Journal of Applied Finance & Banking

Factors Shaping Consumer Adoption of Digital-Only Banking Services in Hong Kong

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• Abstract

   

  The Hong Kong banking sector entered a new era with the launch of licensed digital-only banks, also known as virtual banks, which are authorized and regulated by the Hong Kong Monetary Authority (HKMA). Unlike traditional banks, digital-only banks operate entirely online, offering streamlined, cost-effective retail banking services. They have expanded access and transformed banking but face challenges like deposit attrition and account inactivity. By the end of 2023, none had achieved profitability. Understanding the factors influencing user adoption is vital for sustaining these banks amid the evolving financial landscape in Hong Kong. A sample of 303 participants was gathered through a survey, and the data was analyzed using structural equation modeling. The results indicated that perceived compatibility, perceived relative benefits, and familiarity with internet banking all had positive associations with trust, whereas risk was negatively associated with trust. Additionally, trust was found to have a direct impact on the intention to use digital-only banking services. The study can help existing and future digital-only banks to design better systems and formulate better marketing strategies to attract customers to their banks.

   

  Keywords: Digital-only bank, adoption, trust, usage intention.