Hong Kong’s new online-only banks have announced plans to venture into business lending and wealth management.
Eight such banks were established in 2020 and as of November 2020 had accepted more than $1 billion in deposits and attracted nearly 300,000 customers looking for more lucrative avenues beyond simple savings accounts and remittance services.
ZA Bank, which is operated by a unit of ZhongAn Online P&C Insurance, aims to break even in five years. It aims to go beyond personal lending and begin lending to small and medium-sized businesses in 2021, as larger lending is more profitable, and will also offer insurance and investment services to retail customers.
Mox Bank, whose backers include Standard Chartered and local telecom company PCCW, plans to add credit cards, personal loans and wealth management services by mid-2022.
The new banks are trying to convince their lenders with more attractive savings and loan interest rates, user-friendly customer apps and other advantages. An example of this is Livi Bank, which plans to offer personal lending and wealth management services in 2021. The bank has also become a partner in a loyalty program that offers customers cashback and points and is operated by retail and restaurant chain Dairy Farm, a unit of Jardine Matheson Group, another Livi shareholder.
Traditional banks have responded by cutting fees and investing heavily in modernizing and adopting new digital platforms.
Whether these banks can take a significant stake from Hong Kong giants like HSBC and Standard Chartered and become profitable will be closely watched in other Asian markets, where regulators are also encouraging new entrants, according to Reuters.