The Inside Story of Virtual Banking in Hong Kong

In a bid to further cement its status as a global leader in banking and finance, while raising its position as a global trailblazer in FinTech, Hong Kong steps up its ‘Smart-City’ game through the roll out of its first batch of virtual banks.

Just in mid-2019, eight out of 33 operators who applied for virtual banking licences from the Hong Kong Monetary Authority (HKMA) did so successfully, allowing financial institutions to carry out branchless savings and loans operations.

Fintech firms have been pulling out all the stops to gain market share in a territory that yields for banks $26 billion in annual earnings. The pressure is on for traditional banks as competition heats up against the growing capabilities of digital banks, and the talent war between brick-and-mortar and virtual banks has been waged as a consequence.

VIRTUAL BANKS ARE ACTIVELY HIRING ACROSS THE BOARD: IT, MARKETING, AND CONTROL FUNCTIONS INCLUDING AUDIT, RISK AND COMPLIANCE

Being at the very initial stages of rolling out operations, and having to carry out policies and frameworks, Fintech firms are actively hiring their C-suite professionals and teams across the board: IT, marketing, and particularly within the control functions including audit, risk and compliance. Hiring managers have expressed particular interest in candidates with a strong retail banking background, especially those with deep expertise of related financial products and services. This applies not only for IT and front-line roles but also to the risk management and compliance functions because of the need to be familiar with the risks inherent to day-to-day working. Candidates who have experience with e-payment set ups and project management are also highly coveted.

The demand for these skillsets is only expected to grow exponentially as more licences are anticipated to be approved and issued within the next 12 months. In preparation of getting the green light from regulators, more operators are in a hiring frenzy for their front and back office teams ahead of official commencement. Industry experts speculate that the eventual approvals would come sooner rather than later.

In fact, in an interview with the China Business Law Journal, Simon Hawkins, a counsel at Latham & Watkins in Hong Kong, said, “In short, some of the authorization criteria for becoming licensed as a virtual bank are in some ways less onerous than the criteria for becoming a conventional bank with physical branches. The most obvious difference is that virtual banks are not required to maintain physical branches, although they must maintain a physical presence in Hong Kong, to interface with the HKMA and with customers, to deal with their enquiries or complaints.”

FIRMS ARE MORE RECEPTIVE OF LEADERS WITH FEWER YEARS OF EXPERIENCE TO SPEARHEAD VIRTUAL BANKING OPERATIONS

Many virtual banks have since taken a ‘top down’ approach to their hiring. In the early stages, firms place a high focus on hires in the upper echelons of the business –– such as Department Heads and above –– in order to start the ball rolling. Due to the relative newness of the industry, instead of looking for senior qualified people with over 20 years of experience in C-level roles, businesses have been receptive of candidates with fewer years of experience; sometimes even five to ten years’ experience would suffice for a senior position within the company. It is foreseeable that hires at more junior levels will come in the second phase of hiring.

However, the excitement that comes with pursuing the shiny new object of virtual banking as a career also comes with some concerns. While some view Fintech as the technology of the future, others remain somewhat conservative; this is especially true of people within control functions such as audit, risk and compliance who are usually more risk-averse. In general, there is a ‘wait and see’ attitude before taking a leap of faith and this is typical of senior candidates with 15 to 20 years of experience in traditional banks. Notably, it is not unusual for the Gen Y or millennial crowd to display more enthusiasm towards the prospect and potential of something different as it is this age group of professionals who are more likely to be adaptable to change.

TALENT SEEKING A CAREER IN VIRTUAL BANKING MUST BE ADAPTABLE, OPEN-MINDED AND PASSIONATE ABOUT THE BOUNDLESS OPPORTUNITY WHICH THE INDUSTRY PRESENTS

While professional certifications are valued in Hong Kong, especially in fields such as AML and compliance, firms are keener on candidates with practical experience who can hit the ground running. As the concept of virtual banking is relatively new, there is very little talent that has real experience within this space. As a result, candidates with experience in e-banking or digital banking, and knowledge in e-banking regulations are highly covered.

Many line managers are becoming increasingly conscious of the importance of a candidate’s soft skills to strike a good balance between doing business and being compliant with regulations. Technical knowledge and business acumen are almost equally important and in many roles, stakeholder management skills are essential to efficiency.

All in all, virtual banking is perfect for candidates who are seeking a challenge while remaining in an industry they are familiar with. To reap the rewards of the boundless opportunities that virtual banking presents, candidates are urged to be open minded, adaptable, tech savvy and passionate about the sector.

If you would like to discuss this report in more depth or you wish to discuss your job search or recruitment needs, please contact us.

Commercial Banking, Transaction Banking & Treasury Services: Wisely.Wong@hays.com.hk
Asset Management & Investment Banking: Tristan.Pang@hays.com.hk
Risk Management: Nishita.Mohnani@hays.com.hk