A complete guide of all you need to know about “What is virtual banking?”
When talking about a virtual bank, you may ask: “What is a virtual bank? Can I trust a virtual bank? What are the differences between virtual and conventional banks?” There is no denying that virtual banking is a new concept in Hong Kong that some people may not be too familiar with. In this blog, we will introduce you to virtual banks, and hopefully, clear up your confusions!What is a virtual bank?The Hong Kong Monetary Authority (HKMA) defines a “Virtual Bank” as a bank that primarily delivers retail banking services through the internet or other forms of electronic channels instead of physical branches.How many virtual banks are there in Hong Kong? The HKMA issued eight “virtual bank” licenses since 2019. There are eight virtual banks under the regulation of the HKMA, with WeLab Bank being one of them.No physical branches? What are the advantages of a virtual bank then?
To open a bank account remotely and enjoy 24/7 banking services anywhere, all you need is a smartphone! Say goodbye to waiting in long lines at conventional bank branches!2. There are no minimum balance fees!While many conventional banks have cancelled their minimum balance fees since the HKMA started issuing virtual banking licenses, not all of them have made this move - so if your account balance is less than their minimum balance requirement, you will be charged fees by the bank. In contrast, there are no such fees at virtual banks – rest assured, you can open a virtual bank account regardless of how much you deposit!3. Virtual banks can be connected to traditional banks too!Your virtual bank account can be linked with other banks via the Faster Payment System (FPS) and electronic Direct Debit Authorization (eDDA). Through these channels, you can enjoy a faster and more convenient inter-bank transfer at no cost.4. Virtual banks increase market competition!Due to lower operation costs, virtual banks can benefit their users by offering a higher interest savings rate or a lower loan interest rate. This leads to a more competitive market in the financial industry while bringing extra benefits to consumers.What kinds of protection do virtual bank customers get?Many first-time virtual bank users are worried about whether virtual banks are secure enough for them to deposit their money into. However, you can rest assured knowing that virtual banks, like conventional banks, are also regulated by the HKMA, and are required to comply with a stringent set of regulations.Except for a few overseas-incorporated banks covered by similar schemes in their respective countries of incorporation, all licensed banks in Hong Kong, including virtual banks like WeLab Bank, are members of the Deposit Protection Scheme (DPS) of the Hong Kong Deposit Protection Board. All eligible deposits taken by these banks are protected by the Scheme up to a limit of HKD 500,000 per depositor. The following is the DPS Coverage for your reference:Eligible deposits include:
- It’s convenient!
Ineligible deposits include:
- Various common deposit accounts (e.g. savings account, current account and time deposits with a term not more than 5 years)
- Deposits held by individuals (including joint account) or corporations
- Pledged deposits
Do note that some restricted license banks and deposit-taking companies are not members of the DPS, therefore your deposits in these companies are not eligible to be protected by the Scheme.If there are no branches for virtual banks, how can I get support?Although virtual banks mainly offer services through the online channels, customers can still get help from customer service in several ways. For example, with WeLab Bank, you can contact us via our 24/7 customer service hotline for immediate support any timeAll in all, virtual bank customers are not only protected, but can also enjoy lots of benefits! If you want to try something new, download the WeLab Bank app now and keep an eye on our website for the latest updates!
- Structured deposits (e.g. foreign exchange linked and equity linked deposits)
- Time deposits with a maturity longer than five years
- Bearer instruments (e.g. bearer certificates of deposit)
- Offshore deposits (e.g. deposits with overseas / mainland China offices of a Scheme member)