WeLab Digital Limited was awarded Hong Kong’s fourth online-only banking licence on Wednesday, the Hong Kong Monetary Authority said in a statement, giving the fintech company access to a lucrative retail banking market in the Asian financial hub.
WeLab is a fintech company that offers mobile lending services primarily in Hong Kong and mainland China.
The HKMA had previously granted virtual banking licences to joint ventures of Standard Chartered and BOC Hong Kong as well as to a subsidiary of ZhongAn Technologies International Group, the international arm of Chinese online insurer ZhongAn Online P&C Insurance.
The introduction of online-only banking has the potential to be the biggest shake-up in years in the city’s retail banking sector dominated by old-guard lenders such as HSBC, StanChart and a slew of Chinese banks.
Many consumers are unhappy with the current options, however the entrenched position of current retail banks is expected to be a major challenge for the new online-only entrants.
“The introduction of virtual banks in Hong Kong is a key pillar supporting Hong Kong’s entry into the smart banking era,” the HKMA said in the statement announcing WeLab‘s licence.
“Virtual banks will not only help drive FinTech and innovation, but also bring about brand new customer experiences and further promote financial inclusion in Hong Kong.”
The HKMA said WeLab intended to launch its services within six to nine months.
Some 33 virtual banking applications were submitted by the deadline of Aug. 31 last year. The HKMA short-listed eight, and said on Wednesday it was making good progress on the remaining four applications.
Besides individuals, small firms, which have long complained of difficulties in opening bank accounts in Hong Kong, will also be targeted by the new online lenders, with small loans, foreign exchange and payment services among those on offer.