Tencent, Ant Financial, Xiaomi join Hong Kong’s virtual banking race

Bloomberg

Tencent Holdings Ltd., Ant Financial, Industrial & Commercial Bank of China Ltd. and Xiaomi Corp. are among companies to win licenses to create virtual lenders in Hong Kong, bringing major players into the race to shake up the city’s traditional banking sector.
Tencent has teamed up with ICBC’s local unit and Hong Kong Exchanges and Clearing Ltd., according to a joint statement from their venture. Ant and Xiaomi have also got permits via local entities.
The four newly licensed firms intend to offer services within nine months, the Hong Kong Monetary Authority said in a statement. “The HKMA expects to be able to conduct a comprehensive assessment of the situation about one year after the first virtual bank has launched its service,” it said.
Virtual banks are estimated to snare as much as 30 percent of revenues from the city’s traditional lenders. For Tencent and Ant, the move offers a chance to expand beyond their home market; for Hong Kong it’s an opportunity to shake up its banking sector by encouraging
financial technology.
Facing a cool-down in China’s economy, companies are seeking new avenues of growth. Tencent’s flagship digital wallet WeChat Pay started allowing users to link foreign credit cards including those issued by Mastercard Inc. and Visa Inc. from January 2018, and later that year Tencent partnered with Hang Seng Bank to develop mobile payment offerings in Hong Kong. Zhejiang Ant Small & Micro Financial Services Group Co. has invested in Indian payments provider Paytm.
Virtual banks will be able to accept deposits and issue loans without setting up physical branches.
Four ventures have already won permits before the latest batch.