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Singapore vs. Hong Kong: Who is winning the digital banking race?

Singapore and Hong Kong are both global epicentres for technology and finance, but one market is leading over the other in the field of digital banking. According to a recent research by RFI Global, Singapore has seen more rapid growth in their heavy digital users or customers who use only the internet or mobile banking frequently. Based on data, the percentage of heavy digital users in Singapore has reached more than a third (35%) of its retail banking population as of 2H22. Growth in heavy digital users, however, has been slower in Hong Kong, with only a quarter of the population identified as heavy digital users in H2 2022.

The difference in customer preferences

The report added that Hong Kong still has a higher percentage of traditional users or customers who only use traditional channels such as ATM and phone banking frequently. Looking at the markets’ Net Promoter Scores (NPS) for digital versus traditional banking, RFI concluded that in Singapore, heavy digital users are more satisfied with their main banks than traditional users, suggesting the success of digital channels. Conversely, in Hong Kong, traditional banking resonates more with customers, as evidenced by higher NPS scores among heavy traditional users. NPS is a metric that reflects customer satisfaction and loyalty.

The contrasting NPS trends between Singapore and Hong Kong emphasise the need for banks to recognise and adapt to regional customer preferences. Singapore leans towards digital banking, while traditional channels hold sway in Hong Kong. This divergence underscores the importance of a tailored banking approach to cater to the unique needs of each market.

Singapore vs. Hong Kong: Who is winning the digital banking race

Another factor that may influence the digital banking landscape in both markets is the issuance of digital banking licences by the respective regulators. In Singapore, the Monetary Authority of Singapore (MAS) awarded four digital banking licences in December 2022 to two consortiums led by Grab-Singtel and Sea Group, and two non-bank entities Ant Group and Greenland Financial Holdings. These new entrants are expected to start their operations by early 2023 and offer innovative products and services to underserved segments of the market.

In Hong Kong, the Hong Kong Monetary Authority (HKMA) granted eight virtual banking licences between March and May 2019 to various players including Tencent, Ant Group, Xiaomi, Ping An Insurance and Standard Chartered Bank. However, only four of them have launched their services as of September 2023, namely ZA Bank, Airstar Bank, WeLab Bank and Fusion Bank. The other four are still in the process of preparing for their launch.

The different pace and scale of digital banking licence issuance may have implications for the level of competition and innovation in both markets. Singapore may see more intense rivalry and disruption from the new entrants, while Hong Kong may have more room for collaboration and integration among the existing and virtual banks.

The future outlook for digital banking

As both markets continue to evolve and embrace digital transformation, there are opportunities and challenges for both incumbents and newcomers in the digital banking space. According to RFI Global, some of the key success factors for digital banks include:

  • Offering a seamless and personalised customer experience across multiple channels
  • Leveraging data analytics and artificial intelligence to enhance customer insights and engagement
  • Providing value-added services beyond basic banking products such as wealth management, insurance, e-commerce and lifestyle
  • Building trust and loyalty among customers through security, transparency and social responsibility
  • Collaborating with strategic partners across different industries to create synergies and expand customer base

Singapore vs. Hong Kong: Who is winning the digital banking race? The answer may not be clear-cut or definitive, as both markets have their own strengths and weaknesses. However, one thing is certain: digital banking is here to stay and will shape the future of financial services in Asia.

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