Mox Bank is seeking to turn economic distress into opportunities by joining four other rival virtual lenders in seeking a share of online financial transactions amid the coronavirus pandemic.
The latest virtual bank, backed by Standard Chartered, will compete by offering 5 per cent rebates to members on spending at 30 partner merchants, such as McDonald’s, Foodpanda and Circle K stores, as well as services offered by Mox Bank’s other shareholders HKT, PCCW and Ctrip.
Its customers will be able to obtain up to HK$1,000 of cashback until the end of the year, while those using the bank’s cards to pay for purchases at stores or online malls can also get 1 per cent rebate without an amount or time limit, it added.
Get the latest insights and analysis from our Global Impact newsletter on the big stories originating in China.
“Covid-19 is good timing for us to launch our business,” Deniz Güven, chief executive of Mox, said in a telephone interview about its launch on Tuesday. “More people are willing to use digital banking services since the outbreak started in January.”
Hong Kong last year approved eight virtual banks in its efforts to spur financial innovation and competition in the industry. The viral outbreak has come as a challenge to bricks and mortar banks as preventive measures and social distancing rules drive more consumers and businesses to online platforms.
The pandemic has caused big damages to traditional bank operations as bad loans jumped amid the city’s worst recession on record. Standard Chartered has lost more than half of its market value this year, hastened by the latest news surrounding the movement of funds linked to suspected money laundering acts.
The five existing virtual banks are competing with 155 traditional lenders serving a city of 7.5 million people. HSBC earlier this month has announced plans to cut 26 transaction fees from November to fend off stiffer competition. Ant Bank, Ping An OneConnect and Fusion Bank are still conducting their trial runs.
Mox has captured more than 14,000 customers, from 18 to 70 years old, during its three-month trial run before its launch on Tuesday. “We do not only target to get young customers, but we welcome all customers who like to use digital banking services,” Güven said.
Mox does not follow in the footsteps of its peers by offering high interest rates on deposits. Mox Bank’s offering “is fair, simple and reasonable” with 1 per cent annual interest rate for every customer all year round, instead of one-off incentive rates during a short promotional period, he added.
Mox Bank’s customers can open an online account within three minutes, it said. They can also enjoy the convenience of having access to some 2,000 automated teller machines operated by Jetco across the city.
ZA Bank, the first virtual bank in Hong Kong, offered 6.8 per cent in January but that was only for its first 50 customers. Airstar provided a 3.6 per cent rate on savings up to HK$20,000 for new customers. WeLab offered a high cash reward of 8 per cent on spending up to HK$3,000, while Livi gave small-dollar cash awards on spending.
Standard Chartered owns 65.1 per cent of Mox Bank while HKT has 15 per cent. PCCW owns a 10 per cent stake and Chinese travel services group Ctrip Hong Kong has the remaining 9.9 per cent.
More from South China Morning Post:
- Hong Kong’s virtual banks in talks with Jetco for customer to gain access to 2,000 automated teller machines across city
- Standard Chartered to merge businesses, shrink some senior roles in latest revamp under CEO Bill Winters
- Standard Chartered will target tech-savvy young customers as it gears up to join Hong Kong’s virtual banking race, says CEO Bill Winters
- Cantonese opera features on new HK$100 banknotes launched by HSBC, Standard Chartered and Bank of China (Hong Kong) on Tuesday
This article Mox, Standard Chartered-backed virtual bank, enters fray with cash rebates plan, shuns deposit gimmicks first appeared on South China Morning Post