Several virtual banks have been gaining advantage in Hong Kong by luring consumers to leave brick-and-mortar lenders, The Wall Street Journal reported Wednesday (Feb. 23).
ZA Bank and Mox Bank reportedly make up over two-thirds of the total deposits of the city’s eight digital banks. They are offering numberless credit cards promising more security, and gamelike interfaces offering cash prizes.
There are eight digital lenders, which are backed by larger banks or corporations, and which operate online or through mobile phones — they have no physical branches. The banks have reportedly been working through one of the most banked Asian cities since starting out in 2020.
That has led other traditional banks to try and modify their own operations.
Meanwhile, analysts have said gamelike interfaces often encourage user engagement, which has helped the new banks stand out.
“The more screen time you have, the more time you have to engage and monetize your customers,” says Benjamin Quinlan, chief executive of Hong Kong-based consulting firm Quinlan & Associates and chairman of the FinTech Association of Hong Kong. “‘Gamification’ [is] one avenue by which to make the online banking experience more appealing.”
The group is competing with more than 150 traditional banks and their 1,200 branches, in a city where HSBC, Bank of China and Standard Chartered have big footprints, WSJ wrote.
Read more: What’s Ahead for Chinese Banks in 2022
Beijing was looking to free liquidity for lending, which was at its lowest pace in over 15 years, according to a report from S&P Global Market Intelligence.
China was reportedly lowering the required reserve ratio for banks, along with a 5-basis-point cut to a benchmark interest rate as of last year. It is also making sure banks’ net interest margins are at multiyear lows.
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