Virtual Banks Reshaping the Industry

Cover Story

Virtual Banks Reshaping the Industry

Since eight virtual banks have been granted licenses by the Hong Kong Monetary Authority (HKMA), there has been much interest in the potential impact these newcomers will have on the established banking markets, but there is very little publicly available market intelligence on the customer’s perspective towards digital banking.

PwC conducted an extensive quantitative research and interviewed banking customers from Hong Kong, Singapore and Malaysia – the three most active markets for digital banking – and the survey reveals that the number of pain points or frustrations a customer has with the incumbent bank presents a correlation with his/her willingness to open a digital bank account.
 

China World

Comprehensive New Foreign Investment Regime Taking Shape 
Highlights of Recent PRC Incentive Policies on Foreign Investment

Since the promulgation of the Foreign Investment Law (the “FIL”) in 2019, multiple authorities in China have also introduced a series of regulations on investment access, overall business environment, foreign exchange, intellectual property, dispute resolution, and other related fields, which cover further opening-up of a variety of industries, especially in key sectors such as finance, automobile, petroleum and mining. 

The string of policies and measures demonstrates China’s firm attitude to establishing a more open and upgraded foreign investment regime and promoting the development of foreign investment. It is also expected that these policies will usher in the second "Golden Era" for foreign investment in China.
 

Fintech

Virtual Lender’s Launch Sets Tone for Future of Banking and Fintech in Hong Kong

On 12 January, ZA Bank, announced that it would offer deposit interest rates of up to 6.8% during its pilot trial, which is a bold move that can potentially become a catalyst in transforming Hong Kong’s established heavyweight lenders.

According to a 2018 estimate, USD15 billion, or 30%, of Hong Kong’s total banking revenue, is up for grabs. That’s a lot of cash in a finance hub that ranks third worldwide in bringing its traditional finance sector into the Fintech universe.
 

The 2020-21 Budget

Huge Deficit – Calling for New Source of Revenue?

Under the shadows of public concerns over the novel coronavirus and economic slowdown, the Financial Secretary, Mr Paul CHAN Mo-po, delivered his fourth Budget Speech on 26 February 2020. As widely expected, he revised the budget for 2019/20 to a deficit of HKD37.8 billion.

Aside from offering a series of short-term reliefs and medium-term strategies, Mr. CHAN also proposed additional funding and incentives to support Hong Kong’s pillar industries and other sectors and had specifically identified Financial services as the focus to drive the future and growth of Hong Kong’s economy.
 

Knowledge Plus

Cultivating Talent in the Smart Banking Era

While 80 percent of all banking transactions worldwide are digital, no one should ignore the core dynamics that lie at the heart of the relationship between a bank and its customers: a relationship of trust informed by empathy and individual judgment. In a technologically enabled financial ecosystem, the human element becomes more important, not less. Without the right people, no amount of technology will bring success.

People are, and will remain, crucial to the operations of a full-service bank for the foreseeable future. The bank of the future will be: part human, part machine. The machines are taking on the routine plain vanilla banking tasks and empowering human bankers to help their clients grow.

GRC Corner

Artificial Intelligence for Hong Kong Regulatory Reporting
 
Financial institutions across the globe are facing a more stringent regulatory environment as governments seek to put in place investor protections and increased transparency in an attempt to rebuild public confidence in the financial system. As a result, financial firms are finding they need to report more information about their activities to regulators than ever before; “reports” are of greater granularity in machine-readable format, submissions are at more frequent timeframes, underlying data elements require integration across finance and risk domains and any reported information requires the ability to audit and explain.
HKMA recently kicked off its Granular Data Repository (GdR) pilot with selected institutions, which comprises up to around 250 data elements required for submission at its most granular level. The GdR requirements are expected to be finalised later this year for the broader market.