Author | she Yunfeng

Source | Mobile payment network

In March last year, the issuance of virtual banking licences in Hong Kong attracted applications from more than 70 institutions, but in the end, only three of the first batch stood out. In the following two months, the HKMA issued two more virtual banking licences, including a number of companies with domestic financial institutions or Internet backgrounds. As a result, the total number of virtual banking licences in Hong Kong has increased to eight.

Recently, according to the mobile payment network, the first batch of eight virtual banks in Hong Kong (although the licensing time is different, but the industry is accustomed to refer to the eight as the first batch) have entered the stage of internal testing or quasi-trial operation.

After a series of trials, what services does the virtual bank provide?

On March 24th, ZA Bank, one of the first virtual banks in Hong Kong, officially provided services to the people of Hong Kong and launched its flagship demand deposit product "ZA demand Go". As a result, Zhong'an Bank became the first virtual bank to conduct a trial operation.

March 31stmilletThe monk took advantage of its Star Bank (Airstar Bank) to open a virtual bank for trial operation, officially launching two products.

Coincidentally, on the evening of March 31st, Ant Financial Services Group's Ant Bank (Ant Bank) also officially opened its trial operation. A spokesman for Ant Bank said that during the trial operation, only relatives and friends invited by bank employees would participate. After the completion of the trial operation, the bank will continue the next round of preparatory work, and a clear official opening time will be announced.

According to mobile payment network, the trial operations of several virtual banks are only aimed at some users and are carried out within sandboxie, the financial technology regulator supervised by the Hong Kong Monetary Authority. In addition to Ant Bank did not disclose the details of the trial products, Zhongan Bank, Star Bank have launched related products, let's take a look at what specific services they provide at present.

The zero-threshold demand deposit product "ZA demand Go" launched by Zhongan Bank focuses on flexibility and zero threshold. Take HK $500000 as an example, assuming that the annual interest rate of "ZA demand Go" is 1%, users will deposit HK $500000 in March 2020 and can earn HK $5000.23 a year. The basic deposit rate in the market is only 0.001%. The difference is obvious. On the other hand, there is no limit to the initial deposit, and as long as it is less than HK $500000, you can enjoy a high interest rate of 1 per cent.

Star Bank, on the other hand, offers a combination of demand and time deposits, which also has a high interest rate of 1 per cent on demand deposit products, except that it has a limit of HK $50 to HK $1 million.

Of course, in addition to deposit products, the two banks also provide money transfer, loans and other banking services. In terms of loan products, the loan of Star Bank is calculated at daily interest rate, and customers can repay the loan in advance at any time without having to pay a handling fee. Zhongan Yinan sets up individual installment loans to pay off the handling fee in advance, which is 2% of the outstanding principal and any applicable promotion concessions.

According to the mobile payment network, different from the physical model of traditional banks, Zhong'an Bank has built an one-stop mobile application into an all-weather bank exclusive to users. Users only need a phone, an ID card and five steps to open an account within five minutes at the earliest. It provides banking services such as deposit, transfer and loan, and supports fast cross-platform transfer. Users can experience new functions such as "7x24 time deposit", "5-second transfer buffer", "face recognition authentication" and so on.

On the other hand, Star Bank has launched a retail business with a complete "zero service charge (this inclusive service pledge will be maintained for at least three years)". Customers can open accounts remotely within 5 minutes on the strength of their Hong Kong identity cards without setting any minimum deposit requirements. Customers can transfer money across banks through the Fast turn (FPS) and Real-time payment settlement system (RTGS) without paying any handling fee.

According to the mobile payment network, WeLab Bank is also conducting internal testing and reveals that it will work withMasterCardCooperate to launch unnumbered bank cards. And before that,Standard CharteredIts virtual bank Mox has already announced that it is the first bank in Asia to launch a full-function unnumbered bank card with MasterCard, known as Mox card. From this, it can be seen that, in addition to the traditional deposit and loan business, it is similar to that before.AppleCard's virtual credit card and unnumbered bank card will also be one of the future business directions of virtual banks.

Inclusive Finance, with more emphasis on technology and personalized products

Virtual bank refers to the banks that provide retail banking services mainly through the Internet or other forms of electronic transmission channels rather than physical branches, generally serving retail customers, including small and medium-sized enterprises. According to the Hong Kong Monetary Authority, the introduction of virtual banking is a key measure for Hong Kong to enter a new era of smart banking, which can promote Hong Kong's financial technology and innovation, and provide new experiences for bank customers.

It can also be seen from the above that Hong Kong virtual banks have basically improved their service functions such as deposit, loan and foreign exchange, mainly for ordinary retail users, but like many Internet businesses, its service capabilities must be more personalized, Internet-based and technologically applied, and are more suitable for people who are more receptive to new things.

