Livi, the virtual bank co-owned by Bank of China (Hong Kong), hopes to attract customers with cash rewards and the convenience of easy payments at shops through quick-response (QR) codes.

The fourth virtual lender to start operations in Hong Kong this year, Livi launches on Wednesday. Online e-commerce company JD Digits and Hong Kong conglomerate Jardines are its other owners.

"We do not compete on pricing. But we believe our mobile apps can offer a good customer experience to attract clients to use our services," said David Sun, Livi's chief executive.

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Virtual banks are a core part of the Hong Kong Monetary Authority's efforts to encourage the use of financial technology to cut costs and enhance services. These banks cannot have any physical branches and must operate online only. Hong Kong's is a competitive market - the virtual lenders must compete with 155 traditional banks serving a city of 7.5 million people.

Livi is teaming up with payments company UnionPay for its QR code services, which will allow customers to settle payments at hundreds of shops, including 7-Eleven stores and Maxim's cake shops, as well as dining establishments with a quick scan of codes on its app.

David Sun, Livi's chief executive. Photo: Handout alt=David Sun, Livi's chief executive. Photo: Handout

Moreover, all customers using its app to make payments will be able to play a game and earn cash rewards. The bank will not reveal the reward amounts, which will be a surprise for its customers, said Anthony Wong, Livi's marketing director.

Opening an account will take less time than making coffee, Wong added.

The bank will not follow in the foot steps of Hong Kong's other virtual lenders by offering high interest rates on deposits. Livi will only give 0.5 per cent in annual interest for large deposits up to HK$500,000 (US$64,516). ZA Bank, meanwhile, is offering 6.8 per cent, WeLab is offering 4.5 per cent and Airstar is offering 3.6 per cent.

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The interest rates on deposits that Livi is offering are lower than those offered by traditional banks as well. BOCHK, its parent company, offers 0.6 per cent for three-month time deposits, while HSBC and Standard Chartered Bank offer 0.55 per cent to 1 per cent.

"Hong Kong's economic outlook is full of uncertainties, and it might discourage some new players such as Livi from spending too much on attracting customers in the current situation," said Louis Tse Ming-kwong, managing director of VC Asset Management. "The bank might consider launching more incentives to attract clients when the economy improves."

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 © 2020 South China Morning Post Publishers Ltd. All rights reserved.

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