The i-Wealth app took two years to develop, and it incorporates instant identity verification, biometric recognition and state-of-the-art digital security, according to DBS Hong Kong CEO Sebastian Paredes, speaking at a media event in Hong Kong.
He called the service “a great leapfrog forward in the nascent virtual banking landscape”.
The biggest hurdle was to convince the regulators, the Hong Kong Monetary Authority (HKMA) and the Securities and Futures Commission, of the accuracy and security of the technology, he said. However, Paredes did not explain the particular nature of their concerns, for instance inappropriate investing, data theft, fraud, money laundering — or how DBS’s technology assuaged those anxieties.
The launch took place following the granting of eight virtual bank licences by the HKMA in March and May this year. Seven of the licences were awarded to mainland China firms, including technology giants Alibaba, Tencent and Xiaomi, and to traditional financial firms such as Bank of China, Industrial and Commercial Bank of China and insurer Ping An — who will form partnerships with other firms or be sole operators.
Although Standard Chartered successively applied for a virtual banking licence, HSBC and Citigroup chose not to apply at all, because they believed that they did not require them, according to the Financial Times.
Virtual, or digital, banks promise to offer similar services as traditional banks but at a lower cost. The most important difference is that they operate online only and may not open physical branches, according to the HKMA website.
Although DBS’s Paredes described the i-Wealth app launch as a “virtual, invisible bank”, it does not fit the criteria of a “pure” virtual bank, because the Singapore-based lender will maintain its physical presence in Hong Kong. Instead, it is offering the type of online or mobile wealth management service that HSBC and other rivals will also be able to provide.
Despite the hyperbole of the launch ceremony, perhaps the attraction of the i-Wealth app is convenience.
“The first fully virtual wealth management account opening marks a turning point for time-pressed affluent customers in Hong Kong by saving them time previously spent at branches and completing paper forms,” said Ajay Mathur, managing director and head of consumer banking group and wealth management, at DBS Hong Kong.
The account opening process involves five stages including after downloading the app, including letting it photograph your Hong Kong ID, taking a selfie, creating login details, uploading proof of address and supplying a few personal details.
Applications are processed within one working day and successful applicants must then deposit a minimum of HK$1m ($128,200) in their wealth management account to use its services.
These include the ability to invest in seven global equities markets, trade 14 currency pairs in real time and transfer funds on the same day across 42 international destinations without charge.
However, there are other online or mobile wealth management platforms that provide these services. For example Lu Global, which is part-owned by Ping An, recently made its app-driven wealth management platform available to accredited investors in Singapore and to “mass-affluent” investors across Southeast Asia. It is unclear if DBS intends to launch its app in Singapore.
Also, DBS’s latest initiative should be viewed within the context of the bank’s other attempts to attract new customers through a fusion of high-tech and traditional service. Earlier this year it created a hybrid robo-advisor platform that offers ETFs selected by the wealth manager’s investment professionals and deploys digital technology to speed up the dealing process and handle back-office functions.
