StanChart keen on digital presence in mainland

Standard Chartered Bank is looking for an opportunity to establish a digital bank in the Chinese mainland as it increasingly highlights the role of technology in its growth, said Bill Winters, group chief executive of the bank.

"We would love to have the opportunity to establish a digital bank in the Chinese mainland. That would be an area that we would be very keen to participate in. We think we could add some real value to Chinese customers by bringing some of our knowledge from other markets. If there are licenses going, we'd like one," he said on the sidelines of the recently concluded China Development Forum 2019.

Standard Chartered Bank (Hong Kong) Ltd announced on Wednesday the establishment of a strategic joint venture to deliver a new standalone digital retail bank in Hong Kong, partnering with PCCW Ltd, HKT Trust and HKT Ltd, and Ctrip Financial Management (Hong Kong) Co Ltd.

Standard Chartered will hold a 65.1 percent stake in the joint venture, while PCCW, HKT and Ctrip Finance will hold 10 percent, 15 percent and 9.9 percent respectively.

Having obtained a license from the Hong Kong Monetary Authority to operate a virtual bank in Hong Kong, the joint venture will integrate virtual banking into the service offerings of the well established customer bases of PCCW, HKT and Ctrip.

It will provide a suite of retail financial services and products, as well as telecom, entertainment and travel propositions from partners all in one place, enabling clients to open accounts and apply for financial services on-the-go in real time.

"We have excellent partners who are attracted to us because of our technical strength and our presence in Hong Kong and because at some point they mentioned we might be able to deploy some of these technologies in the Chinese mainland, the big market that everyone would love to service," said Winters.

He noted that technology is at the heart of everything that Standard Chartered does. The bank has substantially increased its investment in technology over the past three years, and the things it is investing in are across a broad range.

"We are now spending almost three times on technical investments of what we spent in 2015. It's close to 20 percent of our annual expenses - just the investment, not operations," he said.

Having invested heavily in digital retail banking, Standard Chartered set up a standalone digital bank in an African nation, allowing its African customers to do everything on their mobile phone that they could do in a bank branch. Standard Chartered has rolled out a standalone digital bank in five markets and will roll that out in five more markets before the end of the year, according to Winters.

John Qu, senior partner of McKinsey, said: "Foreign investors will focus on the development of asset-light business as China further opens up its financial market. As far as we know, the business segments that they are most interested in are wealth and asset management, insurance, internet banking and banking through ecosystems of bank and non-bank players."

Apart from Standard Chartered, some other foreign banks have also shown interest in offering digital banking services in the Chinese mainland with no branches. Last week, Bank of Beijing Co Ltd said it has got the necessary board approval for the establishment of a joint venture with Netherlands-based ING Bank NV.

Different from the traditional counter-based model, the direct banking model uses e-channels to provide financial products and therefore has no restrictions in terms of time, regions or geographic branches.

With a total investment of 3 billion yuan ($448 million), the forthcoming joint-venture bank, which is awaiting regulatory approval, may become the Chinese mainland's first commercial lender in which a foreign shareholder has a controlling interest. According to the plan, ING Bank will hold a 51 percent stake, and Bank of Beijing 49 percent.