Hong Kong Monetary Authority updates on processing of virtual banking license applications
About one-third of the applicants have not submitted sufficient information on certain critical aspects of authorization criteria, the HKMA explains.
The Hong Kong Monetary Authority (HKMA) has earlier today provided an update on the processing of virtual banking applications.
The HKMA had earlier indicated that around 30 applications had been received as at the end of August 2018. Today, the regulator said that about one-third of these applicants did not submit sufficient information on certain critical aspects of authorization criteria. Subsequently, the HKMA informed these applicants that their applications would not be processed.
Regarding the remaining applications, the HKMA explains that it will shortlist about one-third of them for the next stage of assessment. This batch of applicants should be more promising or better-equipped than others in terms of their business models, technology platforms and financial capability, etc., rendering them better positioned to meet the policy objectives of the HKMA in introducing virtual banking. Such objectives include promoting fintech development, providing new customer experience and promoting financial inclusion.
The HKMA aims to start granting virtual banking licenses in the first quarter of 2019. In today’s announcement, the regulator was reluctant to specify a number of virtual banking licenses it would grant.
Let’s recall that, in the end of May this year, 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.
Several banks, including Standard Chartered Bank (Hong Kong) Limited have indicated their interest in virtual banking. In June, Standard Chartered said it was planning to apply for a virtual banking license in Hong Kong. The move is a part of the bank’s strategy of advancing financial inclusion, fintech innovation and bringing enhanced client experience in Hong Kong.
The concept of “virtual banks” is gradually gaining popularity in Hong Kong, according to the results of the latest “Standard Chartered Hong Kong SME Leading Business Index” survey. Conducted during the second half of June 2018, the survey covered 811 local SMEs.
The study shows that whereas 46% of surveyed SMEs have heard about “Virtual Bank”, 23% are reluctant to adopt virtual banking service. For those interested in using the service, “Cybersecurity” (77%) and “System stability” (61%) are the key factors in service selection.
