Swiss bank UBS sees mainland China’s digital bank rules in place by June or July

Swiss bank UBS hopes to launch a dig­i­tal bank­ing plat­form in China first be­fore sub­se­quently bring­ing it to the global mar­ket.

Ed­mund Koh, UB­S’s Asia-Pa­cific head, said that the lender hopes its ap­pli­ca­tion for a na­tion­wide, ma­jor­ity-owned dig­i­tal bank­ing li­cense will make sig­nif­i­cant progress af­ter June or July, once China lays down new reg­u­la­tions for dig­i­tal bank­ing. 

WeBank, one of China’s internet banks, is backed by Tencent. Photo: SCMP

“We need scale, and I’m go­ing to get that scale for UBS, work­ing to­gether with the Chi­nese au­thor­i­ties,” said Koh to South China Morn­ing Post. “To­day’s af­flu­ent in China will be to­mor­row’s high-net-worth in­di­vid­u­als and then bil­lion­aires.”

Koh plans to tar­get Chi­na’s fast-ex­pand­ing mid­dle-class that have funds of be­tween $100,000 to $200,000 at their dis­pos­able, by pro­vid­ing them with chan­nels for in­vest­ment in do­mes­tic se­cu­ri­ties and mu­tual funds.

UB­S’s pro­posed dig­i­tal bank will be sit­u­ated in Shen­zhen’s Qian­hai area, at the core of the eco­nom­i­cally piv­otal Greater Bay Ar­eas, which has a pop­u­la­tion of over 69 mil­lion and en­com­passes Guang­dong province, Hong Kong and Macau.

Ac­cord­ing to Koh a dig­i­tal bank­ing plat­form could help re­duce the cost of ac­quir­ing wealth man­age­ment clients from USD$25,000 to just $60, as well as ex­pand UB­S’s Asian cus­tomer base from 30,000 to 200,000 within the space of just two years.

Once Koh man­ages to build a li­censed dig­i­tal bank­ing plat­form in China he then plans to ex­port the same model to other mar­kets around the world.

Koh, who hails from Sin­ga­pore, has over­seen Asia-Pa­cific op­er­a­tions rise to 31% of UB­S’s pre-tax earn­ings in the first quar­ter, as com­pared to around 20% in re­cent years.

UB­S’s Asia-Pa­cific pre-tax prof­its were close to $800 mil­lion in the first quar­ter, for a 154% surge com­pared to the same pe­riod last year, dri­ven by ma­jor port­fo­lio shifts dur­ing the mar­ket tur­moil cre­ated by COVID-19.

The Swiss bank plans to serve China’s booming middle class with US$100,000 to US$200,000 to put in the bank. Photo: Bloomberg

China is al­ready host to a num­ber of ex­clu­sively dig­i­tal banks that are amongst the coun­try’s first pri­vate lenders, in­clud­ing Chongqing’s XW­Bank, Al­ibaba-backed MY­Bank, Ten­cent-backed We­Bank and CITIC aiBank.

The Chi­nese bank­ing au­thor­i­ties are cur­rently in the process of draft­ing rules gov­ern­ing dig­i­tal bank­ing ap­pli­ca­tions for both do­mes­tic and over­seas com­pa­nies, amidst a push for the greater use of fin­tech in tan­dem with ef­forts to con­tain as­so­ci­ated risk.

In­dus­try in­sid­ers say that the new reg­u­la­tions will place stricter curbs on dig­i­tal fi­nan­cial ac­tiv­ity, how­ever, which will drive up the cost of op­er­a­tions.

Source: Chinabankingnews

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