Virtual banks in Hong Kong are getting more popular, while mobile wallet users are more keen on using the services provided by virtual banks, according to Nielsen's latest study.
In its "Personal Finance Monitor 2020", Nielsen has found out that more banking consumers had heard of the term “virtual bank”, with the corresponding awareness level rocketing from 67% in 2018 to 93% in 2020.
However, this phenomenon did not mean that respondents were familiar with virtual banking. 42% of respondents had heard of the term "virtual bank" but they did not have a strong understanding of it, while 38% were unable to correctly name any virtual bank
The adoption of virtual banks is still low, with just 7% of respondents saying that they were using virtual banking services. The survey has also shown that there had been a spike of intention to use virtual banking services, from 20% in 2018 to 37% this year.
"It is imperative for corresponding financial organisations to dedicate more efforts to promote the virtual banking concept and educate the public about this innovative initiative,” said Eddie Au, senior director of financial services at Nielsen.
People who had been using financial technology (fintech) were more likely to choose virtual banks. Just over half (51%) of active mobile wallet users using it on a weekly basis had expressed their intentions to use virtual banking services in the future, compared to inactive mobile wallet users (27%) and non-users (16%).
In addition, the decision of using virtual banking for customers who were not active peer-to-peer (P2P) service users could be a hindrance as they were unfamiliar with fintech, such as making cash deposits or withdrawals through the Fast Payment System (FPS).
When it comes to popular virtual banking services, the survey also revealed that 75% of potential virtual bank customers preferred to start using virtual banks by opening a deposit account.
Credit card services were also in demand, with over half of respondents (54%) showing interest in virtual bank credit card applications. But only 18% of the customers claimed they would consider applying for the loans in the future.
“Virtual banks have become a prominent and irreversible trend. Continuous growth is expected in virtual bank usage in the coming years along with the opening of more virtual banks. Still, facing competition from not only their peers but also traditional banks, virtual banks are recommended to fight for market share by putting their focuses on the most demanded services and offering competitive deposit interest rates to trigger trial usage," commented Au.