Asia's internet firms are challenging the region's traditional banks f...
HONG KONG - Asia’s internet firms are challenging the region’s traditional banks for consumer finances, tapping their massive user networks for business and following a trail blazed in China by tech giants Alibaba and Tencent.
The shift is in its infancy but contrasts sharply with the banking markets of Europe and North America, where change is slower and such startups tend to be backed by venture capital funds and financial sector incumbents, not tech firms. In South Korea, authorities have issued two online only bank licenses, one of them to Kakao Bank in 2017, which is operated by the company behind the country’s largest chat app.
“Large technology companies are seeing this as a land-grab opportunity where they can build out new sets of financial services that can be cross-sold to their existing users,” said Jeff Galvin, a Hong Kong-based partner at McKinsey.Driving the shift in Asia is mobile technology’s deep penetration across all aspects of consumer life.
The online-only banks in Hong Kong plan to start-off by offering services such as savings accounts, credit cards, personal loans and travel insurance. The number of bank branches in Hong Kong, Japan, Malaysia, South Korea and Thailand has declined in the last couple of years, dropping by between 1 percent and 7 percent in 2017 from 2015, according to the International Monetary Fund. That compares with growth of as much as 8 percent a decade ago.To be sure, legacy banks in Asia have their own plans to stay relevant in the changing space with some tying up with new rivals.
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