Factbox: developments in banking licenses only online in Asia

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HONG KONG (Reuters) – Financial regulators in Asia are creating new rules for banks only online, as they seek to shake the often stable markets, with the help of technology companies, which can operate at lower costs without needing physical branches

Below is a snapshot of the developments in the region.

IN THE OPERATION

South Korea paved the way with special rules for online banks only in Asia, authorizing K Bank, led by the country’s largest telecommunications operator, KT Corp, in 2016, and then Kakao Bank, operated by the application operator of chat Kakao Corp, in 2017.

The Financial Services Commission also issued a third preliminary digital license for a consortium led by Toss, a mobile money transfer application provider, and which includes the local subsidiary of Standard Chartered PLC (StanChart) of Great Britain.

WITH LICENCE

Hong Kong issued eight licenses only online in 2018 of 33 applications. Licensees include Ant Financial [ANTFIN.UL] – a subsidiary of Chinese e-commerce leader Alibaba Group Holding Ltd – and consortia involving StanChart and the Chinese social media and videogames firm Tencent Holdings Ltd.

ZA Bank, led by a unit of China’s ZhongAn Online P&C Insurance Co Ltd, has begun test operations, and up to four others are likely to follow suit earlier this year, the Hong Kong Monetary Authority said last week.

In Taiwan, in July 2019 licenses were granted only online to consortia led by Chunghwa Telecom Co Ltd, the Japanese e-commerce firm Rakuten Inc and the Japan-based chat application operator LINE Corp, the latter of which included to Taipei Fubon Commercial Bank Co Ltd [FUBFNB.UL] and StanChart. The banks are ready to start operations later this year.

APPLIED

Singapore said in January that it had received 21 applications for five bank licenses only online on offer. Bidders in various groups include Singapore Telecommunications Ltd, transportation company Grab Holdings Inc, Ant Financial and gaming firm Razer Inc.

The Monetary Authority of Singapore will issue up to two retail banking licenses and three wholesale licenses, and the winners, which will be announced in June, will start operating from mid-2021.

WHERE NEXT?

The central bank of Malaysia plans to issue up to five licenses for conventional or Islamic banking in a framework that will be finalized later this year.

Grab, Razer, AirAsia, telecommunications firm Axiata and CIMB lender are among the companies seeking to run, Reuters reported Wednesday, citing sources.

China is also working to finalize its first rules covering the banking sector only online, Reuters reported last week, citing people with direct knowledge of the matter.

The country already has four banks online only, including WeBank backed by Tencent and the Alibaba branch MYbank, as well as AiBank, whose investors include search engine operator Baidu Inc and China Citic Bank Corp Ltd.

Alun John reports; Additional report by Heekyong Yang in Seoul; edition by Christopher Cushing and Louise Heavens

Our Standards:The principles of trust of Thomson Reuters.

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