Beyond Financial Inclusion: Reshaping the Regulatory Landscape for Virtual Banks

The digitalisation of banking services, driven by smartphone access and limited physical presence, has transformed bank-customer interactions but introduced challenges, such as a reliance on third-party devices and external software contracts. Based on findings from focus groups held in Hong Kong (2021–2022), this paper identifies three critical gaps: (i) the absence of a personal touch, (ii) inadequate digital dispute resolution channels, and (iii) insufficient regulatory intervention. These gaps hinder digital adoption and undermine the role of banks as public utilities. The study calls for a global alignment of regulatory frameworks, advocating for a technology-centric approach to ensure effective governance and safeguard the integrity of virtual-only banking platforms.