In January 2019, Mitsubishi UFJ Financial Group (MUFG), the largest Japanese bank and the 4th largest in the world with $2.6 billion of assets, launched a corporate venture capital fund of $185mm to invest primarily in Fintech startups in Southeast Asia. No specific investment can be identified by the fund "MUFG Innovation fund", yet, however, Singapore-based Fintech company Silot received $8mm A round investment in March 2019 from a group of investors, among which is Krungsri Finnovate, an CVC of Krungsri Bank, majority-owned by MUFG. Silot provides AI platform to banks including Krungsri Bank.
In March, the Hong Kong Monetary Authority issued virtual banking licenses to three operators selected from a large pool of applications. The three operators are:
- Livi VB, an entity co-owned by Bank of China (Hong Kong), JD Digits and Jardine Matheson. JD Digits, previously known as JD Finance, recently announced a partnership with West Union in cross-border money transfer; JD Digits is trying to catch up with Alipay and WeChat Pay through this strategic alliance. Jardine Matheson，a British conglomerate founded by two Scots in 1832, has a long history with China. Jardine was behind the trades of opium with China in the early 19th century.
- SC Digital Solutions, a joint venture between Standard Chartered, HKT (Hong Kong Telecom), PCCW (a Hong Kong-based information and communications technology company), and Ctrip (a Chinese online travel service provider listed on Nasdaq).
- Zhong An Virtual Finance, a joint venture between ZhongAn Online (a Chinese online-only insurance company initially co-founded by Alibaba's Jack Ma, Tencent's Pony Ma and Pingan Insurance's Mingzhe Ma) and Sinolink (a Chinese company engaged in investment banking and securities brokerage services)
Why does HKMA issue virtual banking licenses? Compared with Mainland China, Hong Kong lags behind in digital solutions in financial services and hopes to close the gap through attracting leading players.
The motivation of applicants to obtain such a license is the outreach to markets outside Hong Kong. The license will help operators, esp. those from Mainland China, to expand their outreach to the rest of Asia and even the West because Hong Kong is globally recognized for its high standard of regulations. With a Hong Kong banking license, an operator will undoubtedly find it easier to apply for banking licenses in other countries outside of China.