Standard Chartered becomes third big lender in Hong Kong to scrap minimum-balance fee as virtual banks get ready to challenge their dominance
- All three note-issuing banks – HSBC, Standard Chartered and BOCHK – have now said they will abolish the fee, widely seen as a penalty on small depositors
- Analysts say the move is to minimise the threat from virtual banks due to launch later in the year
Standard Chartered Bank will abolish its minimum-balance fee from August 1, the third major bank in a week to scrap the charge imposed on small depositors as Hong Kong’s traditional lenders prepare to fight off competition from virtual banks.
HSBC and Bank of China Hong Kong both announced last week that they would drop the fee, also effective from August 1.
Now all three note-issuing banks, the biggest and oldest lenders in the city, will no longer levy charges on their small depositors. HSBC believes 3 million of its customers will benefit from the move.
Hang Seng Bank, a subsidiary of HSBC, is also considering cancelling the minimum-balance fee, a spokeswoman said on Tuesday.
Hong Kong issues four more virtual bank licences to spur innovation
Analysts expect more banks to follow suit before a wave of virtual banks, which operate purely online without branches, launch their services in the fourth quarter. Since March, the Hong Kong Monetary Authority has granted eight virtual bank licences to add competition to a landscape dominated by traditional lenders. The digital lenders are not allowed to charge a minimum-balance fee.
Standard Chartered, established in Hong Kong in 1859, will remove the fee for its premium bank clients, who currently have to pay HK$360 per quarter if their transaction volume is less than HK$200,000 (US$25,623). “Easy banking” customers will no longer need to pay HK$180 a quarter if trading below HK$10,000.
It will also remove the HK$100 monthly charge for customers whose balance falls below HK$10,000 as well as the HK$20 transaction fee for its click-a-count clients.
“The removal of the minimum-balance maintenance fee further demonstrates the bank’s commitment to meeting the needs of basic banking services of the public,” Standard Chartered said in a statement on Tuesday.
Virtual banking calls for innovation from new talented players
The Hong Kong Monetary Authority, the city’s de facto central bank, said it was “glad to see all three note-issuing banks abolish the minimum balance fee and other fees for a number of bank accounts.”
A spokesman said: “This will benefit the public, enabling them to enjoy basic banking services.”
The minimum-balance fee has long been seen as a penalty on small depositors, regarded as some of a bank’s most loyal customers. The charge was introduced by most banks in Hong Kong in 2001.
Both Standard Chartered and Bank of China Hong Kong have led separate joint ventures to set up virtual banks.
Simon Loong, co-founder and chief executive of WeLab, one of the recipients of a virtual bank licence, told the Post he was not worried by HSBC or other traditional banks removing their minimum-balance fee.
“The key differentiating factor between virtual banks and conventional banks is the focus on the customer, and their experiences, in addition to just lower fees and charges in a virtual bank,” Loong said.
“Conventional banks tend to rely on physical branches and telemarketing to provide services, whereas virtual banks utilise innovative technologies, such as artificial intelligence and big data to deliver personalised solutions, and provide a refreshing yet enjoyable customer experience.”
