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A Skeptical Look at HK’s 8 New Virtual Banks*

* from the desk of a former banks research analyst

Sukrit Khatri
May 22, 2019 · 15 min read

It’s too early to write the obituaries of brick-n-mortar banks

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Source: HK Monetary Authority. Updated to reflect 4 new virtual banks announced in May 2019

HK’s banking system at a glance

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Source: HK Monetary Authority
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The Big 3 of HK’s banking system call the shots (Source: Bloomberg & Goldman Sachs)

The New Entrants

First, the Optimism

1. Let there will be innovation

2. More hiring

3. The opportunity set

4. Better customer understanding

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Source: Reuters

And, then the Caution

1. Business model differentiator

2. So product offerings, anyone?

3. Banking is hard business

4. Demographics and mindset changes

5. Process. Process. Process.

The key question is: How much leeway will regulators provide to these new virtual banks?

Final word: A lot to do for the virtual banks

Instead, the 8 new VBs will put in the hard yards to find their niche, and hope to convince customers that their technology, their UI/UX and their products are more innovative and worth trying. However, their success will also depend on external factors, like mindset changes from a largely risk averse population with no dearth of banking relationships, and regulators, who are very critical to this process.

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Sukrit Khatri

Written by

I write about Finance, StartUps and Personal Development | All opinions personal | Mantra: Be the voice, not the noise.

The Startup

Medium's largest active publication, followed by +752K people. Follow to join our community.

Sukrit Khatri

Written by

I write about Finance, StartUps and Personal Development | All opinions personal | Mantra: Be the voice, not the noise.

The Startup

Medium's largest active publication, followed by +752K people. Follow to join our community.

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