HK's digital banks win over public and SMEs with AI innovation and security

A majority of Hongkongers and SMEs have reported a positive experience with digital banks, with over 90% of them recognising digital banks' forward-thinking approach in applying artificial intelligence (AI) technology.

The latest survey by The Hong Kong Association of Banks (HKAB) Digital Banking Education Taskforce indicates that digital banks have transformed from market innovators into a key force driving industry development, demonstrating significant growth potential in areas such as AI. 

The taskforce commissioned the School of Communication at Hong Kong Baptist University to conduct an online questionnaire survey from 13 to 26 August this year, successfully interviewing 1,006 individual respondents and 205 SMEs. The aim was to gain a deeper understanding of the public's and SMEs' usage habits, trust levels, and future expectations regarding digital banking.

The findings revealed that digital banks have secured a loyal customer base, with 66.4% of individual and 63.7% of SME users consistently using their services for over two years. A quarter of individual users and 22.2% of SMEs have been customers for more than four years, citing reasons such as making a digital bank their primary account, positive user experience, and attractive rewards.

Digital banking has also become integral to daily life: 92.9% of individuals and 98.2% of SMEs stated that these platforms meet at least half of their daily banking needs. Furthermore, 82.7% of individual users and 96.5% of SME users engage with digital banking at least once a week, signaling the maturity of the business model.

User confidence in digital bank security is exceptionally high. Nearly 100% of SME users and over 94.5% of individual users trust the banks' measures for data protection, fraud prevention, and overall account security. This trust is underpinned by a strong awareness of the regulatory framework, with 70.1% of the public and 82.4% of SMEs knowing that digital banks are strictly regulated by the HKMA and covered by the Deposit Protection Scheme.

Furthermore, multiple digital banks have been recognised for their performance in safeguarding user privacy, receiving awards from the Office of the Privacy Commissioner for Personal Data (“PCPD”). This reinforces their professional image in data handling and information security.

AI applications gain broad recognition 

On the other hand, digital banks are recognised as a core force driving industry innovation, particularly in financial technology and AI applications. The survey revealed that a high 92.7% of the public and 99.4% of SMEs agree that digital banks are more forward-thinking than traditional banks in adopting AI technology.

The application of AI has also tangibly translated into better customer experience, with 84.9% of the public and 98.8% of SMEs stating that AI-driven services have enhanced the perception of a "smarter and more convenient" banking experience.

Gigi Wong, spokesperson for the HKAB Digital Banking Education Taskforce stated, "This survey marks a significant milestone, reflecting that in just five years, digital banks have evolved from an innovative concept into an essential platform for the everyday banking of both the public and SMEs. Over 90% of users report a positive overall experience, with the majority stating that digital banks meet most of their daily service needs. Behind this data is a profound behavioral shift."

"The establishment of user habits and trust demonstrates that digital banking is not merely 'viable' but is becoming mainstream. As the user base continues to expand, the industry has also begun to achieve profitability, further validating the sustainability of this operating model. This is not only a recognition of the industry's efforts but also a clear signal that the financial ecosystem is being reshaped," she added.

As digitally native financial platforms, Wong believes that digital banks hold immense potential in areas such as AI applications, data analytics, and smart financial management. "Looking ahead, we will continue to drive innovation through technology to bring more convenient and personalized financial experiences to the public and propel the comprehensive development of smart finance in Hong Kong."

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