Eight virtual banks transforming Hong Kong's fintech sector

By Matt High

May 16, 2020

undefined mins

We take a closer look at the eight innovative virtual banks that are digitally disrupting Hong Kong's financial services industry using technologies lik...

We take a closer look at the eight innovative virtual banks that are digitally disrupting Hong Kong's financial services industry using technologies like AI, machine learning and Big Data

With a national GDP of $341.4bn, Hong Kong is a rapidly growing economy and a centre of innovation and digital transformation. The special administrative region's history is rooted in the financial sector due to its low taxation, legislation that favours free trade and a currency pegged to the US Dollar.

Despite the financial sector in Hong Kong being dominated by incumbents, it is seeing a rapid rise in fintechs, digital banks and new propositions that are driven by the latest technologies.

The rise of virtual banking

Last year the Hong Kong Monetary Authority announced that eight virtual banks had been selected to receive licenses to operate in the country. Below we look in more detail at those virtual banks.

Ant SME: A subsidiary of Ant Financial, the virtual bank is reportedly going to target the Hong Kong SME market, and is dedicated to providing inclusive banking solutions to smaller businesses in the nation’s economy.
Insight Fintech: A joint venture between smartphone brand Xiaomi and AMTD Group, with Xiaomi owning 90% of the company, Insight Fintech provides capital markets and advisory, asset management, insurance brokerage, and strategic investment services. According to a recent press release, the bank will use Xiaomi’s strong foothold in the IoT technology space to create modern, integrated banking solutions that are easier to use and more accessible than traditional alternatives.
Fusion Bank: The Hong Kong challenger with the most impressive backing is Fusion Bank (originally branded as Infinium), which is a joint venture between Chinese giants Tencent and ICBC, with additional support from Hillhouse Capital. Fusion Bank is reportedly looking to provide a full-service virtual banking experience, particularly highlighting small-value deposit services to the under-banked. The bank’s service also won’t require any minimum account balance, or low-balance fees both to the general public and SMEs.
Livi VB: Another of Hong Kong’s new challengers banks to have backing from mainland Chinese financial giants, Livi VB is a joint venture by the Bank of China, JD Digits and Jardines. Worth an estimated $2bn, the resulting company has huge cash reserves behind it and plans to use cutting edge fintech solutions driven by artificial intelligence (AI), blockchain and Big Data to deliver a truly seamless digital experience comparable to some of the leading European virtual banks.
SC Digital: Backed by global finance giant Standard Chartered (alongside PCCW Limited, HKT and Ctrip Hong Kong) SC Digital is looking to corner the retail banking market in Hong Kong. In addition to standard digital banking solutions, the virtual bank is looking to offer retailers and shoppers better ways of spending and transferring money.
WeLab: A truly homegrown Hong Kong fintech, WeLab is also looking to enter the retail banking space, with an offering powered by AI, machine learning (ML) and Big Data. In a press release announcing the company’s new license, founder and CEO Simon Loong said: “WeLab will fully dedicate its resources to provide seamless digital financial services built for the customer, leveraging on the proven track record, cumulative knowledge and experience over the last six years.”
Zhong An Virtual Finance (ZA Bank): the first virtual bank in Hong Kong to launch its pilot program in March 2020, ZA Bank already has a leg up on brand recognition and is looking to tempt a wave of new customers to its platform with a bold new campaign.
Ping An One Connect: A virtual bank that falls under the banner of Ping An Insurance Group, China’s largest insurer by market value. Will initially offer lending to individuals and SMEs, and will subsequently develop new products and markets overseas.