Hong Kong plans to rename virtual banks into digital banks

The move comes after a public consultation between August and September 2024 which included 26 submissions and revealed significant support towards the renaming. The majority of respondents mentioned that they prefer the new terminology of digital bank. In addition, the consultation underlined that the term virtual bank cannot properly represent banks adopting new technologies and their business models.

At the same time, respondents think that the proposed renaming would better fall in line with worldwide and industry trends. The regulator highlighted that many of them also expressed concern over the current terminology due to giving the impression that they do not engage in actual financial activities, as well as they are participating in or associated with high-risk business procedures.

When commenting on the announcement, representatives from ZA Bank, a digital financial institution based in Hong Kong, welcomed the completion of the HKMA’s consultation and expressed enthusiasm over seeing broad support from the industry and the public that the term digital bank reflects the nature of this type of service. Moreover, the bank stated that this updated name could address misconceptions and augment public awareness of how digital banking operates.

In addition, HKMA’s move highlights the industry’s focus on facilitating sustainable profitability and advanced business models. ZA Bank’s officials mentioned that this change could also foster a more stable and reliable image for the sector, further augmenting competitiveness and scaling public confidence in digital banking. 

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