Hongkongers are reaping the benefits of a revolution in banking services, even before the first virtual bank kicks off
- City’s eight largest banks have scrapped minimum balance fees effective August 1
- Traditional lenders are upping their digital banking game in preparation for virtual banking challenge
Hong Kong’s first virtual banks are not expected to be operational for at least another month, but banking customers in the city are already reaping the benefits. For the first time in about two decades, eight of the special administrative region’s largest banks will no longer charge fees for failure to maintain a minimum monthly balance.
“HSBC needs to act now to persuade its millions of customers to stay on, or many of them may opt for joining the virtual banks, which do not charge a fee for small depositors,” Ben Kwong Man-bun, director at brokerage KGI Asia, said at the time.
The minimum balance fees, introduced in 2001, allowed banks to recoup costs following a change in rules that let them freely compete for deposits and lending by offering different interest rates. The fee has long been criticised as a penalty on small but loyal depositors.
“I have paid the minimum balance fee from Day 1, when HSBC started charging me in 2001,” David Wong, a white-collar professional, said. “As a small depositor, I had no choice but to pay the fee, as I needed the banking services. I am happy to see the arrival of virtual banks has forced the big players to scrap it.”