Online banks in Hong Kong aim for wealth management expansion following 74% deposit growth.
Digital Lenders in Hong Kong Set Sights on Wealth Management
In the upcoming years, the eight digital banks of Hong Kong have expressed their intentions to amplify their wealth management endeavors, propelled by a successful half-decade of amassing customer deposits, which has bolstered their confidence to delve into a domain traditionally favored by traditional banks.
All eight of these branchless banking entities reported significant growth in deposits, loans, and net interest income in the annals of 2024. Though they failed to report net profit, their losses narrowed substantially due to improved net interest income and fee income from their wealth management divisions, as announced on Thursday.
The COVID-19 pandemic played a pivotal role in driving the digital banks' success, as they collectively attracted HK$64.39 billion (US$8.3 billion) in deposits by the end of the previous year, marking a staggering 74% increase from the year before.
In a trailblazing move, October 2024 saw the Hong Kong Monetary Authority (HKMA) lift restrictions on digital banks, enabling them to establish a limited number of physical locations. While none of the digital banks opened branches by early 2025, this modification provided operational flexibility for their venture into wealth management services.
Key digital banks like ZA Bank and WeLab seized this opportunity, focusing their attention on wealth management, capitalizing on their spectacular year-on-year deposit growth (74%) that reached HK$64.39 billion by the year's end. The HKMA's rule modification also bolstered regulatory alignment, eradicating sector restrictions, thereby facilitating product diversification and boosting net interest margins, effectively offsetting operational losses.
These adjustments served as part of larger 2024–2025 initiatives from the HKMA, such as anti-fraud measures and virtual asset policy updates, contributing to an innovation-friendly climate for digital banks to expand their wealth services.
- The digital banks in Hong Kong, bolstered by their 2024 success, plan to increase their involvement in wealth management, traditionally favored by traditional banks.
- In 2024, Octobers saw the Hong Kong Monetary Authority (HKMA) lift restrictions on digital banks, allowing them to grow their operational flexibility in wealth management services.
- The COVID-19 pandemic in 2024 played a crucial role in the growth of digital banks, attracting HK$64.39 billion in deposits, marking a significant 74% increase.
- Digital banks like ZA Bank and WeLab, capitalizing on their 2024 deposit growth, focused their attention on enhancing their wealth management services, a move facilitated by the HKMA's rule modifications.
- With initiatives like anti-fraud measures and virtual asset policy updates, the HKMA is fostering a climate conducive for digital banks to expand their wealth services, a key focus in the 2024–2025 period.
