The proliferation of digital banks around the world led to Hong Kong Monetary Authority being one of the first regulators in Asia to invite applications and approve the launch of eight virtual banks in Hong Kong. Of the eight applications approved to operate as virtual banks, WeLab Bank –a wholly owned subsidiary of WeLab, positioned as a home grown virtual bank continues to build on an existing eight year relationship with the people of Hong Kong. The bank’s aim is to introduce innovative financial solutions to help the young target market find joy along their financial journey by helping them Manage (M), Save (S), and Grow (G) their money. The Digital Banker interviewed Tat Lee, Chief Executive at WeLab Bank, to understand the lay of the land, discuss highlights and mandates at the virtual bank and what does the future hold for the banking industry as a whole.
The Digital Banker (TDB): Having launched in the midst of a pandemic, can you please recount for us some of the highlights of WeLab Bank in 2020?
Tat Lee: I can vividly recall the day – July 30, 2020, in the midst of third wave of the global health crisis in Hong Kong, we launched WeLab Bank. People here largely stayed indoors, due to heavy restrictions on social gathering. Several traditional banks were forced to close down branches or shorten operating hours. In hindsight, 2020 accelerated digital banking adoption – allowing WeLab Bank to step in and fulfil everyday banking needs. A testament of how the people of Hong Kong embraced our bank is that we received 10,000 new account opening applications in the first 10 days!
The highlight for us at WeLab Bank was the launch of GoSave – an innovative term deposit product with a unique social element. Drawing on a symbolic icon, the Hong Kong mini-bus, the GoSave term deposit product harnesses the power of community to provide higher than market 3-month tenor interest rates, with minimum deposit being as low as HKD 10. To kickstart the GoSave mini-bus (time deposit vehicle), 80 depositors must be onboard. Since launch, over 1300 Go-Save term deposit minibus have begun, with half of the customers participating in more than one GoSave mini-bus.
TDB: As a new emerging player in the banking segment, what are some of the challenges and opportunities for WeLab Bank in 2021?
Tat Lee: With a total of eight new virtual banks in the market, coupled with the fact that the concept of ‘virtual bank’ isn’t always clear, the stakes are very high. One of the challenges WeLab Bank as well as other virtual banks have to encounter is to educate the market on the key difference between virtual banks and traditional banks.
To gain market awareness, all virtual banks are actively offering perks for opening accounts by offering cash rewards, bonus points, to merchant discounts in order to attract early adopters. In 2021, we anticipate all virtual banks to be more mindful of costs, hence curtailing their spending.
At WeLab Bank we aim to continue building brand trust in our first full year of running in 2021. A pertinent message for our current and potential customers is that, like any other traditional bank, we are regulated by the Hong Kong Monetary Authority and depositors are protected under the Deposit Protection Scheme. As much as we can, WeLab Bank distinguishes itself from the competition by innovating its product stack.
TDB: How is WeLab Bank differentiating customer experience and enhancing its products and services in 2021, given the fact that HKMA has approved 7 other virtual bank licenses and that other retail banks are also strengthening their digital initiatives.
Tat Lee: While I cannot comment on other virtual banks, at WeLab Bank we aim to help the next generations Manage, Save and Grow their money. Based on our research, there are three million people in Hong Kong who are “underadvised” on how best to bank based on their personal needs.
These customers are overlooked majority of the time, with banks maintaining “little to no” relationship with them primarily due to balance thresholds. On the other hand, WeLab Bank provides essential banking services like deposits, card, and loan products that help our customers manage and save.
As we speak, I can tell you that, we are set to increase diversity in our product range to better serve our customers, and take them on a holistic banking journey while also empowering them to take control of their finances. At WeLab Bank, we believe it is vital for the ‘underadvised’ to grow their money. Hence, this is why a range of wealth management products is part of our roadmap.
TDB: What are the ways in which WeLab Bank harnesses technology to create and foster greater levels of personalization for its customers?
Tat Lee: We combine human needs and digital solutions to address a customer’s financial journey pain points. In our team of experienced professionals from both the financial services and technology industries – we believe we have a good understanding of our customers’ needs. This helps us prepare ahead of time, deploy the required technology and always be ready with insights to improve one’s current spending, savings, and investments, enabling one to accomplish financial goals.
Speaking of personalisation of financial services for customers, in March 2021, we formed a strategic partnership with Allianz Global Investors to introduce digital wealth management solutions for our customers. The first phase of this partnership will include the development of wealthtech advisory solutions to empower our next-gen to invest better.
TDB: According to The Digital Banker, emerging players such as WeLab Bank are re-shaping some of the mandates related to retail banking. Could you talk to us about some of the mandates that you and your team are trying to achieve/re-shape in the short term and long term?
Tat Lee: I believe, our mandates come from the next-gen banking customers. Specifically, our customers need help and advice on how best to manage their finances. We also understand that, the next generation is not particularly looking for a bank per se, they are looking for an advisor to keep them abreast of the various products and services available, to better manage their finances.
Hence, we took our customer’s mandates for us and applied Fintech-like solutions to bring about a vision of what banking for the next generation can look like.
TDB: Based on your experience in the banking industry, talk to us about what the future of banking industry looks like? What are the keys trends for the next 5 years?
Tat Lee: I do not have a crystal ball, but I would say that we have already begun to see the emerging trends. Some of them according to me are:
- Adoption of technology not only by the younger generation, also among the older generation.
- The power of social engagement, will continue to forge its mark in the banking industry like never before. Peer advice and affirmation on best banking products will play a key role in influencing product adoption.
- The agility and robustness with which challenger banks introduce new products will determine dominance in market share. Also, the ability to cement relationships with smart relevant advice will significantly affect market share. A phase of consolidation will also occur in the near future.
- The most interesting to me will be the overhaul of the talent pool by traditional banks in the next five years. Core skill competencies that banks once looked for in new young recruits could no longer be relevant. Skills like rote learning, routine process adherence, relationship management prowess in servicing high net worth customers may well be replaced by the competency to think out-of-the-box and advise on the basics of manage, save and grow the next-gen money.
To wrap up this interview, I believe, it will be the willingness and foresight of the upper echelons of our industry, to adopt new ways of banking and performance management, and determine which banks will win hearts, trust and in the end a chance to build a fruitful relationship with the next generation.