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Why Asia’s Banking Hubs Are Making Virtual a Reality

Ant Financial Services Group's Alipay Campaign Event
Photographer: Shiho Fukada/Bloomberg
Updated on

Long gone are the days when banking meant having to stand in line at crowded branches to cash a check or apply for a loan. Automated teller machines, the internet and mobile apps mean many people hardly ever step foot inside their bank. So-called virtual banks question the need for brick-and-mortar branches altogether. With catchy names such as Ally and Simple in the U.S., Monzo in the U.K. and WeBank and MYbank in mainland China, these digital-only upstarts have been signing up lots of customers, especially among the young. Now Asia’s financial hubs, Hong Kong and Singapore, are getting ready to hop on the bandwagon, issuing licenses for new entrants.

The Hong Kong Monetary Authority defines it as a bank that delivers services through the internet or other electronic channels instead of physical branches. That means not only facilitating payments but accepting deposits and making loans, just like traditional ones. Other terms used interchangeably include digital or digital-only banks or neobanks. By contrast, so-called digital wallets or e-wallets such as Apple Pay, PayPal or Google Pay usually serve as intermediaries between a consumer’s traditional account or credit card and a merchant, usually via a smartphone or computer.