The Asian Banker Thursday, 18 July 2024

HKAB: virtual Banks’ efficient and innovative services attract public adoption

5 min read

Hong Kong, 30 October 2023 – Approximately four years after the licensing of virtual banks, a wide range of innovative, digitally-driven banking services have gained significant traction. The Virtual Banking Education Taskforce (“VBE Taskforce”), an initiative set up by the Hong Kong Association of Banks ("HKAB") underscores the continued surge in acceptance of virtual banks, as individuals and small and medium enterprises ("SMEs") increasingly acknowledge their innovative nature and the convenience they provide. The VBE Taskforce emphasises the importance of bolstering public awareness of virtual banks to foster greater adoption, thus enabling a wider population to avail themselves of the top-notch services offered.

In an effort to gauge public perception and better understand their impression towards virtual banks, the VBE Taskforce commissioned a comprehensive survey* (“The Survey”) in the form of an online questionnaire, targeting both the public and SMEs. The survey results revealed a predominantly positive impression of virtual banks, with over 70% of the 1,000 individual respondents considering virtual banks innovative and convenient. While SMEs had even better perception towards virtual banks, with over 90% considered virtual banks as convenient and efficient, with technology-enabled advanced services.

Virtual Banks Usage

Users typically utilised virtual banking for general banking services. Among individual respondents, the most frequently used banking service was deposit/savings (63%), followed by credit card/debit card services (49%), and rewards such as cash rebates and free gifts (45%). For SMEs, the main service used was deposit/savings (38%), followed by investment funds (28%) and money transfer (28%).

The Public has Sufficient Understanding in Virtual Banks

When asked about their perception of virtual banks, 52% individual respondents believed advantage of virtual banks lay in reduced document requirements, 50% individual respondents believed virtual banks are innovative, and 48% individual respondents believed virtual banks have lower fees. The findings of this survey also revealed that over 50% of individual respondents considered themselves knowledgeable about and favourable towards virtual banks, perceiving virtual banks’ services as pertinent to their financial needs. The utilisation of virtual banks had been steadily rising, with 45% of surveyed individuals opened virtual bank accounts. Meanwhile, 30% of respondents expressed an intention to sign up for a virtual bank account in the next three months. High deposit interest rates, rewards for opening an account and convenience to use were also key factors that motivated individual respondents to open virtual bank accounts.

On the corporate front, among the 200 surveyed SMEs, over 90% of the surveyed SMEs expressed that virtual banks were convenient, provided fast and efficient service, and contributed to enhanced operational efficiency. This reflected the sentiment that many SMEs have begun integrating virtual banking services into their business operations. A significant 76% possessed virtual bank accounts, while 79% also had accounts with traditional banks. This underscored that SMEs, even with existing traditional bank accounts, are inclined to open new accounts with virtual banks. In particular, SMEs relatively concerned about service efficiency and convenience, brand and reputation, and interest rate of savings.

SMEs Surveyed Exhibit Clear Understanding: Virtual Banks Regulated by HKMA

Regarding the regulation of virtual banks, the survey indicated that 75% of individual respondents are aware that virtual banks, just like traditional banks, are licensed and regulated by the Hong Kong Monetary Authority (“HKMA”). Awareness among SMEs was even higher at 79%. Additionally, 65% of individual respondents and 62% of SMEs were aware that deposit accounts in virtual banks are currently entitled up to HKD 500,000 in protection. Currently, all eight virtual banks are members of the Hong Kong Deposit Protection Scheme.

Spokesperson for the Virtual Banking Education Taskforce of The Hong Kong Association of Banks stated, “The survey results demonstrated that over the past four years, the public has developed a more accurate and in-depth understanding of virtual banks. They recognised that virtual banks are no different from traditional banks in terms of regulation and deposit protection for account holders. With this in mind, virtual banks can offer customers convenient experiences through fintech, for example, Virtual Banks provide 24/7 banking services and reduce the time required for account opening and loan approval. Overall, we are pleased to see the improvement in public and business perception of virtual banks. Going forward, the VBE Taskforce hopes to deepen public understanding of the features of virtual banks through intensified promotional efforts. As the public's understanding of virtual banks deepens, it is widely believed that the popularity of virtual banks will continue to increase, further promoting fintech development in Hong Kong.”

Deepening Public Understanding towards Virtual Banks

Virtual banks offer convenient and secured services to customers with features including:

Firstly, they boast a robust security infrastructure and stable systems that effectively detect and prevent fraud, ensuring the utmost security for user accounts. Virtual banks highly value user security and have mobile-binding authentication functions, along with biometric authentication and user identification. The mobile app of some virtual banks also features a "report lost card" function, enabling users to swiftly inform the bank and promptly freeze or cancel their card in case of loss or unauthorised transactions.

Secondly, virtual banks prioritise transparent privacy management. They are bound by the Personal Data (Privacy) Ordinance, placing a high importance on the non-disclosure of customer information to third parties without the customer's consent.

Thirdly, virtual banks being part of the Hong Kong Deposit Protection Scheme ensure that their depositors enjoy the protection of deposits up to HKD500,000.

Lastly, by harnessing the power of fintech, virtual banks deliver innovative banking services that empower individuals and businesses to accomplish their financial objectives.

*The survey was conducted via online questionnaire from 27 February to 8 March 2023, with approximately 1,000 individual respondents and 200 SMEs.


Re-disseminated by The Asian Banker

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