Hong Kong and Mainland China have recently seen a boom in new digital banking firms, with large tech companies now establishing their own brands that offer digital banking services. The pioneer in internet banking in Hong Kong, Citigroup, revealed that it was not fazed by the new trend as its own digital services still remain to be very competitive despite the added competition.
According to the bank's Hong Kong and Macau chief executive, Angel Ng Yin-yee, Citibank currently offers all types of online banking services being offered by the new startups. For this reason, Citigroup had decided not to apply for a virtual bank license as it already has existing online services available.
Citibank does have a big advantage over these startups as it does have a good number of brick-and-mortar locations.
Ng explained that their customers have the option of either going to their branches or using their digital services, an option virtual banks do not have. The licenses issued by regulators to the new digital banks only allow the firms to operate their businesses online. This means that the firms can only operate via their websites or through mobile apps.
Hong Kong banking regulators recently issued eight new virtual banking permits to new firms backed by some of the world's largest tech conglomerates. These eight new banks add to the already 160 licensed banks operating in Hong Kong.
The most recent licenses were awarded by the Hong Kong Monetary Authority (HKMA) to four virtual banks established by a trio of Chinese tech firms and even one that was backed by the city's own stock exchange operator,
Hong Kong Exchanges and Clearing Limited (HKEX). Other big name companies involved in the new digital banks include Ping An Insurance, Xiaomi, AMTD Group, Tencent Holdings, and the Industrial and Commercial Bank of China (ICBC).
Citigroup mentioned that the slew of new digital banks in the city may serve as a wakeup call for all traditional banks in Hong Kong. In order to remain relevant, banks should drastically improve their digital capabilities and services.
This is especially true given that most customers are now transitioning into a digital lifestyle. Banks that do not adapt to this new trend will likely die off, as newer and more innovative banking options become available.
One of the ways that Citibank has been innovating is through its latest partnership with AAStocks.com last month. The partnership gave Citibank customers access to the site's vast financial data, which allows them to trade stocks via Citibank's online trading app.
This has allowed the bank to increase its bottom line through brokering trade transactions done through its platform.
