Banks in Asia’s financial hubs, such as HSBC Holdings and Citigroup, are finding that the disruption from the coronavirus outbreak is helping them push back on a threat from a new breed of virtual upstarts.
With branches shut, customers social distancing and fearful of tainted cash, the banking giants are seeing a surge in demand for digital services for everything from wealth management to insurance. Now they are rolling out new video services and fresh mobile features for retail and affluent clients, speeding up a transformation to cement customer loyalty and reduce costs, according to consultants and bankers.
“Most banks are using this as an opportunity to sharpen their strategy,” said Fergus Gordon, growth markets banking industry lead at Accenture. “There will be a longer-term impact on their balance sheets.”s
The heightened digital activity comes just as bricks-and-mortar banks were contemplating how to fend off an onslaught of fresh competition from virtual banks that are being allowed into Hong Kong and Singapore.
For HSBC, which gets about a third of its revenue in Hong Kong, the stakes are high. The city is opening the door to eight new digital-only lenders with powerful backers such as Alibaba Group Holding, the parent company of the South China Morning Post.
The start-ups could capture as much as US$15 billion, or 30 per cent, of the city’s banking revenue, Goldman Sachs estimated in 2018.
At HSBC, the share of retail transactions in Hong Kong conducted digitally hit 94 per cent in March. Active customers on its mobile app jumped almost 40 per cent from a year earlier, to 1.12 million.
Citigroup’s digital wealth management transactions, including stock and foreign exchange, rose 37 per cent in the first two months of the year in Hong Kong. Overall in Asia, its digital brokerage and mutual fund transactions jumped more than 70 per cent in March from January.
“We do anticipate that Covid will lead to an acceleration in customer adoption of digital channels, which will continue,” said Greg Hingston, HSBC head of wealth and personal banking for Asia-Pacific.
During the crisis, Citigroup has added features to its mobile app such as a “Help” function and is working on enabling two-way messaging.
“Our view is customers will continue to embrace digital once the pandemic is behind us after having experienced first-hand the added convenience and possibilities it offers,” said Gonzalo Luchetti, head of Asia-Pacific and EMEA consumer banking.
Bank of China (Hong Kong), which has the biggest branch network in the city, has accelerated the roll-out of digital services, speeding up its plans by months, according to Arnold Chow, an executive in charge of the personal digital banking products unit for investment and insurance.