“Bloody” battle under way between Hong Kong’s virtual banks and traditional lenders as four new players join overcrowded market

Ping An OneConnect Bank, Ant Bank (Hong Kong), and Mox Bank join 155 traditional lenders, while Fusion Bank also has a soft launch for 1,000 customers

Virtual banks offering high interest rates, spending awards and speedy account opening

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Published: 3:00pm, 1 Oct 2020Updated: 10:03pm, 1 Oct 2020

Competition between traditional lenders and a new breed of branchless banks is heating up in Hong Kong as four new players join an overcrowded market in just two weeks.

Ping An OneConnect Bank completed its three-month trial run and started operations on Tuesday, following Ant Bank (Hong Kong) on Monday and Mox Bank on September 22. Seven virtual banks have started operations this year. Tencent-backed Fusion Bank had a soft launch on Wednesday for 1,000 customers, a step closer to a fully-fledged launch.

Hong Kong last year approved eight virtual banks to spur financial innovation and competition in the industry. These lenders only offer online banking services. They are competing with 155 traditional lenders to serve a city of 7.5 million people.

Competition between traditional banks and the new crop of virtual banks will be “very busy and very bloody”, said Sebastian Paredes, CEO of DBS Bank (Hong Kong).

Smartphone showing Ant Bank’s app. Photo: Ant Bank

The eight new players are offering high-interest rates, spending awards and other gimmicks to customers, forcing HSBC, the city’s biggest bricks-and-mortar lender, to cut 26 of its fees from November. Citibank is teaming up with partners to bolster its offering, such as financial data provider AAStocks.com on stock trading.

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