Hong Kong online banks to spread wings, offering business loans and wealth management (updated)

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24/12/2020 03:54

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    By Alun John
    HONG KONG, Dec 23 (Reuters) - Hong Kong's new online-only
banks plan to venture into business lending and wealth
management, seeking more lucrative avenues beyond basic savings
accounts and transfer services, senior executives said.
    Eight such banks started this year and as of November had
taken more than $1 billion in deposits and attracted nearly
300,000 customers.
    Whether these banks can take significant share from Hong
Kong stalwarts such as HSBC  0005.HK  and Standard Chartered
 2888.HK  and become profitable is being closely watched in
other Asian markets where regulators are also encouraging new
challengers.
    ZA Bank, operated by a unit of ZhongAn Online P&C Insurance
Co Ltd  6060.HK , 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 next year as larger loans are
more profitable, and will also offer insurance and investment
services to retail customers.
    "I've got four years to go, and personal loans by itself
simply won't fly because the market is only so big," Chief
Executive Rockson Hsu told Reuters.
    Mox Bank, whose backers include Standard Chartered  STAN.L 
and local telecoms firm PCCW  0008.HK , says it plans to add
credit card, personal loans and wealth management services by
mid-2022.
    "Hong Kong is still a very big market for wealth management
offerings," said Samir Subberwal, a Mox director and StanChart's
retail banking head for Greater China and North Asia.  
    He added that the city's current IPO boom, which has seen
companies raise more than $50 billion this year, is likely to
spur continued demand for investment advice and fees.
    The new banks are betting they can win over customers with 
more attractive interest rates on savings and loans - which they
are able to offer in the absence of costly branch networks - 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 next year, is one such example. 
    Its mobile app has been partly developed by shareholder JD
Digits, the fintech unit of China's JD.Com  9618.HK   JD.O ,
said CEO David Sun. 
    The bank has also become a partner in a loyalty programme
that will offer its customers cashbacks and points and which is
operated by retail and restaurant chain Dairy Farm  DAIR.SI , a
unit of Jardine Matheson Group  JARD.SI , another Livi
shareholder. 
    Traditional banks have responded by slashing fees and
investing heavily in upgrading and launching new digital
platforms. HSBC has said it will spend $5.8 billion on
technology globally this year, while this month Citi launched
new digital-only banking services in Hong Kong.
    In other markets such as Britain and Australia, new digital
banks have been launched with mixed success. Australia's Xinja
Bank said this month that in the wake of the pandemic and having
reviewed the market it would cease to be a bank and return
customer deposits.  urn:newsml:reuters.com:*:nL1N2IV2WB
    In Asia, however, new banks tend to have the backing of
big-name companies, improving their prospects. Singapore issued
four digital banking licences this month and Malaysia is set to
take applications next year.  urn:newsml:reuters.com:*:nL1N2IK0T1
     

 (Reporting by Alun John; Additional reporting by Sumeet
Chatterjee; Editing by Anshuman Daga and Edwina Gibbs)
 ((Alun.John@thomsonreuters.com; +852-28415827;))