**Introduction**: Hong Kong Monetary Authority: Will Implement the Renaming of "Virtual Banks" to "Digital Banks" as Soon as Possible

After a one-month consultation period, the Hong Kong Monetary Authority (hereinafter referred to as the Hong Kong Monetary Authority) announced that it will implement the renaming of "virtual banks" to "digital banks" as soon as possible.

Hong Kong Monetary Authority: Hong Kong Licensed "Virtual Banks" Will Be Renamed "Digital Banks"

On October 14th, the Hong Kong Monetary Authority issued a summary of public consultation on the renaming proposal of "virtual banks" (hereinafter referred to as the summary document), stating that the Hong Kong Monetary Authority will revise the "Recognition of Virtual Banks" guidelines to implement the use of the new name "digital banks" as soon as possible.

The summary document indicated that during the one-month consultation period, the Hong Kong Monetary Authority received a total of 26 submissions of opinions, from industry or professional organizations, virtual banks, and citizens. Respondents widely supported the Hong Kong Monetary Authority's proposal to rename "virtual banks", with the majority supporting the new name "Digital Bank".

All institutional respondents and most individual respondents pointed out that the name "Virtual Bank" has become outdated and does not reflect the application of virtual banks in financial technology and the evolving nature of banking operations. Some respondents believe that the renaming proposal can align with global trends, while the term "virtual" may give the impression that virtual banks are not engaged in real financial activities or involve high-risk business activities.

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All respondents (including all virtual banks that support the renaming proposal) agreed on the proposed new English name "Digital Bank", with the majority in favor of using "Digital Bank" as the new Chinese name. Respondents generally believe that the English name "Digital Bank" aligns with industry trends and can accurately reflect the use of financial technology by virtual banks, thereby enhancing the public's confidence and trust in them. A minority of individual respondents preferred the Chinese name "Digital Bank".

After fully considering the feedback received, the Hong Kong Monetary Authority believes that "Virtual Bank" should be renamed "Digital Bank" to focus more on emphasizing the business model and application of financial technology used by virtual banks, rather than their form of existence.

The Hong Kong Monetary Authority also believes that "Digital Bank" is appropriate because this name aligns with the current industry trends and government policy's digital terminology, and can also be distinguished from the existing "digital banking services" of traditional banks.

Industry: Renaming Helps to Enhance Competitiveness and Public ConfidenceAt a press conference, journalists interviewed banks holding virtual banking licenses, and their executives all expressed welcome for the renaming consultation results of virtual banks.

ZhongAn Bank's Chief Executive Officer, Ronald Yao Wensong, stated: "We welcome the completion of the virtual bank renaming consultation by the Hong Kong Monetary Authority and are pleased to see that the industry and the public generally believe that the term 'digital bank' more accurately reflects the essence of the industry. We believe that the renaming will help eliminate public misunderstandings and allow the public to more clearly understand the operating model of digital banks."

Yao Wensong said: "ZhongAn Bank has achieved profitability in a single month, and the latest mid-term performance announced by the digital banking industry is also excellent, with the deposit protection just increased to 800,000 Hong Kong dollars. These positive news signify that digital banks are on a better path to profitability, their business model is sustainable, and they have established a more stable and reliable image for the industry, further enhancing the competitiveness and public confidence of digital banks."

As the first digital bank to open in Hong Kong, as of June 30, 2024, ZhongAn Bank has the highest number of users and deposits among the eight digital banks in Hong Kong.

WeLab Bank's Executive Director and Chief Executive Officer, Li Jiada, stated that "digital" can more accurately highlight the core characteristics of providing digital financial services through technology, clearly defining the service model and characteristics of such banks, facilitating public understanding, and helping to strengthen customers' confidence in local digital banks, which is beneficial for digital banks to attract new customers and sustain development.

Li Jiada believes that the renaming of virtual banks to "digital banks" will be an important step for Hong Kong's financial industry. He believes that with a clearer positioning, the public's understanding and trust in these new types of banks will gradually strengthen. At the same time, it will help banks bring more convenient, efficient, and secure financial services to different customer groups, enhancing the financial technology development of the entire city.

In 2019, the Hong Kong Monetary Authority issued three batches of a total of eight virtual bank licenses, respectively to LIVI BANK, ZhongAn Bank, MOX BANK, WeLab Bank, Ant Bank, Ping An OneConnect Bank, Tianxing Bank, and Fubon Bank. In 2020, the eight virtual banks successively opened in Hong Kong.