In Hong Kong, eight local digital banks intend to expand their wealth management services in the background of favorable results.
According to media reports, the mentioned intentions are observed against the background of the fact that the specified virtual financial institutions have recorded a significant increase in deposits, loans, and net interest income. The losses of Hong Kong lenders operating in the online environment have narrowed.
In this case, it means such digital banks as ZA Bank, WeLab Bank, Mox Bank, Ant Bank, Livi Bank, PAO Bank, Airstar Bank, and Fusion Bank. The listed virtual financial institutions began their operations in 2020, having previously obtained licenses from the Hong Kong Monetary Authority (HKMA) a year earlier.
The mentioned digital banks have achieved significant milestone growth. They raised deposits of HK$64.39 billion (US$8.3 billion) by the end of 2024. The mentioned indicator grew by 74% year-on-year. This is evidenced by the calculations of the media.
It is worth noting separately that the coronavirus pandemic, as a period with its own specifics, including in the financial context and in terms of the peculiarities of people’s lives, has become a factor contributing to the growth of virtual financial institutions in Hong Kong.
Last year, the total volume of loans issued by the mentioned digital banks reached HK$24.73 billion. This indicator showed an increase of 30% year-on-year. The cumulative net interest income of virtual financial institutions in 2024 was recorded at the HK$2.29 billion mark. This indicator increased by 48% year-on-year. The total losses of digital banks in 2024 amounted to HK$2.65 billion. In this case, there is a decrease in the indicator on an annual basis.
ZA Bank stated that it achieved a monthly income gain in July 2024. At the same time, WeLab Bank reported a profit for the first quarter of the current year. It is worth noting separately that both of these virtual financial institutions have not published detailed information about their earnings.
Data from ZA Bank indicates that this online lender has 800,000 customers. The digital bank also holds deposits worth HK$19.4 billion. Mox Bank currently serves 650,000 consumers. This virtual financial institution holds deposits in the amount of HK$17.3 billion.
Other digital banks have not released specific or relatively specific information about their performance. The media reports that their deposits range from HK$2.4 billion to almost HK$7 billion.
Last year, Mox Bank offered loans to consumers at HK$6 billion. The corresponding ZA Bank figure for 2024 was HK$5.6 billion. WeLab Bank has offered HK$5.5 billion in loans to consumers.
ZA Bank chief executive officer Calvin Ng stated that this virtual financial institution aims to increase its customer base to 1 million in the current year. The digital bank currently offers consumers access to 170 funds from more than 20 fund companies, including Allianz Global Investors and Franklin Templeton.
During a conversation with media representatives last week, Calvin Ng stated that the tariff policies of the United States have recently formed uncertainty in the market, but the virtual financial institution still sees strong demand for investment products from customers. It was noted that the mentioned consumers would like to invest in various fund products to diversify their portfolios and achieve long-term gains.
WeLab Bank stated that its wealth management services and mainland Chinese investors were the drivers of its growth. This lender also noted that since 68% of potential travelers from mainland China are citing managing their personal financial needs as the main purpose of visiting Hong Kong, it tailored out its digital offers to the relevant emerging segment of customers. The corresponding information is contained in the WeLab Bank performance report. The virtual financial institution also stated that its mainland visitor growth improved by eight times in the second half of last year from the figure recorded in the first six months of 2024. Moreover, a digital bank, expects the mentioned tendency to persist in 2025. The virtual financial institution also assumes that the implementation of the specified potential scenario will make the relevant segment the main driver of new customer acquisitions.
Mox Bank stated that in the current year, it would enhance its wealth management business and lending products.
Benjamin Quinlan, chief executive officer and managing partner of Quinlan & Associates, a Hong Kong-based consultancy, stated that the mentioned eight digital banks have done very well in building up their customer base, but they need to do better in activating this base. It was also noted that virtual financial institutions should team up with partners to sell services and products to consumers. Moreover, Benjamin Quinlan stated that digital banks have a very strong visibility into the payment and transaction data of individuals. It was highlighted that virtual financial institutions can use that to cross-sell products to customers.
Lawmaker Robert Lee Wai-wang, who is also the chairman of Hong Kong-based Grand Finance Group, said that local digital banks may consider expanding into the Greater Bay Area. It was also noted that eight virtual financial institutions have had a good start in Hong Kong in the first five years of operation.
It is worth clarifying that in this case, the wording of the Greater Bay Area refers to a project implemented by Beijing as a political center aimed at integration between Hong Kong, Macau, and nine mainland cities of Guangdong Province.
Robert Lee Wai-wang said that digital banks, by expanding their services beyond Hong Kong, can tap a bigger pool of customers. This scaling is generally logical for lenders who have achieved significant results at a kind of initial geographical level of activity.
It is worth noting that the Hong Kong authorities actively support the fintech sector. This circumstance, among other things, is a factor that stimulates the development of digital banking. Local virtual financial institutions offer consumers mobile wallets for convenient funds management. Virtual lenders also provide customers with access to multicurrency accounts without any restrictions on transactions in yuan. Moreover, Hong Kong’s digital banks guarantee consumers a high level of security and compliance with international standards. The positive prospects for the development of the local virtual financial institutions sector are related to the expansion of the Web3 ecosystem, easier regulation for gaining new players, and the expected growth in the number of users.
As we have reported earlier, Hong Kong’s Finance Sector Embraces GenAI.
