Survey: 64% of HKers plan to engage with fintech firms or virtual banks for credit activities

Hong Kong consumers anticipate increasingly using financial technology (fintech) firms and virtual banks, whereas nearly half of the Gen Z respondents look to apply for new credit or refinance existing credit in the upcoming year, a TransUnion survey found.

The new Q3 2023 Consumer Pulse Survey surveyed 973 Hong Kong consumers in July this year, done in partnership with third-party research provider Dynata. This quarterly survey examines shifting consumer attitudes and behaviors based on the dynamics of income, debt, and identity theft.

With over 800 fintech companies operating in Hong Kong, the survey findings revealed that 56% of consumers reported holding fintech or virtual bank loans or credit cards, and this figure is expected to rise further as 64% of consumers plan to engage with fintech firms or virtual banks for credit activities in the coming year.

While traditional banks continue to dominate the credit market with 29% of respondents selecting their existing traditional bank where they have an account, 24% of respondents prefer applying for a new digital loan with a fintech, or neo, digital or challenger bank. Furthermore, 24% said their preferred option for applying for a new digital loan is any entity which offers them the lowest rate of interest.

Meanwhile, the percentage of respondents planning to apply for new credit or refinance existing credit in the next 12 months has surged significantly, reaching its highest level since Q2 2022 at 35%. Across generations, 43% of Gen Z planned to apply for new credit or refinance existing credit in the next year, which accounted for the highest percentage among age groups.

Among those planning to apply for new credit or refinance existing credit, there has been a notable shift in the types of credit. The demand for new credit cards has increased the most, rising by 15 percentage points from Q2 2023 to 59%. Buy-now-pay-later payment services are the second most in demand credit type and second fastest growing type behind new credit cards, growing five percentage points in that same time period to 33%.

Commenting on the survey results, Wingo Wong, managing director of TransUnion Credit Information Services, said: "Current consumer behaviour, especially Gen Z, has been shaped by the digital age, shifting financial landscapes, and the global pandemic. As technology continues to reshape the way we approach financial services, it is clear that fintech and virtual banks are playing a vital role in driving financial inclusion and meeting the evolving needs of consumers in Hong Kong."

"The rebound in consumer credit interest, particularly among young consumers, indicates a growing optimism and a desire to access financial resources for various purposes. With the aid of advanced analytics and modeling, financial institutions can gain valuable insights into consumer preferences and effectively cater to their evolving needs," added Wong.

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