Adoption of Virtual Banks and Insurers

Adoption of Virtual Banks and Insurers 11 Executive Summary Society-wide infrastructure for identity authentication The respondents were asked if they agreed that the government should facilitate the authentication of their identity. The iAM Smart Account initiative 2 of the Office of the Government Chief Information Officer (OGCIO) could facilitate a large-scale adoption of online services in Hong Kong using a new digital identity infrastructure. It was found that most respondents (36%) were indifferent to such an initiative, and the proportion of respondents (32%) who totally disagreed or disagreed was similar to the number (31%) who totally agreed or agreed. Overall, the respondents were more comfortable with using fingerprint and HKID than facial recognition and HKID as an authentication method, with the former practice having been used since 2003 for Hong Kong’s smart ID cards. Challenges facing virtual banks and insurers The majority of respondents replied that they were very unlikely or unlikely to open an account with a virtual bank over the following 12 months. When asked for their reasons, 36% of respondents replied, “I already have a traditional bank account(s),” 29% explained, “I don’t trust the new virtual banks,” and 24% were uncertain or lacked knowledge about the differences between the two types of banks. Similar to the above question, five options were offered to the respondents to declare why they were reluctant to purchase products from virtual insurers. Of these options, 38% selected, “I have already purchased products from my existing insurers,” the second highest proportion of respondents (26%) selected, “I do not trust the new virtual insurers,” and a further 20% selected, “I am not sure about the difference between a virtual insurer and a traditional insurer.” From a list of words and phrases, the most selected key words to describe the challenges facing virtual banks and insurers were “security,” “trust,” “safety,” and “competition.” Success factors of virtual banks and insurers The survey results revealed the respondents’ preferences for products to be offered by virtual banks. In addition to electronic payment, deposits, and loan services— which are already provided by current virtual banks—the respondents preferred investment products (18%) and cryptocurrency investments (12%). It is interesting to note that the respondents favored cryptocurrency, which is not available from traditional banks, as an investment asset. 2 https://www.ogcio.gov.hk/en/our_work/business/tech_promotion/iam_smart/