HSBC, Citi speed up digital push to ward off Asian upstarts
Banking giants see surge in demand for digital services
Banks in Asia’s financial hubs such as HSBC Holdings Plc and Citigroup Inc. are finding that the disruption from the coronavirus outbreak is helping them push back on a threat from a new breed of virtual upstarts.
With branches shut, customers social distancing and fearful of tainted cash, the brick-andmortar giants are seeing a surge in demand for digital services for everything from wealth management to insurance.
Now they are rolling out new video services and fresh mobile features for retail and affluent clients, speeding up a transformation to cement customer loyalty and reduce costs, consultants and bankers say.
“Most banks are using this as an opportunity to sharpen their strategy,” said Fergus Gordon, growth markets banking industry lead at Accenture. “There will be a longer-term impact on their balance sheets.”
Refocusing on digital
The heightened digital activity comes just as banks were contemplating how to fend off an onslaught of competition from virtual banks that are being allowed into Hong Kong and Singapore.
For HSBC, which gets about a third of its revenue in Hong
Kong, the stakes are high. The city is opening the door to eight new digital-only lenders with powerful backers such as Alibaba Group Holding Ltd. The start-ups could capture as much as $15 billion, or 30 per cent, of the city’s banking revenue, Goldman Sachs Group Inc. estimated in 2018.
At HSBC, the share of retail transactions in Hong Kong conducted digitally hit 94 per cent in March. Active customers on its mobile app jumped almost 40 per cent from a year earlier, to 1.12 million. Citigroup’s digital wealth management transactions, including stock and foreign exchange, rose 37 per cent in the first two months of the year in Hong Kong.
“We do anticipate that Covid-19 will lead to an acceleration in customer adoption of digital channels, which will continue,” said Greg Hingston, HSBC head of wealth and personal banking for Asia Pacific.