The Hong Kong Monetary Authority (HKMA) released a report on 6 August 2024, reviewing the performance and impact of virtual banks (VBs) in Hong Kong since their inception in 2020. The review assessed the delivery of three policy objectives, market acceptance, business performance, and user response to VBs, identified challenges, and proposed further steps for the industry’s development. The review found that VBs have met the policy objectives, gained wide acceptance with 2.2 million depositors by the end of 2023, and received positive responses to their products and services. Despite initial challenges, including the COVID-19 pandemic, VBs saw moderate growth, with operating income increasing sevenfold and net losses narrowing by 15% from FY2021 to FY2023. HKMA Chief Executive Eddie Yue stated that the current number of VB licenses is optimal, and there are no plans to introduce more players. Additionally, the HKMA launched a one-month public consultation to propose renaming “Virtual Bank” to “Digital Bank” to better reflect the current banking model. The report and consultation paper are available on the HKMA website.
Resources: https://www.hkma.gov.hk/eng/news-and-media/press-releases/2024/08/20240806-3/