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Hong Kong Digital Banks to Open Physical Branches Amid New Regulations
ZA Bank, a digital neobank offering crypto trading services, is reportedly considering opening physical branches in Hong Kong following the introduction of new rules by the Hong Kong Monetary Authority (HKMA).
The new regulations allow digital banks to operate a limited number of physical branches, a move that could enhance the customer experience and help resolve complex issues more efficiently. ZA Bank, the largest digital bank in Hong Kong, has expressed support for the introduction of physical branches.
Face-to-face interactions would greatly enhance the customer experience and help resolve complex issues more efficiently.
Challenges Faced by Crypto Startups in Hong Kong
Web3 startups in Hong Kong have struggled to access financial services due to strict regulations and traditional banks’ cautious stance toward cryptocurrency. A report from the HKMA noted that out of over 120 web3 firms set up in Hong Kong in 2022, about 95% had trouble opening accounts with virtual banks.
The challenges faced by these startups include:
- 70% of firms were asked to have shareholders or directors visit Hong Kong multiple times
- 60% had to maintain fixed deposits
- 54% took more than six months to open an account
- Nearly 20% took between two and five months to open an account
- 3% were outright rejected
The move to open physical branches could help alleviate some of these challenges and provide better support for crypto businesses in the city.
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