virtual banks in Hong Kong – creating a better customer journey

by | Feb 21, 2019 | All Blog Posts, Featured

Asia Pacific is on the verge of a digital banking revolution. With the creation of new virtual banks in Hong Kong expected this year, the customer experience is set to be completely transformed. Customer services will be at the heart of this new digitized journey and every aspect, from onboarding to communications, needs to be frictionless for consumers.

In this piece we look deeper into the new developments and how new technologies in remote onboarding are helping improve this experience without compromising on AML standards.

the current banking situation

Across the wider Asia Pacific region, consumers are tech-savvy and expect high levels of customer service. FinTech driven personal financial services applications and banking are a regular part of consumers lives, with firms such as Alipay and Tencent offering payment services in China and further afield.

Yet, personal banking in Hong Kong still remains a manual, cumbersome process with the antiquated cheque still dominating the payments landscape. Face-to-face interaction with a teller remains common, as does the need for numerous mandatory touchpoints and physical documentation submission for onboarding. With only 53% of Hong Kong banking customers being satisfied with their banks it’s clear why 2018 saw the issue of a notice for applicants for virtual banking licences in Hong Kong by the HKMA (Hong Kong Monetary Authority).

opening up the playing field

One of the key driving forces for the HKMA to issue virtual banking licenses has been to increase competition in the sector, spurring on innovation and driving better outcomes for consumers. Around thirty applications for Hong Kong banking licences were received from a variety of firms, both from the banking and technology sectors.

Non-banking organisations, such as large technology players, have long been leaders in developing customer-centric experiences using cutting edge technology. Virtual banking in Hong Kong will be no different as we expect these organisations to not just re-imagine banking, but disrupt it. Through large distribution networks as well as hardware based technologies we expect to see everything from lending, payments and e-commerce platforms find a fresh, new look. These challenger banks will have reduced bureaucracy and less established decision making processes allowing innovation to flourish.

To combat new entrants, numerous incumbent banks have applied for a virtual banking license in Hong Kong including Standard Chartered Bank, Bank of China and Bank of East Asia. While these banks have more rigid structures, they also have long established KYC and AML procedures that meet the HKMA’s standards. This is not something that can be said for the challenger banks, who are new to the complexity of regulatory regimes.

We also expect banking organisations to use Hong Kong as a virtual banking hub putting even more importance on getting the onboarding process right. The ability to remotely onboard new customers opens the client base from the domestic Hong Kong market to the wider region.

the new customer journey

The typical Hong Kong customer has a busy lifestyle and expects any banking product to support this while still being unique to their needs. Consumers expect real-time payments and accessibility to different products through one centralised mobile-enhanced platform. The right FinTech platform will provide that. A recent study highlighted that:

consumers are drawn to FinTech services because propositions are simpler, more convenient, more transparent and more readily personalized.

Small and medium enterprises (SMEs) have considerably different needs which virtual banks are also looking to address in the first phases of their roll out plans. The SME and business banking sector is ripe for disruption as many remain underbanked or in most cases, underserved. Many small businesses have had significant issues in obtaining and maintaining accounts with incumbent banks due to tightening customer due diligence requirements and de-risking. This is set to change.

New virtual banks in Hong Kong will be able to re-imagine banking from a customer-centric perspective and build from the ground up. As digital strategies will be implemented from the outset, banks will be able to cut away unnecessary fat, bringing a differentiated proposition to market. We can expect to see a significantly streamlined customer experience initiated by vastly improved remote onboarding (eKYC).

remote onboarding – starting the new journey

For new virtual banks in Hong Kong, digitization and automation are the building blocks for success. By centralising and standardising back office functions it is possible to automate the customer and user workflows. Processing new applicant information using intelligent automation techniques will allow for seamless processing of customer information to create a frictionless onboarding experience.

AML will not be compromised as a result of the drive for a better customer journey. The ability for the new virtual banks to integrate numerous technologies from biometric identity verification and ultimate beneficial owner discovery to AML screening and adverse media screening is hugely important in the fight against financial crime.

Take, for example the ID checks, new clients will be able use selfies as part of the onboarding process bypassing the need for physical identity checks. The biometric checks are not only the safest form of identity check but the fastest and most flexible. Consumers in Hong Kong are about to witness a completely new way of banking and remote onboarding will be the very start of the journey.

The encompass platform allows organisations to utilise best in class technologies powered by intelligent process automation. Contact us to arrange a consultation to find out more

about Alex Oxford


Over the past decade, Alex has been a part of numerous organisations across the Asia-Pacific region within the business technology and data industry, also serving as an advisor to firms that specialise in identity management. Alex is also a board member of the Australian Chamber of Commerce Hong Kong & Macau, elected as the youngest ever board member.

Connect with Alex on LinkedIn.

about encompass

Founded in 2012 by entrepreneurs Roger Carson and Wayne Johnson, and operating from the UK, encompass is the creator of unique, innovative Know Your Customer (KYC) software for banking, finance, legal and accountancy that enable better, faster commercial decisions. The company is driven by the belief that the best decisions are made when people understand the full picture.

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