Hong Kong Monetary Authority is considering rebranding its financial institutions, which may involve changing the name of Hong Kong’s virtual banks. After consulting with industry experts, including Chinese experts and AI ChatGPT, a new plan has been proposed. Sources close to Hong Kong virtual banks indicated that the institution plans to change the name of virtual banks to licensed digital banks. Currently, the Monetary Authority has initiated a one-month consultation with the banking industry and intends to seek public opinion subsequently.
The renaming proposal has taken into account discussions with the Hong Kong Association of Banks, banks holding restricted licenses, and the Deposit-taking Companies Association. Feedback from the existing eight virtual banks will not be overlooked. The term “virtual bank” has been in use for many years since the release of the “Guidelines for Authorization of Virtual Banks” in 2000, and it is now being changed to “licensed digital banks”.
According to the Deputy Chief Executive of the Hong Kong Monetary Authority, Ruan Guoheng, the main consideration for pushing the renaming is to address specific associations that the term “virtual” may evoke in a Chinese context. Some marketing campaigns have already started using “digital bank” to represent their services. Internationally, many banks are choosing names that do not include the term “virtual.”
As part of the branding strategy, the renaming strategy will discard the term “virtual” and instead use “digital,” a broader term that encompasses the concepts of “internet” and “technology” and helps to keep pace with fintech and innovation. The term “licensed digital bank” will also help to reinforce the public’s confidence in the banking license status.
In 2019, Hong Kong implemented the “Smart Banking Era” policy, granting several virtual banking licenses, such as LIVI BANK, ZhongAn Bank, MOX BANK, etc. With the operation of these institutions, the experience of traditional banking services in Hong Kong has significantly improved. For example, the ability to open an account in a very short time and the provision of round-the-clock online customer service have brought unprecedented convenience to customers, playing an undeniable role in enhancing the image of Hong Kong’s banking sector.
By the end of December 2023, the total number of customers for the eight virtual banks operating in Hong Kong had reached 2.2 million, showing a 20% growth rate compared to the end of 2022.
The total deposits accumulated by these virtual banks had reached 37 billion RMB, an increase of 23% from the previous statistics. Meanwhile, virtual banks’ total loan volume also grew, reaching 19 billion RMB, with an increase of 19%.
Against the backdrop of deeper integration and cooperation in the Guangdong-Hong Kong-Macao Greater Bay Area, virtual banks are gradually demonstrating their unique advantages in user experience and are expected to maintain their rapid development momentum.
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