Hong Kong online banks gear up to business loans and wealth management offers

Hong Kong’s new online-only banks have announced plans to venture into business lending and wealth management.

Eight such banks started in 2020 and as of November 2020 had taken more than USD 1 billion in deposits and attracted nearly 300,000 customers, seeking more lucrative avenues beyond basic savings accounts and transfer services.

ZA Bank, operated by a unit of ZhongAn Online P&C Insurance, has set itself the goal of breaking even in five years. It aims to branch out beyond personal loans to lend to small and medium-sized firms in 2021 as larger loans are more profitable and will also offer insurance and investment services to retail customers.

Mox Bank, whose backers include Standard Chartered and local telecoms firm PCCW, says it plans to add credit cards, personal loans, and wealth management services by mid-2022.

The new banks are betting they can win over customers with more attractive interest rates on savings and loans, as well as with more user-friendly customer apps and other advantages developed by their backers. Livi Bank, which plans to offer personal lending and wealth management services in 2021, is one such example. The bank has also become a partner in a loyalty programme that will offer its customers cashback and points, and which is operated by retail and restaurant chain Dairy Farm, a unit of Jardine Matheson Group, another Livi shareholder.

Traditional banks have responded by slashing fees and investing heavily in upgrading and launching new digital platforms.

Whether these banks can take significant share from Hong Kong stalwarts such as HSBC and Standard Chartered and become profitable is being closely watched in other Asian markets where regulators are also encouraging new challengers, according to Reuters.