Hong Kong’s Financial Sector Under Threat By Alibaba & Tencent
On, 9th May 2019, HSBC & Standard Charted came under menace by Alibaba and Tencent along with Xiomi. As these companies were granted a banking license to launch virtual banks. In the past decade, Hong Kong has emerged as a key player to attract foreign companies. These companies don’t only hold regional ambitions, but they are looking to acquire a considerable space in the global economy.
The Economist and Financial Times warned the financial sector that these tech companies could give stiff competition. They were warned based on customer spending data, predominantly in payments and personal finance loans. Banks need to withstand against attacks by these tech giants, as they are procuring over multiple sectors. Silicon Valley & Chinese tech giants are moving forward for further encroachment in the financial domain. The financial industry is putting all their efforts to protect data, from their tech competitors. Cyber Security experts have argued that banks have not updated themselves and didn’t move forward in providing efficient Digital Banking Services, and the ground is left to explore by these new emerging Fintech groups.
In the UK, many Fintech companies have emerged to target the same subsection of clients, and moving into the banking sector’s realm. These emerging entrants will wobble their already established rivals and will hit HSBC & Standard Charted. Financial experts are hoping great success for these new players, where traditional banking sector holds significant market share, but with poor customer satisfaction, even in a developed economy, they are lagging far behind. Only 25% of consumers in Hong Kong believes that these banks offer splendid digital financial services, but the rest 75% hold an adverse view.
Alibaba & Tencent are the vanguards of the digital revolution, and now they are going to stir metamorphosis in the financial sector as well. Goldman Sachs has predicted that these tech giants will grab $15bn or more than 30% of total revenue in its initial phase. The amalgamation of expertise and technology will prove to be a severe threat to the traditional banking sector.
HSBC holds a significant market share in Hong Kong, they offer digital financial services, but now they will have to compete with upstarts. Standard Charted has also applied for a digital banking license, and they are moving forward to inflate their digital services.
Alibaba has joined hands with Ant financials, while Tencent is in a joint venture with an industrial and commercial bank of China, whereas Xiomi has collaborated with AMTD group (Hong Kong Based Investment Bank).
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