TAIPEI (Taiwan News) – The arrival of virtual banking is set to rattle the traditional banking market in Hong Kong as the first batch of licenses are expected to be issued by the end of this year, reports said Monday.
Virtual banks allow customers to open accounts online without the hassle of going through multiple procedures in physical branches. The online financial institutions also provide customers with easier transaction management, and access to more complicated financial services and products such as mortgage and insurance business, reported hk01.
Promoted as having the potential to expand public access to banking services by the Hong Kong Monetary Authority, research jointly conducted by the Hong Kong Productivity Council and Standard Chartered in June indicated that only 46 percent of 800 small and medium enterprises surveyed reported having heard about virtual banking, while 23 percent expressed no interest in adopting the service.
77 percent of those interested showed concern over cybersecurity and 61 percent over system stability, suggesting a conservative attitude towards the innovative financial service, wrote the report.
The report argued that virtual banks enjoy the advantage of flexible practices and a quicker response rate to market changes thanks to less regulation. These institutions are poised to drive a seismic change in the banking industry, and benefit from better operational efficiency by tapping technology to gain insight into customer needs and investment risks through big data analysis.
Nevertheless, the Hong Kong Monetary Authority has cautioned that virtual banks will not only have to address cybersecurity but also risks associated with credit, liquidity, and interest rate management, said the report.