In 2019, there are a total of 160 licensed banks in Hong Kong SAR, ranging from small local financial firms to large international players. Banks in Hong Kong SAR have remained largely profitable over the past years, mainly attributed to a large pool of wealthy customers and increasing investments in Asia Pacific.
finding the balance between traditional and digital banking
The changing customer demographics and demands are pressuring banks to review their strategies to safeguard their businesses from external forces and ensure long-term sustainability. As the demand for digital services and alternative options increase, there is an opportunity for virtual banking in Hong Kong SAR and new fintech entrants to shake up the market. International banks are stepping up their digitisation efforts to keep pace, initiating business restructuring and digital transformation to automate processes, so that employees and customers can make faster and smarter decisions.
The HKMA (Hong Kong Market Authority) has already granted virtual banking licenses to eight successful applicants and most have indicated market launch plans by mid-2020. However, experts are saying that tech-based financial services may not radically displace traditional banks’ profits and customer base.
Rick Chung, Associate Director of the Banking and Financial Services team in Randstad Hong Kong shared, “At the end of the day, Hong Kong SAR’s population is still fairly traditional. They would prefer to bank with traditional firms, although we are seeing them slowly opening up to the services provided by fintechs. The new marketplace calls for an ecosystem that consists of small to large players, each of them providing a different type of service or product to meet very specific customer’s needs. In fact, with the right talent equipped to lead the transformation, products and services provided by virtual banks, fintech firms and traditional institutions can complement each other.”
3 market and talent trends to look out for in hong kong SAR’s banking scene
Chung shares the three trends he and his team of specialised banking and finance recruiters have observed in Hong Kong SAR.
1. mitigating financial risks in the digital space
In its first batch of virtual banking licenses, HKMA received 29 applications from telecoms and fintech firms, and granted only eight. As these eight firms prepare for market launch in 2020, we see an increased demand for risk and compliance talent as well as sales management.
Activities that require physical validation, such as know-your-customer tasks, identity checks to prevent potential fraudulent activities, could all be conducted on the virtual space in the future. Without a human to validate confidential details such as reasons for loans or large deposits, banks risk dealing with illegal shell companies or people who are looking for ways to unlawfully transfer their assets across firms and markets.
Therefore, it is critical for fintech and virtual banks to have a strong compliance strategy and framework in place, to secure themselves and reassure their customers. As a result, the talent demand for risk and compliance professionals has increased, particularly for those who are highly-adaptable and digitally-adept to thrive in this new environment.
Firms are also actively looking to hire sales management talent to develop and manage client segmentation strategies. Experienced technology and finance professionals are also required to identify technology and fintech services to create highly-personalised banking services that meet niche customer needs.
Virtual banks are looking for young and experienced talent from traditional banks who are open to joining a new industry which promises greater job exposure and career progression opportunities.
2. finance people want exposure and internal mobility
As the external environment becomes more unpredictable, Hong Kong SAR employees are less inclined to switch employers. Notably, front-line staff whose performance is tied to a sales target will have to re-establish their activities in an environment that is not in their favor.
According to our latest Employer Brand Research, ‘job security’ is ranked the third most important employee value proposition that people in Hong Kong SAR look for in an ideal employer, right after ‘attractive salary and benefits’ and ‘work-life balance’. In addition, 39% of respondents are willing to give up at least 10% of their salary in exchange for job security. Employees are concerned about ‘protecting their rice bowl’ and are looking to their employers to equip them with the right skills to remain employable.
Other employees in middle and back-office who are focus on career development will likely ask for more exposure through internal mobility opportunities. Companies that invest in their employees’ growth will find themselves having more a more loyal, productive and engaged workforce.
3. untapped potential in insurance brokerage
Insurance broker firms do not exclusively represent the products sold by an insurance company, which gives these firms a large playing field to attract customers who are looking for a variety of options. For instance, customers that are looking for a comprehensive financial portfolio that consist of different products from a number of insurance companies will be more attracted to engage with broker firms.
In comparison to bancassurance which operates in a rather mature environment and insurance agencies which are tied exclusively to products from a single insurance entity, brokerage firms tend to have more flexibility in creating highly-personalised portfolios to meet the specific needs of their customers. As a result, the current market trend point towards a growing customer base that would prefer services provided via brokerage channels.
We expect the insurance brokerage field to expand – both in the number of firms providing these services as well as workforce size. Firms are looking to hire experienced brokers who have a large network to gain access to build a loyal customer base, and who have commendable in-depth market and product knowledge and risk management capabilities.