Perfect match: Hong Kong virtual banks WeLab, Mox, ZA Bank partner with digital insurers amid government fintech push

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  • WeLab and Mox are planning to team up with partners to sell insurance, while ZA Bank already works with ZA Insure and Generali
  • The moves come as the city’s regulators promote cross-sector fintech development and the eight virtual banks quest to become profitable

Hong Kong’s virtual banks are increasingly teaming up with the city’s digital insurers to promote and sell insurance products as the city’s regulators nurture cross-sector fintech development.

WeLab Bank, Mox Bank, and ZA Bank are among the virtual banks forming or exploring alliances with digital insurers that include Bowtie Insurance and OneDegree, as the trend promises to encourage more people to the convenience of buying insurance online, according to analysts.

The Hong Kong Monetary Authority (HKMA), Hong Kong’s de facto central bank, said in August that it would team up with the Insurance Authority and the Securities and Futures Commission to encourage financial firms to invest in technology to enhance their wealth management, insurance, and green finance services.

The increase in partnerships also comes as the city’s eight branchless banks quest for profitability, which none has yet achieved.

Virtual bank WeLab Bank is planning to join its peer ZA Bank, which started selling insurance in 2021, in the insurance sales game by teaming up with insurance partners it cannot name at the moment, said CEO Tat Lee.

“WeLab has already achieved good customer numbers and has strong growth in deposits and loan growth in the first half of this year,” Lee said. “While we have already sold fund products for other fund companies, it is natural for us to explore developing the insurance business.”

WeLab earlier joined up with eight fund houses, including Allianz, BlackRock, Fidelity, and JP Morgan, to sell 92 funds from these companies. It also has a partnership with electric vehicle maker Tesla to offer car loans.

“We would like to team up with more different partners to cross-sell products and services,” Lee said. “This is a key strategy for us as we hope to achieve our first profitable year in 2025. We believe insurance sales will increase our fee income in the future.”

Hong Kong’s virtual banks – banks without physical branches – entered the market in 2020. The first, ZA Bank, teamed up with digital insurer and sister company ZA Insure to sell policies starting in May 2021. It also partnered with Generali Hong Kong, a traditional insurer, by referring ZA customers to Generali agents starting in April last year.
Jayant Bhatia, chief product officer of Mox Bank, co-founded by Standard Chartered Bank, said his bank is also planning to sell insurance. “It is in our plan, and we intend to offer it in the future,” he said. “We will announce it in due course.”

Product line expansion is a logical move for the city’s virtual banks at this point, said Benjamin Quinlan, CEO and managing partner of Quinlan & Associates, a Hong Kong-based consultancy.

“The virtual banks have signed up a lot of tech-savvy customers since 2020 who are comfortable managing their financial needs online,” he said. “It’s only natural for virtual banks to be looking at expanding their product lines by teaming up with insurers to sell policies online to their existing customers.”

Hong Kong’s regulations prevent the eight virtual banks from having physical branches, while the four digital insurers cannot use traditional agents to sell products. Nothing prevents the two types of digital financial firms from joining forces.

“At OneDegree, we have engaged in discussions to partner with virtual banks and e-commerce platforms,” Alvin Kwock Yin-lun, OneDegree’s co-founder, told the Post. “We are ready for the fintech push by the HKMA and Insurance Authority.”

Fred Ngan Yiu-fai, the co-founder and co-CEO of another virtual insurer, Bowtie, said it is also exploring a partnership with virtual banks to sell insurance products.

“Through data integration, customers will have the opportunity to enjoy low premiums and a personalized experience, with automated billing linked directly to their bank accounts,” Ngan said.

Such partnerships would allow individuals to buy low-cost term life insurance policies and other investment vehicles via the virtual banks, he said.

Image by: Pixabay

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