Online-Only Banking Kicks Off in Hong Kong
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ZA Bank – one of the eight recipients of Hong Kong’s virtual banking licenses – kicked off operations yesterday, marking the dawn of digital lending in the city.
The virtual banking arm of China’s ZhongAn Online P&C Insurance began operations, according to a statement, with a focus on offering competitive rates. Hong Kong dollar savings deposits at the digital lender will pay an annual intros rate of 1 percent – well above other traditional competitors which are paying as low as just 0.001 percent.
ZA Bank continues to lure new customers by paying significantly higher rates for deposits than traditional lenders which shoulder the burden of heavy overhead costs. In January this year, it reportedly offered as high as 6 percent interest rate for 3-month Hong Kong dollar deposits in an initial trial to attract customers – more than double the rate offered by traditional lenders locally.
Local regulators completed the virtual banking license issuances in April last year and more players are expected to launch in the near-term. This includes Mox which is jointly owned by Standard Chartered, telecom firms PCCW and Hong Kong Telecom, and online travel agency Trip.com. The virtual bank was reportedly undergoing beta testing by staff earlier this month.
According to one estimate by Goldman Sachs in 2018, 30 percent of Hong Kong’s total banking revenue – or $15 billion – were at risk of being overtaken by digital banks.
Questions & Answers
Q.What kind of interest rates does ZA Bank offer for savings deposits?
What kind of interest rates does ZA Bank offer for savings deposits?
ZA Bank offers an annual introductory rate of 1 percent for Hong Kong dollar savings deposits. This is significantly higher than some traditional competitors, which pay as low as 0.001 percent.
Q.What was the highest interest rate offered by ZA Bank during its initial trial?
What was the highest interest rate offered by ZA Bank during its initial trial?
In January this year, ZA Bank reportedly offered an interest rate as high as 6 percent for 3-month Hong Kong dollar deposits during an initial trial period. This was more than double the rate from traditional local lenders.
Q.Which other virtual banks are expected to launch in Hong Kong soon?
Which other virtual banks are expected to launch in Hong Kong soon?
Mox is expected to launch in the near-term. It is jointly owned by Standard Chartered, telecom firms PCCW and Hong Kong Telecom, and online travel agency Trip.com.
Q.What proportion of Hong Kong's banking revenue is at risk from digital banks?
What proportion of Hong Kong's banking revenue is at risk from digital banks?
According to a 2018 estimate by Goldman Sachs, 30 percent of Hong Kong's total banking revenue, or $15 billion, was at risk of being taken by digital banks.
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