On June 11, "Star Bank", in which XIAOMI Financial has a 90% stake, officially opened, becoming the second Hong Kong virtual bank to officially open after Zhongan Bank; similar to the former, flexible deposit products with preferential interest rates were launched on the first day of business. In addition, from the perspective of public experience, the important business features of the first virtual banks are a sense of science and technology, convenience and convenience.

From the point of view of people in the industry, virtual banking licenses are tickets for the comprehensive development of financial business, such as non-bank financial institutions and financial technology companies. they have many advantages, such as having a foothold in Hong Kong and radiating the Greater Bay area, but Hong Kong's financial institutions have full competition. therefore, before applying for a license and starting business, we should also consider our own resource endowment, so as to avoid weak innovation ability and "launch a price war to seize market share with traditional banks."

The second Hong Kong virtual bank opens, XIAOMI Finance "tastes fresh"

On the morning of June 11, Lei Jun announced on his personal Weibo Corp that Star Bank, a Hong Kong virtual bank owned by XIAOMI Finance, had officially opened, saying that "this is a new milestone for XIAOMI's financial business." This is also the second Hong Kong virtual bank officially opened after Zhongan Bank.

"Star Bank", formerly known as "Insight Financial Technology Co., Ltd." (Insight Fintech, in which XIAOMI Group holds 90% and Shang Cheng Group holds 10%), was granted a virtual banking licence issued by the Hong Kong Monetary Authority on May 9 last year. The reporter learned that Star Bank began trial operation as early as March 31 this year, opening up about 2000 places for relatives and friends of employees of the Star Bank and XIAOMI Hong Kong monk Group to participate in the trial operation.

In terms of specific business, Star Bank has launched two deposit products. Among them, Hong Kong dollar demand deposits will be priced at a tiered interest rate, and customers with deposits of between HK $500000 and HK $1 million will enjoy an annual interest rate of up to 1 per cent. Time deposit customers can flexibly set their own deposit maturity dates, such as August, 19th, 27th, etc., customers can settle the time deposit in advance at any time without charging any fee.

According to the official website, Lei Jun, founder and chairman of XIAOMI Technology, was appointed Chairman of the Board of Tianxing Bank. Other board members include Zheng Haiquan, Zhou Shengzi, Liu Xueqiao (CEO), Mao Zhenhua, Tang Weizhang and Wang Shunde. It is reported that Liu Xueqiao is the vice chairman of Shangcheng Group.

Recently, XIAOMI Group has made a lot of moves through the financial layout. On May 31st, Chongqing XIAOMI Consumer Finance Co., Ltd., a consumer finance company under XIAOMI Finance, officially launched its business. XIAOMI payment operator also set up a subsidiary of the network mutual assistance program, Beijing Shouwang Mutual Assistance Technology Co., Ltd., on June 8. XIAOMI Mutual products will be launched on June 15.

What is worth mentioning is XIAOMI consumer finance. Judging from the reply of Chongqing Banking and Insurance Regulatory Bureau, as the 26th consumer finance company in China, its 13 senior executives include Chairman Hong Feng and President Zhou Bin. Zhou Bin, previously vice president of Changshu Bank, grew all the way from the loan officer of Changshu Bank's small loan center to the general manager of the bank's small and micro finance department.

According to public data, XIAOMI Finance, a financial technology service platform of XIAOMI, was officially launched in May 2015. At present, XIAOMI Finance has covered a number of financial business licenses, such as third-party payment, network small loans, virtual banks, insurance brokers, commercial factoring, financing guarantee, consumer finance and so on.

According to XIAOMI's previously released annual financial report, the "Internet service business", which includes Internet advertising, games, finance and e-commerce, reached 19.8 billion yuan in 2019, an increase of 24.4% over the same period last year. Although Internet revenue is also very rigid after the epidemic, Q4 Internet revenue growth reached 41% in 2019 and 38.6% in 2020Q1.

What are the highlights of the bank's "virtual" business?

According to the definition of the HKMA, a virtual bank is a bank that provides services through the Internet or other forms of electronic transmission channels. It does not have physical outlets to reduce operating costs and can provide 7 × 24-hour service. It mainly targets individuals and small and medium-sized enterprises, providing retail businesses such as deposits and withdrawals, loans, settlement, exchange, investment and financial management.

At present, the HKMA has issued eight virtual banking licences, including:

The virtual banking license was issued for the first time on March 27th last year, and the three companies approved were Livi VB Limited (joint venture between BOC Hong Kong (Holdings) Limited and JD.com), SC Digital Solutions Limited and Zhongan Virtual Finance Co., Ltd. (Zhongan Bank).

On April 10th, Welab Digital Limited, a financial technology company, was granted the fourth virtual banking license.

On May 9, Ant Merchant Services (Hong Kong) Limited, Yifeng Limited, Insight Financial Technology Limited and Ping an Yi Yi Tong Co., Ltd. granted banking licences to operate virtual banks with effect from that day.

Dai Zhifeng, director of Zhongtai Securities Research Institute, pointed out that for mainland Internet giants, obtaining a virtual banking license in Hong Kong plays a very positive role and is an important springboard for overseas business expansion. There are three main reasons:

First, Hong Kong is an international free trade port, which is conducive to the development of cross-border financial business.

Second, based on Guangdong-Hong Kong-Macau Greater Bay Area's financial technology market, there is a broad space to stimulate the potential demand for trade financing by strengthening cooperation among enterprises.

The third aspect is that there are many financial institutions in Hong Kong, and Internet giants in the mainland can replicate the successful business model of Internet banking to Hong Kong and other overseas regions.

In April this year, the first virtual bank, Zhongan Bank, officially opened. Judging from the experience of the people in Hong Kong, the important features are the sense of science and technology, convenience and convenience. For example: 7x24 hourly service, get loan approval results within 30 minutes, face recognition remote authentication, with Hong Kong ID card 5 minutes mobile phone account, mobile phone one-stop multi-currency deposit, transfer. On its opening day, the annual interest rate of "ZA current Go" is an example. Regardless of the initial deposit, users can enjoy a high current interest rate of 1%. Zhongan Bank, which has been operating in Hong Kong for a month, has a record of 2 minutes and 14 seconds for opening an account, Xinhua reported.

Xu Luosheng, chief executive of Zhongan Bank, believes that virtual banks are an innovative choice for customers in addition to traditional banks. "compared with traditional banks, the business scope of virtual banks will not be reduced, and the products and services of traditional banks can be optimized through virtual banks. "

However, as some people in the banking industry believe, because Hong Kong's financial services market is relatively saturated and the industry is highly competitive, it is necessary to consider their own capabilities and resource endowments to apply for a virtual banking licence.

Li Yongchen, an analyst at Ping An Insurance Securities (Hong Kong), believes that the possible positioning of virtual banks is either to find new breakthroughs to seize the inherent market of traditional banks, such as using big data to measure risks and quickly approve loans. or it will become a tool to help the development of other financial businesses, such as the financing and settlement platform behind online payment services and online wealth management services. "for non-bank financial institutions and science and technology start-ups, virtual banking licenses are tickets for the development of comprehensive financial business. "

However, he cautioned, "given the limitations in the field of experience and expertise, the business model of the first licensed virtual banks may also tend to be conservative. As a result, some virtual banks with low innovation ability can provide services that are not much different from those of traditional banks and can only compete for market share by starting a price war at the expense of earnings. "