- Hong Kong’s lenders have closed 20 to 30 per cent of their 1,300 branches to contain the viral outbreak
- More than half of the city’s population has signed up for faster electronic payment system since inception in September 2018
Banks, insurers and an online lending platform in Hong Kong are seeing a surge in transactions as the city's biggest health scare in almost two decades puts the Asian financial hub's online financial channels on trial.
Bank of China (Hong Kong) has seen "a significant increase" in customers accessing its mobile applications, while AIA Group is fielding more policy inquiries and claims submissions. Bank of East Asia said it recorded a double-digit increase in faster-payment transactions.
The Covid-19 epidemic, the worst since the Sars (severe acute respiratory syndrome) in 2003, is stretching the pain threshold for local businesses barely weeks after a bruising social unrest in 2019. Hong Kong's economy faces a deeper recession after contracting last year for the first time since the global financial crisis, the government has warned.
"The epidemic is putting the system in Hong Kong to a test," said Kenny Ng Lai-yin, securities strategist at Everbright Sun Hung Kai. "People are shifting to digital channels instead of lining up at physical branches, and the financial institutions have so far handled the situation really well."
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Hong Kong's lenders have closed about 20 to 30 per cent of their 1,300 citywide branches to contain the viral outbreak and sent workers to work from home to curb transmission risks, the Hong Kong Monetary Authority said on January 31. Its faster electronic-payment system installed in September 2018 is showing healthy gains.
About 4.2 million users had signed up by the end of January, or more than half of the local population, HKMA said. Some 192,000 transactions worth HK$2.5 billion (US$322 million) took place last month, triple the volume in its first full month of inception.
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At Bank of China (Hong Kong), the increase in mobile transactions was noted as customers stepped up activity including fund transfers, bill payments, time deposits or foreign-currency exchanges, a spokeswoman said.
"We encourage our customers to utilise the online channels whenever possible to reduce traffic at branches and other public areas in an effort to limit the spread of the virus," a spokeswoman for Bank of East Asia said.
Simon Loong, co-founder and CEO of WeLab and operator of WeLend platform, said loan volume has increased after the viral outbreak, adding to demand seen when customers shunned bank outlets on safety grounds during the social unrest.
WeLend's loan volume grew 24 per cent in the fourth quarter last year from a year earlier, and 14 per cent post-Lunar New Year, when compared with year-ago periods, he added.
While the reaction is to be expected, the surge in online transactions experienced by insurance companies in the city has come as a pleasant surprise for Peter Crewe, CEO for Hong Kong and Macau at AIA, the city's biggest insurance group.
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"Between January 26 and February 9, over 60 per cent of AIA customers used AIA digital channels, such as AIA Connect and AIA Hong Kong website, to carry out policy change requests and transactions," he said. "That works out to about 20 per cent more than in the same period in 2019."
The number of electronic claims submissions for individual life policies in that period was equivalent to 80 per cent of the volume AIA received in the first two months of 2019, he added.
"We found sales have tripled in the first two weeks of February versus a month earlier," said Fred Ngan Yiu-fai, co-founder and co-CEO of online insurer Bowtie Insurance. "When they discover the convenience of online shopping, they will continue to do so in future."
Blue, another online insurer, is also benefiting from the rush for health coverage, said CEO Charles Hung, as applications for policies have doubled. Meanwhile, at Prudential, 90 per cent of claims were received via its e-platform last week, according to CEO Derek Yung Kai-ming.
The city's stockbrokers, though, are not getting a lift from retail traders, said Gordon Tsui, chairman of Hong Kong Securities Association. "Most investors have moved on to online trading and placing orders over the phone for many years already," he noted.
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