customers in the Greater Bay Area, which is home to 69 million residents and a GDP of around $1.5 trillion, according to «Crowdfund Insider».
