Hong Kong – Over 90% of SMEs consider virtual banks with advanced technology services as convenient and efficient, a survey from the Hong Kong Association of Banks (HKAB) revealed. 

The results of the survey showed a predominantly positive impression of virtual banks, with over 70% of the 1,000 individual respondents saying that virtual banks are innovative and convenient.

Interestingly, SMEs are found to have an even better perception of virtual banks. The majority, or over 90% of respondents, considered virtual banks with technology-enabled advanced services as convenient and efficient.

Virtual banks have various usage offerings and are typically used for general banking services. The most frequently used banking services for individual respondents were deposit or savings (63%), followed by credit card and debit card services (49%), and rewards such as cash rebates and free gifts (45%).

Deposits or savings (38%) also topped the list for SMEs’ most-used banking services, followed by investment funds (28%) and money transfers (28%).

With these offerings, the use of virtual banks has also been steadily rising, with 45% of the surveyed individuals opening virtual bank accounts. Additionally, 30% of respondents expressed an intention to sign up for a virtual bank account in the next three months.

High deposit interest rates, rewards for opening an account, and convenience were among the key factors that motivated individual respondents to open virtual bank accounts.

And with the increasing number of individuals and businesses utilising virtual banks for transactions, the survey also delved into how the public perceives and understands virtual banks.

The results from the survey revealed that more than half, or 52%, of individual respondents believed the advantage of virtual banks lay in reduced document requirements. Meanwhile, 50% believed virtual banks were innovative, and 48% believed virtual banks had lower fees.

Furthermore, more than 50% of individual respondents also considered themselves knowledgeable about and favourable towards virtual banks, as they perceived virtual banks’ services as essential to their financial needs.

On the corporate front, a staggering 90% of the surveyed SMEs expressed that virtual banks were convenient, as they provided fast and efficient service and contributed to enhanced operational efficiency. The results are reflected in the number of SMEs that have integrated virtual banking services into their business operations.

A significant 76% of the surveyed SMEs also possessed virtual bank accounts, while 79% also had accounts with traditional banks. This shows that there is an open interest in opening new accounts with virtual banks despite the existing traditional bank accounts, as SMEs are also found to be relatively concerned about service efficiency and convenience, brand and reputation, and the interest rate of savings.

HKAB’s survey also showed that there is a clear understanding of virtual bank regulations, with 75% of individual respondents stating they are aware that virtual banks are also licenced and regulated by the Hong Kong Monetary Authority (“HKMA”). This awareness rate is much higher among SMEs, at 79%.

Additionally, 65% of individual respondents and 62% of SMEs were also aware that deposit accounts in virtual banks are currently entitled to up to HKD 500,000 in protection.

According to the report, the deepening public understanding and interest in virtual banks can be attributed to their features, which offer convenient and secure services to customers.

One of these features is the robust security infrastructure and stable systems that effectively detect and prevent fraud, ensuring the utmost security for user accounts. Virtual banks now have high-value user security and mobile-binding authentication functions on top of their other identification features. Some mobile apps also feature a “report lost card” function to protect lost cards from unauthorised transactions.

Virtual banks now also prioritise transparent privacy management, placing a high value on the non-disclosure of customer information to third parties without the customer’s consent. Additionally, virtual banks, being part of the Hong Kong Deposit Protection Scheme, ensure that their depositors enjoy the protection of deposits up to HKD500,000.

And lastly, virtual banks also deliver innovative banking services that empower individuals and businesses to accomplish their financial objectives, all by harnessing the power of fintech.

A spokesperson for the Virtual Banking Education Taskforce of the Hong Kong Association of Banks stated, “The survey results demonstrated that over the past four years, the public has developed a more accurate and in-depth understanding of virtual banks. They recognised that virtual banks are no different from traditional banks in terms of regulation and deposit protection for account holders.”

They also added, “With this in mind, virtual banks can offer customers convenient experiences through fintech; for example, virtual banks provide 24/7 banking services and reduce the time required for account opening and loan approval. Overall, we are pleased to see the improvement in public and business perceptions of virtual banks. Going forward, the VBE Taskforce hopes to deepen public understanding of the features of virtual banks through intensified promotional efforts. As the public’s understanding of virtual banks deepens, it is widely believed that the popularity of virtual banks will continue to increase, further promoting fintech development in Hong Kong.”

Hong Kong – With the rise in popularity of virtual banks such as Ant Bank, ZA Bank, and Mox Bank in Hong Kong, data company Vpon has recently published a report on the current state of virtual banks in Hong Kong, how they strategize their marketing strategies, and what traditional financial institutions can learn from them.

In the report, Vpon noted that virtual banks have a greater tendency to spark immediate gimmicks to promote their services through promotional campaigns. ZA Bank was the first to offer a promotional package upon Government’s Cash Payout Scheme to attract users, which resulted in a 500% growth rate of new installs. 

Fusion Bank, on the other hand, collaborated with a TV channel by sponsoring digital red packets and cash coupons worth over HK$20M that has resulted in an 1800% increase in growth. Meanwhile, Mox Bank leveraged strategic cooperation and became the first virtual bank in Hong Kong to launch credit on card service, aiming to turn loss into profit as a mid-to-long-term market strategy.

In addition, Vpon also noted that virtual banks have a pattern of ‘go viral, go deep’ in their marketing strategy, wherein they maintain a sustainable install rate and retain loyal users, and then mastering Big Data to understand their current customers and uncover their potential customers.

Demographic-wise, the report noted that the larger demographic of virtual bank users in Hong Kong are 69% male and 31% female, and are prevalent in Hong Kong’s residential areas such as the Southern District and Tai Po District.

Virtual banks tend to be more popular among the younger generation. Zealous Youth and ‘digital learners’ ranked first and second respectively, as they can be seen as more digitized and keen on exploring new technology. Meanwhile, traditional bank users are usually retail lovers and automotive enthusiasts, and their consumption hinges more on life utilities. Besides, they also tend to be more finance-oriented and show interest in other banking and finance services.

With the large majority of virtual bank users being tech-savvy, they mainly engage in toys and games and electronic gadgets ads. In addition, they show interest in food and drinks. Traditional bank users, meanwhile, are more interested in retail and automotive-related ads. They also engage in house care products and tend to fall in cosmetics-related ads. 

In terms of mobile usage, virtual bank users are mainly concentrated in morning to lunch hours during weekdays. Not surprisingly, 24/7 operation hours are also a possible reason for the midnight activeness of virtual bank users. On the other hand, traditional bank users are generally more active in the early morning till the end of the lunch hours during weekdays. Comparatively, the usage rate is lower during weekends due to limited office hours for offline customer service.

Despite the challenging business environment, the report projected an impressive growth of the virtual banking sector over the past year by launching various initiatives for brand building to lure potential customers. Some of them have acted in concert with different market pre-conditions and government benefits to formulate specific offerings, such as account opening rewards, high deposit interest rate and maximum cashback to attract new customers.