Editorial | New name for Hong Kong virtual banks to boost trust

The traditional notion of what makes an institution a bank is that if it is licensed to take deposits, lend money and is subject to regulatory oversight, it should meet the definition of one. These “banks” also should denote, psychologically, a sense of safety and security so depositors have the confidence to keep their money there.

So-called virtual banks satisfy the former technical criteria, but they can still do more to inspire consumer confidence. This is especially so at a time when online fraud is prevalent and has been going up year after year.

That is the main reason the Hong Kong Monetary Authority plans to replace the term “virtual bank” with “licensed digital bank”. A month-long consultation has been launched.

The move comes none too soon.

People have long been accustomed to online banking. Virtual banks are the logical extension.