Xiaomi, JD, Alibaba and Tencent ready to enter in Hong Kong fintech


Hong Kong Monetary Authority (HKMA) had received applications for virtual banking licenses from 29 institutions, some of which were close to completion of the relevant approval procedures

HKMA defines a virtual bank as a bank that provides retail banking services primarily through the Internet or other forms of electronic transmission rather than through a physical branch.

The monetary authority said it would only issue less than 10 virtual banking licenses by the end of this year or in the first quarter of next year. Technology or financial institutions such as Tencent, Ant Financial, JD Finance, Zhong An Insurance, Xiaomi, Ping An Insurance, HSBC and Standard Chartered Bank have all participated in the application in the form of wholly-owned enterprise or joint venture.

Xiaomi’s applies the license through its wholly-owned subsidiary, Dongjian Financial Technology Co., Ltd. Lei Jun, founder and chairman of Xiaomi, registered and served as a director.

According to Ming Pao newspaper, Alibaba’s Ant Financial may apply for a license on its own, though WeLab, another subsidiary of Alibaba had earlier applied.

Hong Kong, the capital market stronghold of Tencent, will not be absent from the battle for the virtual bank licenses. It has formed a three-party alliance that includes Bank of China Hong Kong (BOCHK) and JD Finance to jointly apply for the Hong Kong virtual bank.

In recent years, Hong Kong has been accelerating the pace of fintech development. It is speeding up mobile payment and opening up the rapid payment system. Two years ago, payment giants, including Alipay wallet and WeChat payment, were granted the first Stored Value Facilities (SVF) licenses. So far, HKMA has issued 16 such licenses.

Notably, HKMA intends to ease the application for virtual bank licenses but requires a reputable or officially-recognized financial institution incorporated in Hong Kong to hold at least 50% of the shares of new virtual bank.

According to the new rules HKMA will require non-financial institutions to register an intermediate holding company first when setting up a virtual bank.


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