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Wednesday, May 25, 2022

Hong Kong lenders intensify rivalry in electronic lai see market

Hong Kong lenders intensify rivalry in electronic lai see market

E-lai see demand from the city’s tech-savvy consumers continues to increase, while current social-distancing measures make this digital service more essential than ever.

Hong Kong lenders are escalating efforts to expand the local market for electronic lai see amid increasing demand from tech-savvy consumers, while current social-distancing measures have made this digital red packet service more essential than ever, according to bankers.

Various e-lai see services from the apps of virtual banks such as Mox and ZA Bank as well those of the city’s traditional big players HSBC, Standard Chartered, Bank of China (Hong Kong), Citibank, Hang Seng Bank and Bank of East Asia started to roll out new features – including lucky draws and catchy stickers – ahead of the Lunar New Year holiday this week.

Hongkongers hand out lai see – red paper packets filled with “lucky money” – on auspicious occasions like weddings and the Lunar New Year, which starts on February 1 this year. The first three days of the Lunar New Year are public holidays and non-market days in the city, with most offices and businesses resuming operations on February 4.

“We’ve seen e-lai see enjoying a faster adoption rate among young consumers in various scenarios,” said James Chan, a senior product manager at ZA Bank, the city’s first and the biggest virtual bank with more than 400,000 customers. “Apart from the Lunar New Year, young consumers are sending e-lai see to friends and family for birthdays and weddings.”

Mox Bank is offering special Year of the Tiger stickers to consumers using its e-lai see service.

Married couples and older persons traditionally give physical lai see to children and younger people during the Lunar New Year. Corporate bosses, meanwhile, distribute these red packets to employees. With e-lai see services, more young people are encouraged to take part in sending digital red packets on different occasions, according to bankers.

DBS Bank (Hong Kong), the local subsidiary of the biggest lender in Singapore and Southeast Asia, has said that its e-lai see business doubled last year from 2020, while Hang Seng Bank reported that fund transfers for digital red packets rose 60 per cent year on year during the first week of the Year of the Ox in 2021.

“While physical lai see is limited to banknotes’ existing denominations that range from HK$20 to HK$1,000, e-lai see users can send large sums worth more than HK$10,000, for example, without any need to prepare a lot of banknotes,” Chan said. “E-lai see users can also send sums based on auspicious numbers, such as HK168 and HK$888.”

The English Premiere League’s Liverpool Football Club, which is sponsored by Standard Chartered, is featured in the bank’s new e-lai see stickers for the Year of the Tiger.

An e-lai see worth HK$8,888, for instance, was sent by a ZA Bank customer during the Lunar New Year holiday in 2021, according to Chan. He indicated that such flexibility in digital payouts, along with cash awards offered by ZA Bank, has resulted in 40 per cent of e-lai see recipients from other banks to eventually open an account with the virtual bank.

Its virtual banking rival, Mox, has moved to extend its focus on older consumers up to age 90 to become e-lai see users, according to Jayant Bhatia, chief product officer at Mox. “We believe e-lai see is one of the services that can help increase our exposure to various potential customers,” Bhatia said.

The stakes are high for Hong Kong lenders to generate more demand for e-lai see services in the local market amid the massive success of digital hongbao on the mainland over the past few years.

Digital red packets worth 1.5 billion yuan (US$236 million), for example, will be given away by sponsor JD.com as part of the promotion for the annual Spring Festival Gala of state broadcaster China Central Television.

Mobile payments and transfers have become so popular in China that the country’s central bank had to remind businesses in 2018 not to discriminate against cash.

Ant Group’s Alipay and Tencent Holdings’ WeChat Pay, the two dominant mobile-payment apps, have accounted for more than 80 per cent of that market segment. Ant Group is the financial technology affiliate of Alibaba Group Holding, which owns the South China Morning Post.

The stakes are high for Hong Kong lenders to generate more demand for e-lai see amid the massive success of digital hongbao on the mainland over the past few years.

Hong Kong lenders are betting on timely new features, as part of the city’s Lunar New Year celebration, to entice more consumers to use their e-lai see services.

Along with Mox and ZA Bank, the city’s traditional lenders such as Standard Chartered, Hang Seng and Bank of East Asia are offering lucky draws for e-lai see users. On offer are cash prizes as high as HK$8,888.

Bank of China (Hong Kong) is now offering the first corporate e-lai see function, enabling companies to send up to 10,000 e-lai see to employees when they return to work after the Lunar New Year break.

That followed the group e-lai see feature introduced by HSBC’s mobile payment app PayMe in January, which allow users to send digital red packets to a maximum of 100 recipients in one go. By comparison, Bank of East Asia’s e-lai see service allows up to five people to receive digital red packets per transmission.

HSBC Hong Kong interim chief executive Luanne Lim, left, and David Liao, HSBC’s co-chief executive for Asia-Pacific, show the e-lai see feature of the bank’s PayMe apps displayed on their smartphones.

ZA Bank’s latest e-lai see innovation allows customers to request digital red packets from their relatives or friends, instead of just waiting to receive their lucky money.

Fresh digital stickers are also being made available for download by e-lai see providers during the Lunar New Year holiday. Standard Chartered, for example, is offering stickers that feature the English Premiere League’s Liverpool Football Club, which the bank sponsors.

While DBS data showed that the number of banknotes demanded by its customers have declined by 15 per cent because of e-lai see’s popularity, the Bank of East Asia said the amount of banknotes demand by customers for physical red packets have remained the same in recent years.

Examples of physical red packets that customers of UBS, Credit Suisse, HSBC and Bank of China (Hong Kong) receive for the Year of the Tiger.

Many of the city’s major financial institutions – including HSBC, Bank of China (Hong Kong), UBS and Credit Suisse – still sent out physical red packets to customers ahead of the Lunar New Year holiday.

Those remain an option for consumers like Polly Wong, a start-up executive who moved to Ireland from Hong Kong last year.

“We still like to give physical lai see as a blessing to our friends and colleagues in Ireland,” Wong said. “For our senior relatives in Hong Kong, I would like to use the e-lai see to give my blessing to them for the Year of the Tiger because the pandemic has prevented me from returning to the city.”


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