The use of technology, such as big data and mobile gaming, has enabled Livi Bank to tap business opportunities from borrowers whose needs have been overlooked by the city's 160 licensed banks, according to a top official at the virtual bank.

"The Covid pandemic has accelerated adoption of digital banking in Hong Kong, propelling technologies such as remote identity check, [and] remote customer onboarding," said chief technology officer Gary Lam.

Big data and credit risk modelling have given the bank better insights into the spending habits of its customers, allowing it to better manage credit risks, he said.

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Lam said one innovation that his team has brought to the city's retail borrowers is a revolving loan service that enables its users to split their bills into instalments ranging from three to 36 months. The service is delivered using a virtual debit Mastercard stored on a mobile phone.

Livi Bank is co-owned by Bank of China (Hong Kong). Photo: Handout alt=Livi Bank is co-owned by Bank of China (Hong Kong). Photo: Handout

Since its launch in August 2020, Livi, co-owned by Bank of China (Hong Kong), Jardine Matheson Group and JD Technology, the fintech arm of e-commerce giant JD.com, has signed up 150,000 users, according to Lam. The eight virtual banks licensed to operate in the city had about 580,000 registered users in March and together had HK$20 billion (US$2.6 billion) in deposits, or just 0.1 per cent of Hong Kong's deposit base, according to data from the Hong Kong Monetary Authority.

The online bank is also leveraging businesses owned by Jardine to grow. Livi is using mobile games to attract shoppers to use its banking app at Jardine's subsidiaries like health care chain Mannings and supermarket operator Wellcome.

Livi wants to "gamify" the interaction between customers through games delivered via its mobile app, he said.

The race is also on for virtual banks to win new loans from customers. Among the eight virtual banks, ZA Bank and Airstar Bank were the top two, extending HK$683 million and HK$557 million, respectively, to customers up to December 2020, according to a KPMG report on Hong Kong's banking sector published in June.

HKMA CEO Eddie Yue Wai-man will release details about its commercial data interchange project this week. Photo: Winson Wong alt=HKMA CEO Eddie Yue Wai-man will release details about its commercial data interchange project this week. Photo: Winson Wong

"We expect that in the year ahead the other virtual banks will focus on offering more loans to their clients to boost revenue through interest income," said Steve Cheung, a partner specialising in financial services at KPMG China.

Later this week, the HKMA will release details about its commercial data interchange project, a platform to facilitate more efficient data flow between businesses and banks , HKMA chief executive Eddie Yue Wai-man said last week. The infrastructure is intended to address pain points that have been stifling banks' financing to small and medium-sized enterprises, HKMA officials have said previously.

The commercial data interchange could elevate fintech innovations across Hong Kong to the next level, said King Leung, head of fintech at InvestHK, which promotes foreign direct investments in the city.

"The interchange will promote more secure and efficient data sharing and wider access to data," said Leung. "The sky's the limit on the possibilities."

This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2021 South China Morning Post Publishers Ltd. All rights reserved.

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