Hong Kong – With 2022 already past its first month, banking institutions in Hong Kong, both the traditional and virtual ones, are optimistic about their venture into this year as they expect to implement higher interest rates to improve margins, according to the latest insights from consulting firm KPMG China.
According to the insights, banks highlighted the attraction and retention of talent as a key concern, where global demand across all roles, including digital transformation and ESG has been strong. Meanwhile, mainland banks, which have been a growing force in the sector for the last few years, have been focusing on stabilising their operations in Hong Kong.
In addition, banks in Hong Kong have continued to increase their focus on digital transformation in all aspects, as technology is being used to improve operational efficiency and reduce costs, including in areas such as know-your-customer (KYC) and anti-money laundering (AML).
On the customer side, demand has risen for more seamless digital experiences and banks are being pushed to improve their offerings. Digital transformation, which is critical for Hong Kong to retain its position as a leading international financial centre, is expected to remain a key pillar of growth.
Meanwhile, virtual banks in Hong Kong have completed their first full year of operation. While a few have performed well, most are struggling to find a clear path to growth and looking for ways of customer acquisition at lower costs. These banks are also facing stiffer competition from traditional banks that have strengthened their own digital offerings in response to the arrival of the virtual banks.
Terence Fong, head of Chinese banks for Hong Kong at KPMG China, said, “Mainland Chinese banks in Hong Kong are looking forward to increased fee and commission income in 2022, particularly since they have a large retail customer base. While risk appetite has decreased over the last year, mainland banks will be looking to develop new income streams and increase the level of digitalisation and collaboration between their mainland and Hong Kong operations.”
