Hong Kong’s virtual banks are reportedly delaying their plans to launch online-only services in part due to the anti-extradition protests in the city, Reuters reported.
Why it matters: A delay in a government-led initiative shows the widening effect that the months-long turmoil has had in the city, a regional financial hub.
- Virtual banking is part of the government’s push toward modernizing its financial sector using fintech.
- The Hong Kong Monetary Authority (HKMA) said in March when the first batch of licenses was issued that the virtual banks intend to start offering services in six to nine months.
- The financial arms of China’s tech giants including Xiaomi, Ant Financial, Tencent, and JD.com were among those granted virtual banking licenses.
Details: Virtual banking services mainly target Hong Kong’s younger population, many of whom have been out on the streets protesting the past few months.
- “It will be difficult to launch a brand campaign around them and attract their interest when their priority is clearly not having another bank account,” a senior executive at a licensed virtual banking service said to Reuters.
- Some of the licensed virtual banks had plans to launch promotion campaigns this month but decided to put them off due to the unrest. Some banks including Standard Chartered have set their launch date to some time in early 2020.
- However, some of the financial entities may soft launch their service near the end of this year, restricting offerings to staff members and their families.
Context: The HKMA so far has granted eight companies licenses to operate virtual banks. Similar to traditional retail banking services, virtual banks will be able to accept deposits and offer loans.
- Younger generations of the city’s population have been a central part of the anti-government protests in Hong Kong sparked by an extradition bill. The bill was formally withdrawn earlier this month.