Hong Kong is considered an international banking center with an impressive roster of reputable banks from around the world. In fact, 70 out of the 100 banks in the world have a presence in Hong Kong, and about 29 multinational banks have their regional headquarters in Hong Kong. Aside from this, Hong Kong banking offers a wide range of services including insurance, investment, mortgage and loans, etc. In order to regulate the banks in Hong Kong, the Hong Kong Monetary Authority sets policies to make sure that banks conduct their businesses legally and appropriately. This article outlines the importance of the Hong Kong Monetary Authority, and serves as a comprehensive guide to Hong Kong banks.

What is HKMA?

The Hong Kong Monetary Authority (HKMA) is Hong Kong’s central banking institution. It was created in 1993 when the Office of the Commissioner of Banking and the Office of Exchange Fund merged. There are four main duties of the HKMA, including:

  • promoting stability and integrity of the financial system in the country, including the banking system
  • maintaining currency stability within the framework of the Linked Exchange Rate System
  • assisting in managing the state of Hong Kong as an international financial center, which also includes maintaining and developing the financial infrastructure of Hong Kong
  • governing the Exchange Fund

Any company that wants to operate a banking business or a business that takes deposits has to obtain a license to perform these services by the HKMA. There is a three-tier system of deposit-taking institutions in Hong Kong and is classified based on the amount and term of deposits accepted and the business’s nature.Their aim is to promote the trust of customers in the banking system. 

Deposit-Taking Institutions in Hong Kong

There are different types of deposit-taking institutions in Hong Kong that the HKMA regulates and manages. The three types are:

  • Licensed Banks – Licensed banks operate savings and current accounts, accept deposits of any size, and pay or collect cheques drawn by or paid in by customers. These institutions can use the word “bank” in their name without restriction. Here is a list of licensed banks.
  • Restricted License Banks – Unlike licensed banks, restricted license banks are mostly engaged in capital market activities and merchant banking. Due to its nature, these banks may take deposits from HK$500,000 and above. Here is a list of restricted license banks.
  • Deposit-taking Companies – These institutions are principally owned by, or otherwise associated with, banks. They are involved in a range of specialized activities including commercial lending, consumer finance and securities business. Deposits can start from HK$100,000 and above. Here is a list of deposit-taking companies.

Hong Kong Banking Services

Hong Kong banks offer a wide range of services that caters to both individuals and corporations. You can open a personal bank account and hold a business account for your firm. Here are some of the banking services available in all traditional banks and virtual banking in Hong Kong:

  • Integrated Accounts – An integrated account offers you all your everyday banking needs, including consolidated savings, time deposits, foreign currencies, investments and insurance plans.  All the finances of your account can be viewed in one statement for such an account. 
  • Deposits and investments – By getting a time-deposit account and by investing, you can maximize your returns from surplus funds in multiple currencies. This is one main feature that Hong Kong banks offer where you can also manage all your stock trading and investments online. Use this Hong Kong banking service to capitalize on market opportunities by applying for Hong Kong IPO and trading local securities. 
  • Foreign exchange Hong Kong banks also offer foreign exchange services to suit your needs. Almost every bank has a 24-hour foreign currency exchange platform and the latest news that allows you to exchange currencies with the click of a button. You can also enjoy interest returns when the market goes up as a feature of this service in many banks. Moreover, you can also withdraw foreign currency from the bank’s foreign currency ATM. 
  • Financing and credit cards – All banks also offer financing options and credit cards with installment and property loans, equipment financing, and a lot more. You can enjoy many import and export financing services as well. Here is what you can enjoy under this Hong Kong banking service:
  • Commercial lending – You can take loans to cover your expenses.
  • Commercial cards – You can get credit cards from the bank to help you with instant purchases or expenses.
  • Business Insurance, MPF – When you put a lot into your business, it becomes crucial to protect it as well. That is why business insurance is one thing that banks offer to help you stay away from any risk that might come your way. It can help protect you from unexpected events such as fire, theft, or lawsuits. Some Hong Kong banks also offer customized insurance plans, which you can get by contacting them. Another benefit is the time-tested MPF products, which is a service that provides mortgage lenders the loan selling structures that best fits their needs. You can easily save a lot on tax with this product.

