Some of the city’s eight digital banks are exploring setting up physical branches after the Hong Kong Monetary Authority (HKMA) cleared the way for them to do so in its ongoing efforts to support the growth of such lenders.
WeLab Bank, ZA Bank and Mox Bank are among those considering opening brick-and-mortar branches, while Livi Bank has no plans to do so, the banks told the Post separately in response to inquiries.
It HKMA In 2019, it issued eight virtual bank licenses to inject innovation and competition into the industry. The following year, ZA Bank, WeLab Bank, Mox Bank, Ant Bank, Livi Bank, PAO Bank (formerly Ping An OneConnect Bank), Airstar Bank and Fusion Bank:
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In the biggest reform for these lenders since their launch, the HKMA released a new rule in October that allowed them to have limited physical branches replaced the term virtual bank with licensed digital bank in order to increase public trust in companies.
“Taking into account feedback from the industry, the HKMA believes that giving digital banks the flexibility to conduct business in a limited manner through non-electronic channels will help improve their transaction processes and improve customer experience,” said an HKMA spokesperson.
“The HKMA will carefully assess the rationale and rationale when processing applications from digital banks to establish a physical branch.”
Mox Bank: CEO Barbaros Uygun believes the rule change will help digital banks compete while benefiting the public.
Mox Bank CEO Barbaros Uygun interviewed at Taikoo Place, Quarry Bay on February 1, 2024. Photo: Sun Yeung alt=Barbaros Uygun, Mox Bank CEO interviewed at Taikoo Place, Quarry in Bay on February 1, 2024. Photo: Sun Jung>
“The move to allow digital banks to have a physical presence not only opens up business opportunities, but also increases digital banks’ competitiveness and customer trust, fosters greater financial inclusion and accelerates the industry’s growth,” Uygun said.
Mox Bank’s physical presence is likely to focus on offering advisory services, he said, adding that the bank, which is owned by Standard Chartered, will continue to ramp up its digital services.
WeLab Bankwhich just reported its first monthly profit in December, will also explore branching out, CEO Tat Lee said.
“We are keeping an open mind to the possibility of creating offline channels to attract customers,” Lee said. “It is important that offline channels use different methods to engage with the public and increase awareness of digital banking services.
Tat Lee, CEO of WeLab Bank, in his Quarry Bay office in 2023. on October 12. Photo: Jonathan Wong alt=WeLab Bank CEO Tat Lin in his office in Quarry Bay in 2023. on October 12. Photo by Jonathan Wong>
ZA Bank, the city’s largest digital bank and the first to report monthly earningswelcomes the introduction of physical branches in July, which will enable customers to solve complex problems more effectively and efficiently.
“Face-to-face interactions can significantly improve the resolution process, further enhancing the overall customer experience,” the spokesperson said. “Providing an outstanding customer experience has always been at the core of our digital banking strategy.”
Livi Bank, however, considers branches unnecessary at the moment.
“Livi currently has no plans to open branches as customers are increasingly accustomed to a fully digital banking experience,” the spokesperson said to focus on.”
The expansion of digital banks into real-world locations comes as traditional lenders close smaller branches in favor of new branches in prime locations to tap wealth management clients.
Bank of East Asia, for example, opened a major branch in Harbor City last year after cutting its branch network by almost half over the past 10 years to 48. OCBC is also looking for prime locations to open a flagship branch after 2023 closed three of its branches in 2015, bringing the total to 26 in Hong Kong.
Other digitally-focused financial services firms have also stepped up efforts to establish offline branches to connect with customers.
Digital broker Futu Securities opened a branch in Causeway Bay in October Photo: Jonathan Wong Digital broker Futu Securities opened a branch in Causeway Bay in October Photo: Jonathan Wong
Virtual insurer Bowtie Life Insurance opened the doors of Bow Coffee in Wan Chai in 2021. The cafe is also a place where customers can raise any questions about their policy.
Futu Securities International (Hong Kong), which started in the city 12 years ago as a digital broker offering trading services via apps, opened its fourth outlet in bustling Causeway Bay in October.Its other branches are located in Mong Kok, Tsuen Wan and in Tsim Sha Tsui, and the headquarters in Admiralty.
Brokerage Phillip Securities Group is looking for additional locations and is upgrading its three existing branches in Admiralty, Kwun Tong and Sheung Shui.The firm, which was founded in Singapore in 1975, has reduced its network from seven locations during the recent market downturn.
“Branches really have an advantage in attracting new clients,” said Louis Wong, managing director of Phillip Capital Management (Hong Kong), part of the brokerage group.
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