Covid-19 spurs Hong Kong’s rush to dump notes and coins as Faster Payment System tops 10 million registrations in city’s embrace of digital banking
- Faster Payment System (FPS) reached 10.1 million registrations in March
- The pandemic has accelerated digitisation, CEO of virtual bank Livi says
HKMA has been promoting smart and digital banking services since 2017, to save costs for both customers and banks and to improve banking services. Covid-19, which forced people to work from home and many bank branches to close, has inadvertently given its digital push a big boost – FPS gained about 6 million new registrations over a period of two years that coincided with Hong Kong’s worst outbreaks of the coronavirus.
The number of registrations last month was 30 per cent higher than March 2021’s 7.7 million registrations and more than double of the 4 million registrations recorded in January 2020, when the pandemic first hit the city. Before the pandemic started, FPS registrations were growing at a slower pace, with 2 million new registrations in 2019.
The daily average number of FPS transactions in March, when Hong Kong was gripped by the fifth wave and more than 600 out of a total of 1,100 bank branches in the city were closed, stood at 831,000 and funds worth HK$6.3 billion (US$803.4 million) were transferred.
This number stood at HK$5.2 billion at the end of September last year and HK$2.4 billion in early 2020.
More than 98 per cent of money transfers in the second half of 2021 were carried out through FPS or other online channels, with the rest moving through bank branches, an HKMA survey of 20 retail banks and the city’s eight branch less virtual banks shows, Yue said. Every one in four new retail bank accounts was opened online in the first half of last year, compared with 17 per cent in 2019.
Hong Kong banks halt their digital embrace to cater to technophobes
Livi had recorded strong growth in customer numbers since its launch in 2020, and 83 per cent of them actively used its products, Sun said. The virtual lender had received HK$3 billion in deposits as of the end of last year, while its PayLater product had received about 60,000 applications.
Younger millennials in their 20s and 30s saw the benefits of a smarter way of managing expenditure, both for themselves and their families, Sun said.
Cheques may be replaced by digital payments, but branches will stay
Moreover, 59 per cent of credit card applications were submitted through online channels last year, compared with 32 per cent in 2019, Yue said. Every six in 10 customers get their bank loan approved online last year, compared with 41 per cent in 2019.
Even the more complicated property mortgage applications saw an increase in online submissions, rising to 2.5 per cent last year from 0.8 per cent in 2019. Retail banks’ digital investment transactions amounted to HK$2.7 trillion in the first half of last year, an increase of 120 per cent over the second half of 2019, Yue said.
“All these banking products and services are essential to the daily lives of the public,” Yue said. “And the figures show that banks’ efforts in investing in digital resources to bring convenience to customers have led to a win-win situation.”