Banking everywhere, but never at a bank: The rise of Virtual Banks

The New Era of Digital Banking in Singapore

On 4th December 2020, Monetary Authority of Singapore (MAS) announced the award of Singapore’s first two Digital Full Bank licenses to the Tech giants Sea and Grab-Singtel consortium. This long-awaited announcement was originally expected to be released in mid-2020 but was postponed due to the Covid-19 pandemic.

Digital full banks can serve both retail and corporate customers but unlike traditional banks, all transactions are not completed at a physical branch. With the approval of digital full banks, this is a highly awaited move to liberalise the financial industry through encouraging Fintech innovation and boosting competition. In fact, there has been an emergence of digital banks all across the globe over the past few years, with Asia Pacific being an attractive region for digital banks to expand into due to the untapped market in this part of the world.

Virtual Banks in East Asia

Similar to Singapore, the Hong Kong Monetary Authority (HKMA) granted ZA Bank, part of ZhongAn Technologies International Group in China, a virtual bank license in March 2019. As of March 2020, ZA Bank was the first virtual bank launched within Hong Kong which aims to address customers’ pain points such as having to physically travel down to a traditional bank branch to complete financial transactions by streamlining their user experience through its virtual banking app.

China-based Tencent’s WeBank which was incorporated in late 2014, focused on small and personal loans and auto loans within the country itself. 

"WeBank wanted to focus on improving the accessibility and quality of financial services for the underbanked and unbanked individuals and small businesses in China, especially micro SMEs (small and mid-sized enterprises)."

Henry Ma, CIO WeBank

Today, WeBank boasts over 200 million individual customers and also 1.3 million SMEs, and is the leader in multiple financial services categories such as assets, loans, net profits, return on equity within the Chinese digital banking space.

Riding on the FinTech wave in Hong Kong, HKMA introduced the Smart Banking initiative to move the economy into a new era of finance, with virtual banks playing a pivotal role in ensuring the success of the initiative. There are currently 8 virtual banks serving its market.   

How is Virtual Banking Impacting the Finance Industry?

With the rapid development of technology, virtual banks are reinventing the finance sector in areas which are underbanked and overbanked. For instance, WeBank’s focus on individuals and small businesses enabled them to tap into emerging markets that may not necessarily be adequately served by traditional banks.

On the flip side, virtual banks can also service overbanked developed markets by providing customers convenient banking at a lower cost. For ZA Bank, customers have immediate access to the required financial services at their fingertips anywhere and anytime.

Virtual Banks on the Hunt for New Talents

According to a survey conducted by Consulting & Financial Advisory firm Deloitte, 64% of FinTech employers in Hong Kong are finding it difficult to find the right people for the job, as most firms are looking for people with a wide skillset in finance & FinTech.

In Singapore, PwC noted that the nation’s move to welcome digital banks will create new job opportunities, with the race to staff these digital banks heating up. At the same time, the new players’ hunt for talent will drive a potential churn within the industry.

What does it take to transition into the Virtual Bank / FinTech Sector?

As the FinTech sector continues to innovate and evolve, we expect to see professionals who are looking to broaden their skillset and knowledge to enter into this sector. Besides having the relevant technical skills, professionals who are able to comprehend financial tools and financial market behaviour will have the edge.

Manchester’s MSc Financial Management programme introduces you to sophisticated tools and techniques that finance practitioners regularly access in their profession. Students will gain transferable skills and subject-specific knowledge in areas such as corporate finance, global financial markets, financial accounting and financial strategy. For this programme, workshops are conducted in Singapore and Hong Kong, where students will have the opportunity to engage and interact with C-suites and industry experts from prominent financial institutions.

This part-time programme is designed to have flexible exit points (Postgraduate Certificate, Postgraduate Diploma, and Masters) that are aligned with your career development.

Interested in finding out more about the MSc Financial Management programme?

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