Letters | 5 years on, digital banks are taking root in Hong Kong
Readers discuss perceptions of virtual banks, vetting of English teachers, and the outlook for Hong Kong
In 2019, Hong Kong’s fintech development reached a milestone when the first virtual banks were granted licences. Interestingly, the earliest people around me to get their feet wet were not tech enthusiasts, but two long-time professionals from traditional finance. They left familiar careers to join digital banks, convinced that a mobile-first model could reshape banking.
I was more cautious. My doubts were not about the technology, but about business viability. In a market where banking licences are highly valuable, regulation is strict and traditional banks already dominate daily services, could these newcomers truly challenge established names?
To support my friends, I opened a virtual bank account and became an early user. The experience was undeniably smooth. With just a selfie and an ID upload, an account was opened in minutes. Yet in the first year or so, digital banks still felt like a marketing-led proposition. Offers centred on high deposit rates, cashback cards and fee-free forex spending. Service interruptions during system upgrades and the occasional instability of overseas payments made it hard to trust them with core services such as salary accounts or corporate cash management.
The turning point came in the past year, as digital banks moved beyond their novelty phase. The Hong Kong Association of Banks’ Digital Banking Education Taskforce commissioned Baptist University to conduct a survey, interviewing 1,006 members of the public and 205 small and medium-sized enterprises. Released late last year, the survey found about 93 per cent of respondents and over 98 per cent of SMEs reporting that digital banks could meet at least half of their daily banking needs. That is a meaningful shift: digital banks are no longer just tools for collecting perks, but increasingly a mainstream choice for payment, budgeting and basic wealth management.
Five years may be brief in banking history, but it is enough to reshape habits. I had applied for my first virtual card out of curiosity. By last year, I realised I had already come to rely on digital banks – even for tax loan services. The journey from scepticism to dependence reflects how digital banks have started to redefine banking here.