Hong Kong’s virtual banks in talks with Jetco for customer to gain access to 2,000 automated teller machines across city

Hong Kong’s eight virtual banks, poised to roll out their services in the next few months, are in talks with the city’s dominant operator of automated teller machines (ATMs) to give customers of branchless banks access to more than 2,000 ATMs across the urban centre.

The banks are in talks with the Joint Electronic Teller Services (Jetco), which operates 60 per cent of Hong Kong’s 3,300 ATMs, according to the network’s chief executive Angus Choi Ping-chung.

The discussions offer the eight virtual banks, which are not allowed to operate any physical branches under the terms of their license from the Hong Kong Monetary Authority (HKMA), a workaround that provides customers with the kind of convenience and access that they need, without compromising pledge by the virtual banks to disrupt bricks-and-mortar banking.

“This is a short cut … as it would be more cost-effective than setting up their own network,” said Louis Tse Ming-kwong, managing director at VC Asset Management. “Hongkongers still like using cash, so it is vital for the eight virtual banks to provide ATM services to allow customers to withdraw cash.”

Hong Kong, with a population of 7.5 million residents, is served by 164 licensed banks operating 1,129 branches between them, augmented by a citywide network of 3,300 ATMs. With 44 ATM machines for every 100,000 residents, that makes the city one of the best-served markets on Earth, second only to Singapore, according to World Banks data.

That density of automated tellers, used by residents for withdrawals, deposits and for paying utility bills, present one of the biggest challenges for virtual banks, whose stated mission is to disrupt traditional financial services and force improvement through competition.