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HK Hits Major Fintech Milestone

Hong Kong Monetary Authority Milestone for Fintech

With the launch of more virtual banks this year, Hongkongers can expect to benefit from cheaper and better banking services, experts at the Asian Financial Forum stated.

Their comments followed the revelation that the Hong Kong Monetary Authority has hit an important milestone in its efforts to promote financial technology (fintech). Half the population of the city has now signed up to its Faster Payment System, which enables the free transfer of money between bank accounts via mobile phone.

The development makes it clear that the city is rapidly moving quickly into a new era of branchless banking, a shift that brings up challenges for traditional lenders which must innovate to cope with the competition, officials at the annual conference held by the Hong Kong government said.

It was noted that the Faster Payment System is an important move for the city to develop its fintech. The system has been very popular with the Hong Kong public.

The electronic interbank payment system was introduced by the HKMA in September 2018. It now has half of the local population registered an average daily transaction volume of up to HK$2.4 billion.

The system allows anyone to sign up with their mobile phone number or email address and transfer money between different bank accounts. They can also make payments at shops and restaurants using QR codes on their smartphones.

Next Steps

The first quarter of this year in Hong Kong will see the launch of more virtual banks, which will provide more online banking services to the public.

The Hong Kong Monetary Authority has issued eight virtual bank licences since March 2019. The first virtual lender began operating in December 2019.

The virtual lender, on 27 January 2020, invited people who had registered on its website to open an account. It is offering a 6.8 per cent interest rate for three-month time deposits of up to HK$100,000 during a promotional period that runs until 26 February.

Most of the other seven virtual banks are expected to launch their operations in the first half of this year. The Monetary Authority of Singapore will also issue five digital bank licences, a move set to pile more pressure on traditional lenders.

It was noted that the banking industry will need to innovate and upgrade its technology to cope with the many challenges amid the geopolitical tension and the global economic slowdown, the Deputy Chief Executive of HKMA stated in another panel discussion at the conference.

The launch of virtual banks will benefit the public as a whole because it allows people who have never had a bank account to finally enjoy banking services.

One expert noted that virtual banks can benefit the majority of people in underdeveloped nations. In many such markets in Asia and Africa, half of the population do not have bank accounts. There are often more people with mobile phones than people with bank accounts.

Around two-thirds of these populations are women and many are low-income earners. The virtual banks, which use technology to operate at a low cost and hence can offer cheaper banking services, will help improve financial inclusion and benefit a lot of people in these markets.

OpenGov Asia earlier reported that the Hong Kong Institute of Bankers (HKIB) stated that six virtual banks in Hong Kong have recently joined the Institute as Corporate Members.

Launching virtual banks has marked a new era in the development of Hong Kong’s banking sector and underlines that professional training must advance to keep pace.

Over the next year, the HKIB will continue efforts to promote Fintech development in Hong Kong. As the Fintech ecosystem in Guangdong-Hong Kong-Macao Greater Bay Area continues to grow in prominence, the institute remains committed to improving the cross-border and cross-sector financial and market knowledge of banking practitioners through its professional training programmes to help local professionals sustain their competitiveness.

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