Next big thing for Hong Kong’s virtual banks: wealth management
- Insurance and investment products are the ‘next phase’ for the city’s newest lenders, according to ZA Bank’s chief executive
- New entrants use higher savings rates, technology to shake up city’s crowded banking industry
“Payment is a key thing. That is something we are all striving [for],” Hsu said. “The next phase we are offering will be I&I – insurance and investing. Those are key needs from the community-driven approach where we hear our users say ‘on top of the minimum viable products, what’s next?’”
ZA Bank, the first virtual bank to debut in the city, has attracted 190,000 customers since its full launch in March. It is co-owned by online insurer Zhong An Online P&C Insurance and Sinolink Group.
Seven virtual banks – ZA Bank, Airstar Bank, WeLab Bank, Livi Bank, Mox Bank, Ant Bank (Hong Kong) and Ping An OneConnect Bank – have started operations this year. Tencent-backed Fusion Bank had a soft launch on Wednesday for 1,000 customers.
Online lenders will need to be accessible to a broader range of potential customers if they are to flourish in the local banking industry, Hsu said, a view shared by two other speakers on the panel.
At present, only Hong Kong ID cardholders can open an account with a virtual bank. “Not everyone in Hong Kong has a Hong Kong ID card. If it can be more flexible, it would allow us to further develop our customer base,” Hsu said.
Hsu has found Hong Kong customers demand cash and physical cards even as they are using virtual bank services. ZA Bank does not provide cash withdrawal services, while WeLab Bank launched them two months ago, and Mox Bank introduced them last week. Both offer a debit card for customers to withdraw cash from more than 2,000 ATM machines maintained by Jetco.
“I’m catching up, I’ll be there too,” Hsu said. “The Hong Kong community still likes cash.”
The new lenders are using higher savings rates, spending rewards and other incentives to attract customers. The banks, which are not allowed to have physical branches, also are using technology to speed up account opening.
“The purpose of the virtual bank is to provide something simple, instant and an intuitive bank experience to the customers of Hong Kong,” said Adrian Tse, the chief executive of WeLab Bank. “On top of that, WeLab Bank tries to provide some social elements and also fun into the offering.”
The bank’s GoSave product, for example, offers an interest rate that varies based on the number of people who agree to sign up for the timed deposit account, Tse said.
“We are trying to get the best customer experience, the right heart share instead of only focusing on market share,” Guven said. “We will be here for the next decades. It’s not a game where we’ll be here for a couple of years, gain customers and do some other things.”
Part of getting the right experience is understanding customer needs, the CEOs said.