A virtual bank is a bank that primarily delivers banking services through electronic channels (such as the internet), without physical branches. Customers can open an account, make deposits, take out loans, and conduct other banking transactions via a mobile app and through the website of the virtual bank.
Virtual banking is a new business model in Hong Kong, though virtual banks have been operating in Europe, the U.S., Japan and other countries. According to overseas experience, virtual banks can significantly save on rent and manpower, thus offering services at lower rates. With improved efficiency made available by fintech, virtual banks also offer a new kind of customer experience.
1.Round-the-clock services
Customers can enjoy all services online without visiting a bank. This saves customers’ time and the services are accessible 24/7 anywhere.
2.No minimum account balance requirement
Virtual banks impose no minimum account balance requirements or low-balance fees. Everyone can enjoy banking services regardless of their financial status.
3.Promote the development of the banking sector
It is expected that upon entering the market, virtual banks will attract customers by introducing new financial technology and new user experience, thus bringing insights to conventional banks, and enhancing the quality of services and products of Hong Kong's financial industry as a whole.
4.Under regulation and supervision
Although their operation mode is different from that of conventional banks, virtual banks are also subject to the HKMA’s regulation and are members of the Deposit Protection Scheme. Their customers are entitled to deposit protection of up to HK$500,000.
| Conventional Banks | Virtual Banks | |
|---|---|---|
| Target Users | All categories | Mainly local SMEs and retail customers |
| Service Channels | Physical branches and e-channels | No physical branches, all by e-channels |
| Account Opening Approach | In-person | Remote |
| Min. Account Balance Requirements | Subject to the banks | Nil |
| Low-balance fees | Subject to the banks | Nil |
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