WeLab Bank: Taking Root in a New Digital Landscape

The case, based on WeLab Bank (WLB), is set in February 2021, following the Chinese New Year holidays in Hong Kong. WLB, one of eight new virtual banks in Hong Kong, began operations in July 2020 amid a global pandemic. The de facto central bank in Hong Kong is the Hong Kong Monetary Authority (HKMA), which has been gradually implementing measures to support the development of digital banking in Hong Kong, including the introduction of Open Application Programming Interfaces (Open APIs), which, in principle, would allow Third Party Service Providers (TSP), including fintechs, to gain access to banking customers' data and utilize that data to provide more targeted and innovative services to those customers. Traditionally, banks extended their services to customers at their brick-and-mortar outlets, taking in deposits for which they provided interest earnings and generating income on a variety of loan products for which they charged higher interest than on its deposits. Virtual banks, by contrast, extended their services exclusively via digital channels, including mobile banking. With lower overheads, they could provide some services for free or with minimal charges, while offering financial products with higher earnings for customers. With a growing base of customers accessing financial services remotely, the opportunity existed to find new and innovative ways to serve customers through digital-only channels. The challenge facing WLB and its manager for growth operations and strategy, Ms. Janice Chung, was how to firmly establish itself in a nascent virtual banking market in Hong Kong, while competing with strong traditional banks that were also moving to digitize their banking services. In assessing its strategic options, it could leverage its strong technology infrastructure, open APIs, and the examples of predecessor virtual banks and fintechs in other markets, such as Starling Bank in the UK, Tinkoff Bank in Russia, and Grab in Singapore.