Banking Codes & Transfering Money to Hong Kong Banks

When you have a bank account, you need to know how the account number in Hong Kong works. This is important, especially when you are about to transfer money into another person’s account. In the Hong Kong banking system, you need to know the bank name, account number, branch code, and the beneficiary’s bank code to transfer money.  So, you need the right information for the transfer to take place, and you need to know some basics as well, which has been explained below.

What is a Hong Kong bank code?

A Hong Kong bank code is a 3-digit number that has been assigned to a specific bank or financial institution in Hong Kong. Bank codes are used to identify a particular bank when transferring money between banks in Hong Kong. The Hong Kong bank codes operate under the CHATS (Clearing House Automated Transfer System). This system is managed by a private entity that is jointly owned by the Hong Kong Association of Banks and the Hong Kong Monetary Authority (HKMA), Hong Kong Interbank Clearing Limited. 

CHATS makes sure that there are real-time gross settlements for the transfer of money between Hong Kong banks. This means that transactions are not subjected to any waiting period and are settled between the banks as soon as the transfer has been made. It is a better way to transfer funds than the other clearing systems where the settlement between banks is subjected to netting or bundling of multiple transactions. 

What is a branch code?

While a Hong Kong bank code identifies the bank, the branch code identifies the particular branch under a bank. Just like the bank codes, the branch codes also include 3-digit numbers.

Bank Account Number in Hong Kong

There is no standard format for the account number in Hong Kong, due to which there is always a lot of confusion when people are making transfers through Hong Kong banks. To begin with, the account numbers can range from 6 to 9 digits based on the bank. This makes it difficult to know if the account number of your beneficiary is right or wrong. In addition to this, Hong Kong banks have different policies when it comes to identifying account numbers granted to their clients. 

For instance, some banks do not consider the account number and the branch code as two different things and add the branch code as part of their clients’ account number. And it is common for the first three digits of the account number in Hong Kong to be the branch code of the bank. So, remember to ask this from your bank when you get your bank details. 

Virtual Banking in Hong Kong 

The recent trend of online banking has made a lot of companies move their banking solution online. With this, many companies have started offering virtual banking in Hong Kong, which is one of the leading banking and financial centers in the world. Virtual banks offer the same Hong Kong bank service that traditional banks do, just that it is all online and you do not have to visit the bank. 

What is a virtual bank?

A virtual bank is a new kind of self-service in mobile banking, which offers you the benefit of direct “at the window” banking services. It works as a medium for clients to directly interact with bank advisors via chat, audio, and video channels online. The main tool for virtual banking is a smartphone, laptop, computer, or tablet. 

Virtual banking in Hong Kong allows you to enjoy banking services right at your fingertips. With the aim to offer retail banking services through various electronic channels such as the internet, virtual banking has become a considerable part of the banking industry, especially in Hong Kong. 

How are virtual banks different from traditional banks?

Virtual banking is also called smart banking since it makes the lives of customers more comfortable. Operating through traditional banking is now something of the past. Since the introduction of digital technology and the internet, the fintech industry has reached its peak. Not only are the online banking operations easy to access, but they also offer a lot of security to the customer for their money.

In fact, traditional banks also have incorporated online banking, and almost all of their customers would rather use online services than visit the bank. These developments have enabled the emergence of virtual banking in Hong Kong. People and banks have started rethinking how money should be handled. Moreover, traditional banks are slow and do not allow the customer to access their account whenever they want.

The customer would have to travel to the bank and check their account only during the branch’s fixed working hours. On the other hand, virtual banks are online, which means that the customer can check their account any time. Virtual banking in Hong Kong is also environment friendly as it is paperless and cashless. This also means that there is a lot of security since there is no unauthorized access to personal information. 

The emergence of virtual banking in Hong Kong 

In 2018, the HKMA published a revised guideline on the authorization of virtual banks. These guidelines described the principles where the HKMA approved the application for the smooth running of virtual banks in Hong Kong. And that was the time virtual banking in Hong Kong became the new thing. Obviously, just like every bank, these banks too are subject to some set of supervisory requirements. 

Interested in opening a bank account in Hong Kong?

Opening a bank account in Hong Kong is pretty straightforward, but it could be challenging if you don’t know much about the banking system in Hong Kong. This is why we are working on creating Cheqly, a virtual bank that will cater to your needs. While we continue working on Cheqly, stay tuned for more updates on when it will be available.

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