Digital Banks' Looming Impacts On Apac Real Estate

Digital banks are making their presence felt in the key finance centers of the region such as Singapore and Hong Kong — and it’s not just in the virtual space.

- Iain Mackenzie

Hong Kong now has eight virtual banks operating within the city; meanwhile, the city-state is finalizing applicants for the five licenses that its Monetary Authority of Singapore will be awarding.

These banks are expected to shake up the industry. In a report by digital banking platform Backbase and market intelligence firm IDC, more than 60 per cent of customers in the Asia Pacific region are willing to switch to digital banks in the next five years.

In countries such as Japan, South Korea, and China, where digital banks have already been set up, customers have come to regard digital banks as convenient, offering round-the-clock services with attractive rates and charges. For instance, Hong Kong’s WeLab Bank offers an initial eight percent rebate for customers using its debit cards. Fellow digital bank Airstar launched with a 3.6 per cent rate on savings up to HK$20,000.

Beyond liberalizing the finance industry to better cater to the consumers, digital banks foster greater innovation and competitiveness. They will further democratize financial services by targeting the underserved such as small-medium enterprises (SMEs) and start-ups.

Impact on Traditional Banks

The entry of digital banks has already sparked off a series of changes from traditional banks, many of which have disrupted themselves and ramped up their digital offerings.