Ant Bank (Hong Kong), the virtual banking arm of Ant Group, on Monday became the sixth branchless lender to start operations in the city and said that it would partner with AlipayHK to tap its two million users to avail of its services.
The lender, which recently completed a three-month trial, is following in the footsteps of its peers by offering high interest rates to draw depositors. Ant Bank is offering a 2.5 per cent interest rate for deposits of up to HK$20,000 and 1 per cent for deposits between HK$20,001 and HK$500,000. Traditional lenders offer almost no interest on savings accounts.
Ant Group has previous experience in operating a virtual bank. It co-owns MYbank, one of the first virtual lenders in mainland China that started operations in 2015.
Under the partnership with AlipayHK, users of the e-wallet’s mini apps will be allowed to open an Ant Bank account easily, while at the same time the bank’s other customers can link their accounts to AlipayHK to use the bank’s savings products to shop and dine. AlipayHK is a joint venture between Ant Group and tycoon Li Ka-shing’s CK Hutchison conglomerate which allow users to use the popular mobile phone e-wallet app at a wide range of merchants and restaurants in Hong Kong.
“We set up Ant Bank with the intention of providing increasingly mature fintech products and services to the Hong Kong market and to provide a new choice to people locally,” said Michael Wang, chief executive of Ant Bank. “We are excited to be contributing to the promotion of inclusive financial development in the city.”
The launch of the virtual bank marks another milestone for Ant Group’s expansion in Hong Kong. This week the Hong Kong stock exchange’s listing committee will vet Ant Group’s mega listing application having already received the go-ahead from the Shanghai exchange as the finance giant looks to simultaneously launch its initial public offering on both bourses.
The bank will target both individuals and small and medium-sized enterprises. It plans to introduce digital trade finance services to the SMEs, including a pilot scheme to offer to e-commerce merchants on Alibaba Group Holding’s ecosystem. Alibaba owns Ant and the South China Morning Post.
Ant Bank and five other virtual banks are competing with 155 traditional lenders to serve a city of 7.5 million people. HSBC earlier this month announced plans to cut 26 transaction fees from November to fend off stiffer competition.
Hong Kong last year approved eight virtual banks to spur financial innovation and competition in the industry. Ping An OneConnect Bank and Fusion Bank are still conducting trial runs. The other five that are up and running have mostly relied on high interest rates or spending rewards to attract customers.
ZA Bank, the first virtual bank in Hong Kong, offered 6.8 per cent interest in January, but that was only for the first 50 customers. Airstar offered a 3.6 per cent interest rate on savings of up to HK$20,000 for new customers. WeLab offered a cashback reward of 8 per cent on spending of up to HK$3,000 until the end of August, while Livi gave small cash incentives on spending. Mox meanwhile is offering a HK$1,000 cash rebate at 30 merchants until the end of this year and a 1 per cent rebate on other purchases.
This article appeared in the South China Morning Post print edition as: Branchless Ant Bank launches in Hong Kong