Personalization is mainly manifested in that, in addition to financial institutions, virtual banks have the support of Internet institutions behind them, have rich online operation experience, and can complement other shareholders to give play to their corresponding advantages. Therefore, whether in terms of deposits or loans, the services can be more flexible, can provide different services according to different scenarios, but also can be designed according to specific groups of people.

"We will adopt the user co-creation model and establish close contact with users through a variety of interactions online and offline." From the perspective of service concept, virtual banks need to pay more attention to user feedback. According to the mobile payment network, the zero-threshold demand deposit product launched by the trial operation of Zhongan Bank integrates the needs of pre-test users.

In terms of technology, it is easier to understand. Virtual banks generally serve retail customers and need more powerful Internet technology capabilities. including artificial intelligence, big data, cloud computing, mobile Internet, 5G, Internet of things, blockchain and other technologies, it needs to be fully applied in customer acquisition, risk control, product design, operation, post-loan and other business in the future.

Therefore, what the virtual bank needs to do is more to fill the gap in the market of traditional banks, to use science and technology to deal with small and scattered credit business and to provide inclusive financial services, rather than competing with banks in turn. After all, traditional banks already have a more loyal and solid customer base and offline service capabilities.

The difference between Virtual Bank, mainland Direct selling Bank and Internet Bank

It is generally believed that virtual banks are similar to direct selling banks in the mainland and highly similar to mature business models such as online banking and mobile banking.

November 18, 2015Citic Bank与BaiduJointly announced the establishment of a joint venture direct selling bank "Baixin Bank", which is an independent subsidiary bank controlled by Citic Bank. This is also the first approved direct selling bank in the form of an independent legal person.

Let's take a look at Baixin Bank's market positioning, "financing for the people, financing for the public", relying on CITIC Bank's strong product research and innovation capabilities, customer management and risk control system, as well as Baidu's Internet technology and user traffic resources to meet customers' personalized financial needs and create differentiated direct selling banks with unique market competitiveness. Isn't this the "virtual bank" with a different name?

However, due to the different market and financial environment, direct selling banks are essentially different from virtual banks. Direct selling banks usually refer to a new bank operation mode, which is set up by traditional banks or their joint Internet enterprises, relying on II and III electronic accounts, and providing online and offline financial and life services through Internet technology. Direct selling banks are more like "Internet banks" under traditional banks, because they rely on the internal operation of the parent bank, so they do not need additional banking licenses, but if they are joint Internet enterprises operating as independent legal persons, they need an independent direct selling banking license, such as Baixin Bank.

In terms of customer acquisition, on the one hand, direct selling banks can introduce the stock customers who open accounts at outlets under the bus line, on the other hand, they can also rely on Internet enterprises to attract new users. Virtual banks in Hong Kong are more likely to start from scratch.

Speaking of "self-made" pure online banks, the current widespread existence of "Internet banks" in the mainland is the representative. "there are no physical outlets, no branches, no counters, light assets, and platforms." Internet banks have many similarities with virtual banks. Up to now, there are 18 private banks in the country, and the domestic Internet banks are all private banks.

But there are also differences. Although Internet banks have obtained a banking license and have the business capabilities of "deposit, loan and foreign exchange" provided by physical banks, in fact, because pure network banks do not have actual physical outlets, they are relatively weak in cash business and deposit business. Therefore, the private banks in the mainland, led by Internet banks, mainly serve small and micro enterprises, and tend to provide small loans and consumer finance business for small and medium-sized enterprises.

On the other hand, one of the main obstacles to the limitation of Internet bank deposit is the problem of remote account opening. After the classified management of personal bank accounts, non-face-to-face remote accounts can only be II and III electronic accounts with limited functions, and there are corresponding restrictions on deposits. This may also be the main difference between mainland Internet banks and even direct selling banks and Hong Kong virtual banks.

Conclusion

The trend of virtual banking has extended to the international market. Apart from Hong Kong, Singapore and Malaysia have also opened applications for "digital banking" licenses, including Ant Financial Services Group, Ping an, Xiaomi and other enterprises. According to Mobile payment Network, Singapore will announce the winners of five digital banking licenses in mid-2020. Malaysia, for its part, is expected to issue up to five digital banking licences by the end of 2020 and a final policy in June 2020.

Although the virtual bank has attracted fierce competition from many financial institutions and non-financial institutions, the competitive market is limited to the local market, whether it is traditional banks or mainland Internet enterprises. In the case of Hong Kong, as one of the three major financial centers in the world, the financial environment is developed and stable, bank outlets are springing up everywhere, and the payment system supported by cash, credit cards and Octopus has been relatively mature and perfect.

How big a storm virtual banks can make in this sufficiently perfect financial market, let's wait and see!

The viewpoint in this paper is the author's own point of view and does not represent the viewpoint of the platform of the consumer fund circle.