HONG KONG (Reuters) – Hong Kong’s new online-only banks are planning to move into corporate lending and asset management and are looking for more lucrative avenues beyond simple savings accounts and remittance services, executives said.
Eight such banks launched this year, taking more than $ 1 billion in deposits by November and attracting nearly 300,000 customers.
Whether these banks can take over a significant portion of Hong Kong starwarts like HSBC and Standard Chartered and become profitable is being closely monitored in other Asian markets, where regulators are also encouraging new challengers.
ZA Bank, operated by a unit of ZhongAn Online P&C Insurance Co Ltd, aims to break even in five years. In addition to personal loans, it plans to extend loans to small and medium-sized businesses next year, as larger loans are more profitable, and will also offer insurance and investment services to private customers.
“I have four years left, and personal loans alone are not going to fly because the market is just that big,” CEO Rockson Hsu told Reuters.
Mox Bank, which supports Standard Chartered and local telecommunications company PCCW, plans to add credit cards, personal loans and wealth management services by mid-2022.
“Hong Kong is still a very large market for wealth management offerings,” said Samir Subberwal, Mox director and StanChart’s head of retail banking for Greater China and North Asia.
He added that the city’s recent IPO, which saw companies raise more than $ 50 billion this year, is likely to fuel continued demand for investment advice and fees.
The new banks are focusing on convincing customers with more attractive savings and loan rates – which they can offer without expensive branch networks – as well as with more user-friendly customer apps and other advantages from their own development.
Livi Bank, which plans to offer personal loans and wealth management services over the next year, is one such example.
The mobile app was developed in part by shareholder JD Digits, the fintech unit of China’s JD.Com, said CEO David Sun.
The bank is also a partner in a loyalty program, which offers its customers cashbacks and points, and which is operated by the retail and restaurant chain Dairy Farm, a unit of the Jardine Matheson Group, another shareholder of Livi.
Traditional banks have responded by cutting fees and investing heavily in upgrading and introducing new digital platforms. HSBC announced it will spend $ 5.8 billion worldwide on technology this year, while Citi launched new all-digital banking services in Hong Kong earlier this month.
In other markets such as the UK and Australia, new digital banks have been launched with mixed success. Australia’s Xinja Bank said this month that after the pandemic and after reviewing the market, it would stop being a bank and return customer deposits.
However, in Asia, new banks are usually backed by well-known companies, which improves their prospects. Singapore issued four digital banking licenses this month and Malaysia will be accepting applications next year.
(Reporting by Alun John; Additional reporting by Sumeet Chatterjee; Editing by Anshuman Daga and Edwina Gibbs)