UBS's new digital bank offering for China is ready to go. Everything now depends on the authorities there – including expansion into the rest of the world.
On the one hand, 2020 was a year in which UBS was able to «profit massively» in Asia: Edmund Koh (pictured below), head of Asia Pacific, told reporters at the Greater China Conference, which begins today (Monday). Koh said that by the third quarter of last year, Switzerland's biggest bank had doubled profits in the region compared to the previous year and was now twice as big as its next competitor in terms of assets under management.
On the other hand, UBS is still waiting for the green light for a promising project in the Chinese mass market. There, the bank for the super-rich wants to reach out to merely wealthy «affluent» clients in the future – thanks to a digital wealth management solution. «Beta testing is complete, the team is assembled,» Koh reported Monday. Likewise, internal and external regulatory requirements have been met, he said. Now all that's left is to wait for the license in China.
Plan B for Digital Offering
Earlier reports had suggested that Koh wanted the groundwork done last summer and hoped the licensing process for UBS would be dealt with quickly. Now the Asia chief sounded much more cautious. The licensing process, which still stops the China digital bank from entering the market, is difficult to predict, he said. The big bank even has a plan B now, should the license be denied: the digital project would then be integrated into the existing business.
Obviously, the bank does not want to snub the Chinese supervisory authority with brash announcements. One reason for this could be the surprising suspension of the mega IPO of the Chinese fintech Ant Financial last November: company founder Jack Ma had gone out on a limb shortly beforehand with a tirade against the financial establishment in China. Since then, he has disappeared from the scene, and both Ant and its parent company Alibaba have been heckled by the authorities.
Fintechs: Tough Going in China
Fintechs are facing a tougher wind in the People's Republic, Koh added on Monday: in his opinion, the increased requirements regarding regulation could lead to many neobanks leaning on established big banks in the next five years.
One such established player would be UBS. With its Chinese digital bank, the Swiss want to target the rapidly growing middle class there, people with $100,000 to $200,000 in assets. Unlike local digital banks such as WeBank, Mybank or Aibank, UBS is attracting people with an internationally oriented investment portfolio. With this, it hopes to increase the number of wealth management clients in Asia from 30,000 to 200,000 and massively reduce acquisition costs.
From then on, a roll-out in the rest of the world could even take place, as Koh had earlier indicated. But for now, the UBS digital bankers are waiting in the wings - without Beijing's approval, the race cannot begin for them.
