The first online bank in Hong Kong, ZA Bank, opened on Tuesday (March 24), according to reports. The bank is a unit of China’s ZhongAn Online P&C Insurance Co. Ltd.
In 2019, Hong Kong issued about eight digital banking licenses to companies like Ant Financial, and a team-up of Tencent and Standard Chartered.
The new banks could potentially shake up Hong Kong’s financial system, which has banks like HSBC, Bank of China (Hong Kong) and Standard Chartered as financial stalwarts that have been operational in the country for decades.
The digital banking licenses were awarded last year in March and April, and at the time the Hong Kong Monetary Authority said they’d be up and running in about six to nine months. The launches were supposed to happen sooner but were delayed because of protests in the country and difficulties with getting them started.
ZA Bank’s offerings include a deposit account with an interest rate of 1 percent yearly, and competitive lending. HSBC, for its part, offers 0.001 percent on savings deposits.
The launch comes at a pivotal time for the country, when it’s dealing with the effects of the coronavirus on the economy. All transit passengers and tourists were stopped at the airport in an effort to contain the coronavirus and stop it from spreading.
Other countries plan to follow Hong Kong’s lead and issue banking licenses of their own, including Taiwan, Malaysia and Singapore.
Many of the digital banks, Like ZA Bank, will offer high introductory rates for deposits. The rates, which many believe are just temporary, show how competitive Hong Kong’s “$410 billion local currency time-deposit business” really is.
“This is more of a gimmick, which shouldn’t become a norm,” said Terry Siu, treasurer of CMB Wing Lung Bank, which currently pays 3.8 percent to new customers for two-month deposits of Hong Kong dollars. “But competition for funds is indeed getting higher, as eight more banks are coming out.”