The emergence of virtual banks and their disruptive powers is estimated to cause an average revenue loss of 7 percent in the next three to five years for traditional retail banks in Hong Kong.

The banking industry is gradually transitioning towards the end of minimum balance fees and other charges in the midst of a virtual banking charge, placing pressure on banking margins especially in Hong Kong. In fact, an Accenture report estimates that the 7 percent of revenue at risk in the next three to five years ranks the city at third behind the U.K.’s 8 percent and Australia’s 9 percent.

According to the report, the top three most-cited difficulties globally were unfair fees, opaque pricing and insufficient support of client financial needs. 52 percent of Hong Kongers claimed to encounter difficulties with their bank, significantly above the global average of 36 percent. What’s more, 72 percent of Hong Kong respondents had more than one bank account compared with the global average of 58 percent. 

-7 Percent to +12 Percent

In contrast, Accenture estimates that a reversal of 7 percent revenue loss to a 12 percent incremental increase in the coming years could be achieved in Hong Kong by accomplishing two things: becoming a trusted advisor and offer value-added services. Interestingly, Hong Kong customers’ dissatisfaction is mirrored in positive fashion by their greater willingness to pay extra fees (72 percent compared with the global average of 55 percent) for additional banking services.

The top three most cited services Hong Kongers were willing to pay for were: automated tools where a fixed percentage of customer money is automatically moved current accounts into saving or investment products; discounts on daily expenses based on personalized spending patterns; and planning support to help meet long-term financial goals.

Fee Structure Changes

Expect further changes to banking fee structures, said Accenture’s banking industry lead for growth markets, Fergus Gordon, highlighting transparency as a key driver to win client trust. 

«There’s a real opportunity for banks to earn the trust of their customers by bringing more transparency and understanding about how they charge fees, not to mention a simpler and more straightforward fee structure,» Gordon said.

«Customers are craving for options to better manage their daily spending, grow their savings and improve their financial well-being and they’re willing to pay for banks that they trust will have their back. Banks have made progress in this area recently, but they still have more to do. [The] ones that get that right will have a lot to gain in the years ahead.»