The Hong Kong Monetary Authority (HKMA) is actively seeking to change the terminology for digital banking services in a bid to boost public confidence. The proposed shift from "virtual banks" to "licensed digital banks" represents more than just a name change—it's a strategic upgrade for the sector's future development.
The term "virtual" in Chinese contexts can sometimes carry connotations of being "unreal" or "fictitious," making the rebranding particularly necessary. Eddie Yue, Deputy Chief Executive of the HKMA, noted that the current terminology might negatively impact the growth of these financial institutions. The month-long consultation aims to gather broad feedback to ensure the new designation effectively improves public understanding.
Hong Kong's digital banking sector has shown remarkable progress since the HKMA first issued eight virtual banking licenses in 2019. By the end of 2023, these institutions had attracted 2.2 million customers, with total deposits reaching HK$37 billion (approximately US$4.7 billion) and loan portfolios growing to HK$19 billion. The proposed name change is expected to further strengthen their market position and attract more users.
This move aligns with international trends, as jurisdictions including Europe, Malaysia, and Singapore have already adopted the "digital bank" terminology. The HKMA's initiative positions Hong Kong to maintain its competitive edge in the global digital finance landscape. The rebranding could mark the beginning of a new growth chapter for Hong Kong's digital banking sector.