Virtual banks are beginning operations in Hong Kong. ZA Bank Ltd short form of ZhongAn is one of the 8 firms to begin offering branch-less digital banking services in Hong Kong.

To attract customers, it offers a 6% rate for three-month Hong Kong dollar deposits capped at HK$200,000 (SGD 34,000 or USD 25,000) to select customers. This is way around 400 basis points higher than what you get from from Standard Chartered, HSBC or BOC in Hong Kong which pays around 1.9 % to 2.3 % pa.

Opening of account is all done online. Valid HK ID users will be able to open an account within 5 minutes. Minimum amount deposit is just HKD 1. The depositors are also insured by their deposit protection scheme of up to HKD 500,000 (around SGD 85,000).

Neverthless, with more virtual banks sprouting, Hong Kong traditional banks will have to workout something to lure back the younger generation of depositors who are familiar with online banking.

In Singapore, 7 parties have submitted applications for the virtual banking licensed to be issued in June 2020. Will Singapore banking industry offer competitive rates when they launch in 2021?

By Harry