The next big thing for Hong Kong’s virtual banks is an expansion into wealth management as part of the “next phase” of their development, according to a group of top executives from the city’s newest crop of lenders.
Speaking on a panel discussion on Tuesday as part of the Post’s “Redefining Hong Kong” series, Rockson Hsu, chief executive of ZA Bank, said the newest entrants to the city’s crowded banking landscape are focusing on deposits, payments, loans and cards for now. The series was hosted virtually for the first time, because of the Covid-19 pandemic.
“Payment is a key thing. That is something we are all striving [for],” Hsu said. “The next phase we are offering will be I&I – insurance and investing. Those are key needs from the community-driven approach where we hear our users say ‘on top of the minimum viable products, what’s next?’”
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ZA Bank, the first virtual bank to debut in the city, has attracted 190,000 customers since its full launch in March. It is co-owned by online insurer Zhong An Online P&C Insurance and Sinolink Group.
Hong Kong approved eight new virtual banking licences last year to spur innovation and competition in the financial services sector, with four lenders joining the market in the past three weeks. The banking landscape already contains 155 traditional lenders for a city of 7.5 million people.
Seven virtual banks – ZA Bank, Airstar Bank, WeLab Bank, Livi Bank, Mox Bank, Ant Bank (Hong Kong) and Ping An OneConnect Bank – have started operations this year. Tencent-backed Fusion Bank had a soft launch on Wednesday for 1,000 customers.
Online lenders will need to be accessible to a broader range of potential customers if they are to flourish in the local banking industry, Hsu said, a view shared by two other speakers on the panel.
At present, only Hong Kong ID cardholders can open an account with a virtual bank. “Not everyone in Hong Kong has a Hong Kong ID card. If it can be more flexible, it would allow us to further develop our customer base,” Hsu said.
Hsu has found Hong Kong customers demand cash and physical cards even as they are using virtual bank services. ZA Bank does not provide cash withdrawal services, while WeLab Bank launched them two months ago, and Mox Bank introduced them last week. Both offer a debit card for customers to withdraw cash from more than 2,000 ATM machines maintained by Jetco.
“I’m catching up, I’ll be there too ,” Hsu said. “The Hong Kong community still likes cash.”
The new lenders are using higher savings rates, spending rewards and other incentives to attract customers. The banks, which are not allowed to have physical branches, also are using technology to speed up account opening.
“The purpose of the virtual bank is to provide something simple, instant and an intuitive bank experience to the customers of Hong Kong,” said Adrian Tse, the chief executive of WeLab Bank. “On top of that, WeLab Bank tries to provide some social elements and also fun into the offering.”
The bank’s GoSave product, for example, offers an interest rate that varies based on the number of people who agree to sign up for the timed deposit account, Tse said.
The virtual banks are seeking to address traditional pain points for banking customers, according to Deniz Guven, the CEO of Mox Bank, which is backed by Standard Chartered, HKT, PCCW and Ctrip. Mox debuted just over two weeks ago.
“We are trying to get the best customer experience, the right heart share instead of only focusing on market share,” Guven said. “We will be here for the next decades. It’s not a game where we’ll be here for a couple of years, gain customers and do some other things.”
Part of getting the right experience is understanding customer needs, the CEOs said.
More from South China Morning Post:
- WeLab takes its virtual banking battle to Hong Kong’s bricks-and-mortar lenders with higher rates, rebates in opening salvo
- Mox, Standard Chartered-backed virtual bank, enters fray with cash rebates plan, shuns deposit gimmicks
- “Bloody” battle under way between Hong Kong’s virtual banks and traditional lenders as four new players join overcrowded market
- Ant Bank launch marks another milestone for Ant Group’s expansion in Hong Kong ahead of mega listing
This article Next big thing for Hong Kong’s virtual banks: wealth management first appeared on South China Morning Post