Virtual bank eyes opportunities as it readies Hong Kong rollout | #AsiaNewsNetwork

Virtual bank eyes opportunities as it readies Hong Kong rollout | #AsiaNewsNetwork
Published 31 May 2019
Luo Weiteng

Hong Kong (China Daily) - Livi VB, the new virtual banking arm of Bank of China (Hong Kong), is betting big on its technology-driven, data-propelled advantages as it prepares to launch its business based on a light-asset model.

“All the preparation work is well underway since we were granted the license back in March,” Livi VB CEO Michael Wang Run said in Hong Kong on Thursday.

One of three joint ventures granted Hong Kong’s very first batch of virtual bank licenses, Livi VB remains on track to roll out services within six to nine months. The bank will launch its business with a team of only about 100 people in a sign of its determination to do business in a light manner.

“Over the long run, the total workforce will be kept under 200,” Wang said. Such a “light” business model also means the bank has no immediate plan for fund injection, he said.

“Our business is operated in a light-asset model. With the offering of small loans and other innovative products, we make inclusive finance possible for the city’s unbanked and underbanked population and small- and medium-sized enterprises who have long been excluded from the traditional brick-and-mortar banking services,” Wang said.

In its initial years of operation, the bank will focus on providing some fundamental, basic banking services. Later on, more personalized, tailor-made money management products will be made available to capitalize on the bank’s technological advantages, Wang said.

Due to the nature of the virtual banking business, Livi VB’s cost structure, which does not include any expenses from brick-and-mortar branches, will allow it to offer a more attractive deposit interest rate. However, Wang said, this should not be highlighted as the major selling point. The bank’s competitive edge still lies in its unique financial technology that enables it to offer services in a faster, more convenient way and appeals to tech-savvy consumers who are eager to have more do-it-yourself options.

The disruptive power of virtual banking should neither be overestimated nor underestimated, Wang said. Asia’s financial center is known for its well-established banking industry. Virtual banks, a novelty in Hong Kong, cannot exert much influence on traditional banks’ balance sheets, at least over the short term.

On the other hand, the difference between virtual and brick-and-mortar banks cannot simply be explained as online versus offline. In terms of production innovation and service improvement, virtual banks have many opportunities to make a difference, he added.
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