HK authorities try to play down concerns about virtual banks aggravating manpower shortage

Maria Nikolova

Under the plans of the eight licensed virtual banks, the manpower required for the first three years of their operation represents a tiny fraction of that of Hong Kong’s banking sector.

The granting of the first eight virtual bank licenses in Hong Kong has been seen as a positive development for the financial services sector and the fintech industry. However, it turns out that the establishment of virtual banks has also sparked certain concerns – this becomes clear from a publication by the Hong Kong Legislative Council today.

Hon Chan Chun-ying has explained that some members of the banking industry have relayed that the granting of eight virtual banking licences by the Hong Kong Monetary Authority (HKMA) so far may aggravate the shortage of manpower of the various professional grades in the industry, which will affect the operation and development of the banking industry in the long run.

In this connection, he asked whether the Government has estimated the numbers of members of the various professional grades to be employed by virtual banks in each of the coming three years; (i) of the respective percentages of such numbers in the relevant total numbers in the banking industry, and (ii) out of such numbers, the respective numbers of those who will come from conventional banks and from places outside Hong Kong.

Mr James Lau, Secretary for Financial Services and the Treasury, replied that the HKMA does not collect statistics on the number of practitioners of professional grades in the banking sector.

According to the business plans of the eight licensed virtual banks, the manpower required for the first three years of their operation only represents a tiny fraction of that of the banking sector in Hong Kong. The HKMA expects that the impact of virtual banks on the manpower of the banking system should be manageable.

The HKMA does not collect information on the background of employees of virtual banks and is not in a position to provide any estimate to this end.

In March 2019, HKMA granted the first batch of virtual banking licences under the Banking Ordinance – the first three such licenses were issued to Livi VB Limited, SC Digital Solutions Limited and ZhongAn Virtual Finance Limited.

Let’s recall that, in the end of May 2018, the HKMA published its guidelines on the authorization of virtual banks. During the public consultation on the matter, there was broad support for virtual banks to operate in the form of a locally-incorporated entity with no physical branches. A key objective of introducing virtual banks in Hong Kong is to promote financial inclusion by harnessing the banks’ IT platforms that would lower the incremental cost of taking in additional customers.

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