In the news: Diving into digital banking

Amid the current global turmoil, digital bank Revolut continues to operate and has launched in the US, while both Singapore and Hong Kong are expanding their digital banking offering
by Bethan Rees

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In a blog by Revolut, CEO Nik Storonsky reassures customers that it's business as usual: "Revolut is a digital, cloud-based company. So, it's fairly easy for us to arrange for our people to work from home. That means that our 2,000+ staff can and will continue to support you wherever they are and wherever you are."

The company has recently raised US$500m from investors, according to Storonsky. And on 24 March it announced that it was launching in the US. The announcement says, "America, we come bearing good news in uncertain times."

In a FinTech Magazine article about the expansion, writer Matt High explains that Revolut had until recently been operating in the UK and Europe, while US customers had been on a waiting list. The digital-only bank was launched in 2015 by Vlad Yatsenko and Storonsky as a response to hidden fees associated with exchanging currencies, and now it has "more than seven million customers worldwide and has handled close to 400 million transactions", he reports.

US customers will be able to sign up via their smartphone with a valid form of ID – which takes just minutes, according to High. US users will have access to core Revolut features, such as spending and sending money overseas at the 'real' exchange rate, receiving a salary up to two days in advance and instant spending notifications. "However, the company indicated its plans to introduce more features over the coming months," High writes.

FinTech Magazine article

Arrival in Hong Kong

Meanwhile, in Hong Kong, the region's first virtual bank has launched, "marking the dawn of digital lending in the city", according to finews.asia. ZA Bank is an extension of ZhongAn Online P&C Insurance, a Chinese online-only insurance company, and has a focus on offering competitive rates.

Hong Kong dollar savings deposits at the digital lender will be subject to an annual interest rate of 1%, which is high in comparison to its traditional counterparts, which can pay as low as 0.001%, the article reports.

"In January this year, it reportedly offered as high as 6% interest rate for three-month Hong Kong dollar deposits (capped at HK$200,000 or US$25,800) in an initial trial to attract customers – more than double the rate offered by traditional lenders locally," the article says.

ZA Bank is one of the eight recipients of Hong Kong's virtual banking licenses, and more virtual banks are expected to launch soon. "This includes Mox, which is jointly owned by Standard Chartered, telecom firms PCCW and Hong Kong Telecom, and online travel agency Trip.com. The virtual bank was reportedly undergoing beta testing by staff earlier this month," the article reports.

finews.asia article

Interest in Singapore

Finextra reports that two in three Singaporeans are interested in using digital banks, according to the Visa Consumer Payment Attitudes Study, conducted in October 2019. Out of 511 respondents aged 18 to 65, 84% would be interested in using digital bank services offered by an existing bank, while 63% say they would be keen to bank with a new start-up.

"Among those who are open to digital banking services offered by non-banks, 60% are willing to switch some services from their current bank to new digital banking players which have no prior banking experience [and] 20% also shared that they would move all their services to a neobank without hesitation," Finextra reports.

Reasons respondents gave for potentially using a digital bank include being able to send money transfers to family and friends (64%), paying their bills (63%) and making payments in retail shops (56%). The survey also reveals the top reasons why Singaporeans prefer digital banks. Some 54% of respondents say convenience is their top reason, 52% say faster services and 45% say not having to wait in line.


"The digital banking space in Singapore and Southeast Asia is set for a year of unprecedented growth, setting the stage for the next revolution in banking," says Kunal Chatterjee, Visa's country manager for Singapore and Brunei. "When the region shifts to a millennial, digital-led demographic, more consumers will expect digital-first experiences, and want their banking and payments to match the speed and convenience of their user journeys."

According to an article for ZDNet by Eileen Yu, Singapore's regulator will issue up to five digital bank licences, and in January 2020 revealed that it had received 21 applications, including seven for digital full bank licences. This could be a major move for Singapore into digital banking, and judging by Visa's survey results, this will be a welcome addition to most.

Finextra article 

Will the traditional bank eventually become a relic of the past? Leave your comments below.

Seen a blog, news story or discussion online that you think might interest CISI members? Email bethan.rees@wardour.co.uk.
Published: 27 Mar 2020
Categories:
  • Fintech
  • The Review
Tags:
  • US
  • Singapore
  • Revolut
  • fintech
  • challenger banks
  • Banking
  • digitalisation

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