How To Choose Your Bank Account in Hong Kong
In order to establish your business in Hong Kong, you’ll need to open a local bank account. As a financial centre, Hong Kong can offer a variety of banks to choose from, ranging from international institutions to online banks. The options vary depending on your company’s requirements, as well as the type of services or transactions required.
Let’s start with a brief background of the Hong Kong banking industry.
Banks in Hong Kong previously offered an easy and short account opening process.
Unfortunately, the pendulum swung the other way, where it is now slower and more difficult to open a traditional business bank account in Hong Kong due to money laundering and sanctions protections. This is particularly true if the owners or directors are not located in Hong Kong. Banks need to know about your business and the parties involved in order to allow for funds to pass in and out of their systems.
Thankfully, traditional banks are not your only options; the new breed of online financial technology (fintech) platforms make this process quicker and easier if you only need basic transactions. It all depends on what you need from your bank. We’ll dive deeper into this later on.
What does a bank need to know about you and your business?
A common term you’ll hear is “KYC”, meaning “Know Your Customer”. This is an industry-wide term describing the due diligence and documentation requirements by banks before account opening. It involves gaining an understanding of you, your owners and management, your customers, your suppliers, the flow and volume of transactions, financing and other relevant third parties that play a part in your business.
What is the best business bank in Hong Kong?
We have put together a brief overview of what you can expect from each type of bank, in order to see which bank is right for you.
The ‘best bank’ is generally the one with which you already have a relationship
If you have an existing bank account in another country, contact your relationship manager and ask them to refer you to a colleague in Hong Kong. For example, if your headquarters is located in Germany and you use Commerzbank DE, it would make sense for you to open a Commerzbank Hong Kong account. Major European banks such as Credit Suisse and UBS have a large presence here.
Why should I keep the same bank as I have overseas?
A referral from your bank overseas could save you time and paperwork. It demonstrates to the Hong Kong bank that a relationship already exists between you/your entity and that bank. This could help during the KYC process and if you are in financing conversations. It can also offer more favourable foreign exchange fees if you’re transferring funds within the same bank.
What are my options if I can’t keep my overseas bank account?
If you’d like to open a new account with a bank, Hong Kong offers:
‘Traditional’ or Institutional banks, and
Online-only banking platforms.
At Shepherd Asia, we maintain existing banking relationships with many of the traditional and online banks in Hong Kong.
Traditional business bank accounts
Well-known and trusted brands
Plenty of local and international banks offer business banking services in Hong Kong. We have found that our clients are especially happy with DBS and Standard Chartered. HSBC and Citibank are also popular.
In-person and manual services
If you need to use cheques, receive cash deposits and use other traditional banking services, these are your best options. You can also go in-person to a branch for enquiries. Depending on the tier of your business, you may also have a relationship manager to assist with your enquiries.
Offer a wide range of services
They offer a full range of business banking services, including trade finance, lending and insurance.
Time to open
With one of the larger institutions named above, the timeline for account opening can take 6-8 weeks. This is due to their thorough KYC requirements and due diligence.
Do I need to be in Hong Kong to open the account?
Generally speaking, yes. You may be required to attend a personal meeting in Hong Kong where foreign owners and directors are involved. We can help you with opening your company bank accounts in Hong Kong.
Cons
Higher fees for account opening, maintenance, transactions, FX.
Often poor customer service especially if you do not have a relationship manager.
Account opening process and timeline are long
Continuing KYC monitoring can be a strain
Pros
Large service offering. Not only transaction processing but also lending, trade finance and relationship management.
May have a presence in other jurisdictions where your business operates.
Widely known and used in Hong Kong and overseas.
Can give credibility and authority to a new or existing business.
Best for Companies with more complex banking needs and an international presence
Online “Bank Accounts”
What is an online-only bank account?
Online fintech platforms offer virtual business accounts and other payment solutions that use automated processes and technology to streamline the account opening process and lower fees. This allows them to better serve business customers by offering faster account opening, reduced foreign exchange fees and smarter customer service.
They do not hold funds themselves, but partner with local banks to hold the funds, such as DBS and Standard Chartered Bank. This means that when you provide your bank account details to a third party to receive a payment, the bank account name could be DBS or Standard Chartered Bank.
What online banks are available in Hong Kong?
In Hong Kong you’ll find Airwallex, Neat, Currenxie and Stratys. They offer varying levels of customer service and fees.
Time to open
They use fintech alongside user identification technology to reduce manual interventions so that users can quickly open an account online in as little as 1 day.
Do I need to be in Hong Kong to open the account?
As the process is all online, you don’t need to be present in Hong Kong to open an account. You will need to provide business documentation and answer questions in a secure online environment.
Online Bank Pros & Cons
Cons
Typically no relationship manager. When working with Shepherd Asia, we can often contact our partner manager to assist
Limited range of services at this time, for example, no trade finance
No physical presence
Often can’t accept manual forms of payment such as cheque or cash deposits
Pros
Lower fees on transactions
Minimal ongoing account maintenance requirements and KYC
Excellent foreign exchange terms
Easy & fast to accounting opening process
Best for start-up businesses especially in the e-commerce industry as they allow for easy collection in many currencies using bank accounts or credit card payments. They also integrate smoothly with e-commerce platforms such as Amazon and Shopify.
Is a traditional or online bank account best for my business in Hong Kong?
There’s no short answer here. As with every business decision, it depends on the needs of your growing business.
If you require a wider range of business banking services, a traditional bank may be more appropriate. But if foreign exchange and a smooth payment system is a priority, then an online bank would be the smart choice.
The banking industry is competitive and constantly changing, so we are proud to say that we stay on top of the information for you. We are happy to offer advice and account opening services for your business, to provide you with the best business bank account for your requirements in Hong Kong.
