Learn more about our comprehensive legal services.
Advising our clients on different opportunities and challenges of the industry.
Developing a unique culture, which blends traditional client care with modern technology and working practices since 1851.
Stay up to date on the latest news and legal insights.
News & Insights
Authored by: Simon Deane and Natalie Chan
In 2020, the HKMA granted banking licences to eight virtual banks in Hong Kong. The HKMA recently carried out a review (“Review”) to look into the operations and performance of the virtual banks. The Review reveals that the development of virtual banks in Hong Kong has so far achieved the three policy objectives of introducing virtual banking – namely: (i) promoting fintech and innovation, (ii) offering new customer experiences and (iii) promoting financial inclusion. In terms of market acceptance, since the official launch of the eight virtual banks in 2020, the HKMA has seen a growing acceptance in the market, evidenced by a total number of 2.2 million depositors as at the end of 2023.
Overall, the HKMA considers that the current structure of the virtual bank sector should be maintained with a view to facilitating long-term development of virtual banks as well as maintaining a healthy competitive landscape in the banking industry. However, the HKMA concluded that there is no strong justification to issue more virtual bank licences at the moment as doing so may hamper the development of the virtual bank sector for the existing market participants.
The HKMA also proposes to rename “virtual banks” as “digital banks” better to reflect the current banking model and to clear any public misconception of the term. The public consultation on the proposal to change the name ended in September 2024.
The full Review can be found here.
Subscribe to Publications
Sign up for our regular updates covering the latest legal developments, regulations and case law.