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UPDATE 1-Hong Kong digital banks launch faces delay due to protests - sources

Tue 17th September, 2019 5:12am
* Digital banking services were to be launched by end of
this year
    * Protests have delayed brand promotion campaigns at some
banks
    * Hong Kong has awarded 8 digital bank licenses to banks,
fintechs

 (Adds other licence winners, details, context)
    By Sumeet Chatterjee and Alun John
    HONG KONG, Sept 17 (Reuters) - The launch of new online-only
banks in Hong Kong is expected to be delayed in part due to
anti-government protests in the city, people with direct
knowledge of the matter said.
    Most of the eight newly licensed digital banks in Hong Kong,
including joint ventures involving Standard Chartered  STAN.L 
and Bank of China Hong Kong  2388.HK , had aimed to begin
operating before the end of 2019.
    But as protests stretch into a fourth month, the new banks,
seen triggering the biggest shake-up to Hong Kong's retail
banking sector in years, will now launch early in 2020, the
people told Reuters.  
    A delay would be the latest sign of the damage being wrought
on the Asian financial hub's economy due to the political
turmoil that erupted in June.  urn:newsml:reuters.com:*:nL4N25G0ZK
    Some of these so-called virtual banks had aimed to launch
brand promotion campaigns as early as this month, but these
plans have now been put off, the people said, on condition of
anonymity give the sensitivity of the matter.
    "This form of banking service is mainly aimed at the youth,
millennials, and many of them are out on the street these days
joining the protests," a senior executive at a licence winner
said.
    "It will be difficult to launch a brand campaign around them
and attract their interest when their priority is clearly not
having another bank account," said the executive, declining to
be named as he was not authorised to talk to media.
    More than 100 days of sometimes violent protests were
sparked by a bill that would have drawn the semi- autonomous
Chinese territory closer to the mainland Chinese legal system.
The bill was withdrawn earlier this month, but the protests have
since broadened into calls for universal suffrage.  urn:newsml:reuters.com:*:nL3N26606Y
    Hong Kong awarded virtual banking licences to three groups
in March - joint ventures led by StanChart and BOC Hong Kong,
and a subsidiary of the international arm of Chinese online
insurer ZhongAn Online P&C Insurance  6060.HK .  urn:newsml:reuters.com:*:nL3N21E28U 
    The banks intended to launch services in six-to-nine months,
the Hong Kong Monetary Authority (HKMA) said at that time. 
    Five more licences were issued later to joint ventures led
by smartphone maker Xiaomi  1810.HK  and Tencent  0700.HK , and
a unit of Ant Financial among others. 
    HKMA said starting six-to-nine months after authorisation
was "not a rigid requirement", but services were expected to be
rolled out to the public in the fourth quarter at the earliest
based on the virtual banks' latest indications.
    StanChart said its virtual bank joint venture was working
towards a launch in early 2020. Livi VB Ltd, the virtual banking
joint venture led by BOC Hong Kong, said it was working towards
the launch in the near future. ZhongAn declined to comment.
    A spokeswoman for the Xiaomi-led joint venture said the
virtual banking business was in the preparation stage, while Ant
said that work for its bank was progressing smoothly. Tencent
led-Fusion bank did not respond to a request for comment. 
    
    SOFT LAUNCH
    A couple of the licence winners could still 'soft launch' in
2019, restricting services to staff and their families ahead of
a full launch, the people said.
    The virtual banks plan to offer savings accounts, credit
cards, personal loans and travel insurance, and will try to take
market share from HSBC  HSBA.L , StanChart and some Chinese
lenders who currently dominate retail banking in Hong Kong.
    The launch delay is also partly due to the time required to
build technology infrastructure, compliance and customer
acquisition processes, and hire staff, the people said.
    "This is about building a new bank from ground zero, with
regulatory standards that are similar to traditional banks," one
person said. 

 (Reporting by Sumeet Chatterjee and Alun John; Editing by
Stephen Coates and Himani Sarkar)
 ((sumeet.chatterjee@thomsonreuters.com; +852-2847 2094;))
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