Businesses logging on to online banking
A strong economy and increasing user acceptance will keep online banking transactions for businesses at the Hongkong and Shanghai Banking Corp and Industrial and Commercial Bank of China growing at a double-digit rate in Hong Kong and on the mainland this year.
In Hong Kong, such transactions rose 125 per cent to four million last year from two years ago, said Anurag Hasija, senior manager of channel strategy, propositions and channels, for HSBC's Asia-Pacific operations.
'It will increase 50 per cent to six million transactions in 2008,' he said.
Mr Hasija said the number of HSBC's online small business customers in Hong Kong stood at about 100,000 last year, up 87 per cent from two years ago. The number is expected to grow to 135,000 this year.
HSBC launched its business online banking services locally in 2002, targeting small to medium-sized enterprises. Besides banking transactions, the companies also can manage online investment products such as unit trusts, structured deposits and securities.
'Online transactions now account for 20 per cent of our total commercial banking transactions,' Mr Hasija said. 'About 50 per cent of our total transactions are done through the electronic system, including automated teller machines, phone and the internet, compared with 25 per cent three years ago.'
The Hong Kong-based bank extended its online business banking services to the mainland two years ago. It supports online payment to banks operating on the mainland. In order to allow faster processing of payments and even same-day credit, HSBC has an arrangement with Bank of Communications, the fifth-largest domestic lender by assets.
'China's online banking market has been growing so fast. From May until year-end, we have seen a growth of about 25 per cent in our customer numbers.'
HSBC has a 20-strong online banking team in Hong Kong and teams in Shanghai. The lender plans to expand the service.
However, HSBC faces challenges from domestic players such as ICBC. The world's biggest lender by market capitalisation launched online banking services in 2000 on the mainland, in Hong Kong and Macau.
'Our [online] business transaction volume jumped 132 per cent to about 77 trillion yuan in 2007 from a year earlier,' said Yao Wei-yong, deputy head of ICBC's electronic banking, marketing division. 'It probably will maintain double-digit growth in 2008 due to strong economic growth.'
Including online banking for personal customers, the transaction volume rose 135 per cent to about 81 trillion yuan last year. Mr Yao said the bank had 38 million personal users and 950,000 business users.
He did not provide the number of transactions but said 36 per cent of ICBC's transactions were done by ATM, telephone and the internet.
Both banks said they recognised the need to work hard to allay customers' worries over the security of online banking.
'We have not experienced any incident in our online banking system, but customers still seem overly concerned about security,' Mr Yao said.
The fraudulent sites practise 'phishing' or the theft of passwords.
'Until now, we have not had any losses in online banking due to hacking,' Mr Hasija said.
He said that online banking enabled the bank to connect directly with a company's decision makers, instead of the junior employees who came into the branches.
'In the past, it was difficult for us to contact our customers directly,' Mr Hasija said. 'But in the online environment, the users are usually the decision makers. We can offer them a product based on their transaction history and profile.'
Mr Hasija said online business usage on the mainland was slightly lower than in Hong Kong. 'We saw about 14 log-ons per customer a month in Hong Kong but only eight log-ons in China, but it is growing quite quickly,' he said.
