Hong Kong’s small and medium enterprises (SMEs) have emerged as a new battleground for the city’s banking sector, which has been revitalised by the launch of virtual lenders that do not have any bricks-and-mortar branches.

One of these new banks, Ping An OneConnect Bank, and HSBC, Hong Kong’s largest bank, last week started easing the process through which SMEs can open accounts.

Ping An OneConnect, which is backed by Ping An Insurance, mainland China’s largest insurer, allowed SME owners to open corporate bank accounts within a day through its mobile app. It also promised to approve loans worth up to HK$2 million (US$258,050) within five business days. If it misses this deadline, it will pay the company HK$1,000 as cash compensation.

“We aim to serve the hundreds of thousands of SMEs and micro companies in Hong Kong that have long been ignored by the big banks. By adopting advanced technology, we can offer these small trading companies trade financing and other types of loans in a speedy manner,” Ryan Fung Yuk-lung, Ping An OneConnect’s chief executive, said in an interview

The move by Ping An OneConnect to simplify account opening and shorten loan approval processes for SMEs suggests the Hong Kong Monetary Authority (HKMA), the city’s de facto central bank, has succeeded in bringing new competition to Hong Kong’s banking sector and revitalising it by issuing eight virtual banking licences last year. Seven of these virtual lenders have either carried out soft launches, or are fully operational.

HSBC, which has been in Hong Kong for 155 years and did not opt for a virtual banking licence, and decided to upgrade its digital banking services to compete, last week started allowing small businesses to open accounts without any face-to-face meetings at a branch, or the submission of actual documents and signatures. It will take two to five days to activate such accounts.

“The introduction of virtual banks has added competition, and will pressure traditional banks into introducing more digital services for individuals and companies,” said Gordon Tsui Luen-on, chairman of the Hong Kong Securities Association.
The HKMA has introduced a number of measures recently to support the city’s 340,000 SMEs during Hong Kong’s worst financial crisis on record, including ordering all banks to provide a six-month repayment holiday starting in May.