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Developments in online-only bank licensing in Asia

01/22/2020 | 03:19am EDT

Financial regulators across Asia are creating new rules for online-only banks as they seek to shake up often staid markets, helped by technology firms which are able to operate at lower costs without needing physical branches.

Below is snapshot of developments in the region.

IN OPERATION

South Korea led the way with special rules for online-only banks in Asia, licensing K bank, led by the country's largest telecom operator KT Corp, in 2016, then Kakao Bank, operated by chat app operator Kakao Corp, in 2017.

The Financial Services Commission has also issued a third preliminary digital licence to a consortium led by Toss, a mobile money transfer app provider, and which includes the local subsidiary of Britain's Standard Chartered PLC (StanChart).

LICENSED

Hong Kong issued eight online-only licences in 2018 from 33 applications. Licensees include Ant Financial [ANTFIN.UL] - an affiliate of Chinese e-commerce leader Alibaba Group Holding Ltd - and consortia involving StanChart and Chinese social media and video game firm Tencent Holdings Ltd.

ZA Bank, run by a unit of China's ZhongAn Online P&C Insurance Co Ltd, has started trial operations, and up to four others are likely to follow suit early this year, the Hong Kong Monetary Authority said last week.

In Taiwan, online-only licences were awarded in July 2018 to consortia led by Chunghwa Telecom Co Ltd, Japanese e-commerce firm Rakuten Inc and Japan-based chat app operator LINE Corp - the latter of which included Taipei Fubon Commercial Bank Co Ltd [FUBFNB.UL] and StanChart. The banks are set to start operations later this year.

APPLIED

Singapore in January said it had received 21 applications for five online-only bank licences on offer. Bidders in various groups include Singapore Telecommunications Ltd, ride-hailing firm Grab Holdings Inc, Ant Financial and Hong Kong-listed gaming firm Razer Inc .

The Monetary Authority of Singapore will issue up to two retail and three wholesale bank licences, with the winners - to be announced in June - starting operations from mid-2021.

WHERE NEXT?

The central bank in Malaysia plans to issue up to five licences for either conventional or Islamic banking under a framework set to be finalised later this year.

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

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

(Reporting by Alun John; Additional reporting by Heekyong Yang in Seoul; Editing by Christopher Cushing)

By Alun John


ę Reuters 2020
Stocks mentioned in the article
ChangeLast1st jan.
ALIBABA GROUP HOLDING LIMITED -0.46% 151.19 Delayed Quote.-35.04%
AMP LIMITED 4.89% 0.965 End-of-day quote.-38.14%
AT HOME GROUP INC. -0.08% 36.99 End-of-day quote.0.00%
BAIDU, INC. 0.39% 160.5 Delayed Quote.-25.78%
CHINA CITIC BANK CORPORATION LIMITED 0.00% 4.56 End-of-day quote.-10.76%
CHUNGHWA TELECOM CO., LTD. 0.00% 111 End-of-day quote.1.83%
CITIC LIMITED 0.11% 9.03 End-of-day quote.64.48%
CITIC SECURITIES COMPANY LIMITED 1.99% 26.2 End-of-day quote.-10.88%
DEERE & COMPANY 3.13% 351.5 Delayed Quote.26.68%
KAKAO CORP. -3.77% 115000 End-of-day quote.47.63%
KT CORPORATION -0.15% 32500 End-of-day quote.35.42%
LETS HOLDINGS GROUP CO., LTD. 0.31% 6.52 End-of-day quote.-16.20%
LOOK HOLDINGS INCORPORATED -1.01% 1374 End-of-day quote.43.57%
MSCI TAIWAN (STRD) 0.78% 696.688 Real-time Quote.17.73%
NEXT PLC -0.44% 8220 Delayed Quote.16.00%
RAKUTEN GROUP, INC. -0.18% 1108 End-of-day quote.11.47%
RAZER INC. 2.44% 1.68 End-of-day quote.-29.41%
SINGAPORE TELECOMMUNICATIONS LIMITED 0.82% 2.47 End-of-day quote.6.47%
STANDARD CHARTERED PLC 0.72% 432.5 Delayed Quote.-6.85%
TENCENT HOLDINGS LIMITED 2.93% 463.2 End-of-day quote.-17.87%
ZHONGAN ONLINE P & C INSURANCE CO., LTD. 1.09% 32.5 End-of-day quote.-10.22%
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