• Capco Marketing
  • Published: 28 August 2019


During a keynote speech at a panel discussion co-hosted by Capco and the Fintech Association of Hong Kong, Capco Partner Dan Jones offered his insights into the opportunities and challenges that lie ahead for Hong Kong’s banking industry following the launch earlier this year of eight new virtual banking licences.

Drawing on his experiences as part of the Capco team that built The Royal Bank of Scotland’s UK-based digital bank Mettle, and his wider observations about the swift emergence of challenger banks around the world, Dan stressed the importance of having a clear understanding of the needs of the customer on a day-to-day basis, coupled with a singular focus on delivering the right service to a high standard.

Along with that focus on delivering a very clearly defined proposition rather than offering a wide variety of services all at once – in Mettle’s case, meeting the specific needs of small and medium sized businesses – Dan highlighted the value of prototyping and testing, and of quickly taking on board the lessons that can be drawn from that process. 

“It is also of critical importance to bring the regulator - and in the case of Hong Kong, also your risk and compliance colleagues - with you on the journey,” he noted.

Turning to the shape of the future landscape of virtual banking in Hong Kong, Hong Kong’s smaller size relative to the UK or Europe means there is a smaller pool of available talent. Identifying and retaining experienced and expert employees will accordingly be the main challenge for a virtual bank.

Above all, data security will be a top priority for customers when they are choosing a digital banking app. How to address issues such as connectivity, authentication and authorisation should be key considerations when designing and building a truly secure app. Accordingly, Dan told attendees, any new app will need to undergo rigorous repeat testing prior to release to ensure eliminate vulnerabilities.

Following his keynote, Dan joined a panel discussion moderated by Antony Morris, Managing Director, Industrie & Co. Hong Kong. Other panellists included Jessica Lam, Head of Strategy, WeLab Virtual Bank; Lareina Wang, Head of Smart Banking, HSBC; and Rachel Freeman, Chief Strategy and Innovation Officer, AMTD Group.

Audience members participated in real-time polling on specific topics to share their views with the panel, with ‘establishing trust’ emerging as the top challenge facing virtual banks in Hong Kong. WeLab’s Jessica Lam said that for her this means trust in the brand. The large banks have already established a high level of brand equity and awareness over many years, whereas virtual banking is a new concept, and hence one that for most people is unfamiliar.

“Even when the virtual banks launch, they will still be in the initial stage, and it will take time for virtual bank operators to build out a comprehensive suite of products and services,” said Lam. “Virtual banks will likely start off operating with a “Minimum Viable Mindset”, with a lot of moving parts and scope for evolution. This is a new regime in Hong Kong, building a bank from scratch is a complex task, and there will no doubt be some tweaks and growing pains to overcome.”

In answer to the question ‘have incumbent banks put customers first,’ HSBC’s Lareina Wang stated that “the fundamental needs from banking are the same, which are to make transactions, to borrow, to save. The expectations of people are changing, however, and the thing we have to consider is how to fulfil these expectations.”

Rachel Freeman from AMDT added: “The virtual banks have a responsibility to seek out the underserved in Hong Kong and broaden the market to those who are not fully served currently, like the SMEs that are within 20 feet of this building.”

The panel session ended with a discussion on the customer-centric nature of virtual banks. As one of the panellists noted: “Agility is a great opportunity for virtual banking, especially during the launch period - if something goes wrong, then maintaining a certain level of flexibility mans it can be fixed or changed”.

Armed with knowledge gained from other countries, it is clear that moving forward Hong Kong’s nascent virtual banking market offers significant scope for operators to recalibrate and reshape the wider banking landscape and the products and services found within it.