ZA Bank, amongst the first generation of Hong Kong's digital banks, announced its entrance with a 6 percent introductory rate for deposits. This is over 3 percentage points higher than established banks such as HSBC and Standard Chartered.
ZA Bank began a trial last month, offering the 6 percent rate for three-month Hong Kong dollar deposits capped at HK$200,000 (S$34,740). These accounts are set at a 2 percent rate but offer a top-up of as much as 4 percent to select clients, according to local news reports.
The bank declined to comment on the rates but said new customers who are interested can open an account in five minutes using a Hong Kong identity card.
Sales Gimmick?
Though observers doubt that the new banks will be able to maintain such rates over the medium term, the attractive offer is a precursor to the upcoming competition for the city's US$410 billion local currency time-deposit business. In 2018, Goldman Sachs estimated that US$15 billion, or 30 percent of the city's total banking revenue, is at risk of being taken.
«This is more of a gimmick, which shouldn't become a norm...but competition for funds is indeed getting higher as eight more banks are coming out,» said Terry Siu, treasurer at CMB Wing Lung Bank, who was quoted in «Bloomberg»(behind paywall). CMB Wing Lung pays 3.8 percent to new savers for two-month Hong Kong dollar deposits.
Digital Bank Rates
As central banks in the developed world slashed rates, deposit rates among digital banks globally have trended lower. Monzo in the U.K. offers deposits of about 1.3 percent, while the digital bank named 86400 in Australia pays 2.25 percent on some deposits. In the U.S., Ally boasts of accounts with a 1.6 percent rate and three-month CDs at 0.75 percent, while Goldman Sachs Group Inc's Marcus venture offers a savings account with a 1.7 percent rate.
Backed by mainland-based online insurer ZhongAn Online P&C Insurance, ZA Bank became the first virtual lender to commence business in Hong Kong nearly nine months after the city’s regulators approved a pilot program. Goldman Sachs estimated in 2018 that US$15 billion, or 30 percent of the city's total banking revenue, is up for grabs.
