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China CITIC and DBS take virtual battle to credit cards

CNCBI’s new InMotion brand for virtual banking is reshaping financial services.



Helen Kan, CNCBI

China Citic Bank international (CNCBI), like most of its peers in Hong Kong, didn’t apply for a virtual banking license. It didn’t see the need: it is now launching a comprehensive online banking service to grab market share from more traditional players – and stave off expected competition from incoming virtual banks.

The key part to its strategy is a virtual credit card.

It is therefore crossing swords with DBS, which also launched a virtual card. But whereas DBS’s compliments a physical bit of plastic that gets mailed to customers, CNCBI is betting on a 100% online strategy.

In March 2018, CNCBI launched the city’s first remote account-opening service for its banking app, called InMotion. The second such service was only opened in December, by Standard Chartered Bank.

Doubling the acquisition rate

Now CNCBI is extending its virtual banking service to investments, bancassurance, and credit cards. It has launched a virtual card issued by Mastercard that consumers can use to shop online and even offline, if they have a mobile phone enabled with NFC – near-field communication, a.k.a. contactless payments tech.

“Remote account opening is a key step for any virtual bank,” said Helen Kan, executive director and alternate CEO of CNCBI. “It took us nine months of testing to verify a real I.D. card before we launched it last March, and now we’re offering full virtual service.”

Since March 2018, about 25% of new retail banking accounts have been opened via InMotion. Kan predicts this figure to exceed 50% over the next two or three years, with the aim of doubling the rate of new customer acquisition.

“We didn’t apply for a virtual banking license,” Kan said, “but we are the first mover with InMotion Bank.” (InMotion is the brand name of CNCBI’s app, not a separate company.)

The power of digital cards

A virtual credit card is a tool to attract new customers to Citic bank’s overall digital platform. Virtual banking isn’t just about delivering the same service online. It changes the way banking happens.

A customer at a restaurant sees that if she had an InMotion credit card, she’d get a 20% discount. A physical banking relationship means she can only apply later, if she remembers to at all. A virtual one means she can submit an application on her phone right there, and get approved within minutes to enjoy the discount.

We are the first mover.

Helen Kan, CNCBI

Kan says that a positive experience like that will boost its InMotion brand and lead customers to other offers, such as commission-free purchase of equities, and 3.8% interest for 3-month time deposits.

“Because everything can be done on your mobile, there is no need to go to a branch, so customers are tempted to try new services,” Kan said. The bank expects to double the number of credit cards it issues this year, largely driven by the virtual kind. She declined to say how many cards the bank has in circulation.


DBS was actually earlier to the cards battle: it introduced a virtual credit card in December with the promise of approvals in just a few minutes. The card can be used immediately to make purchases through Google Pay or Apple Pay.

So which is better? DigFin applied for virtual cards from both banks. Here are our findings.

  • Marketing

DBS’s virtual card is temporary, meant to serve until a physical card is mailed. DBS emphasizes the convenience of the application rather than the digital feature and is keeping its branding around itself, casting DBS as a leading bank both online and offline.

CNCBI decided to skip the physical card, with the view that Hongkongers already carry around enough plastic. It is pushing the InMotion brand instead in a bid to appeal to new, younger customers.

  • Application experience

InMotion has made it easier to find information. A Google search immediately displays links to the app. DBS’s card, on the other hand, is not that visible; DigFin, after searching in vain online, had to call DBS to find details about their virtual cards.

CNCBI has a simpler offering. DBS offers more flexibility, but its landing page leads to three different credit cards, which is confusing for new customers.This may be because DBS is marketing to its existing customers.

DBS’s application procedure required DigFin to screen her I.D. card. CNCBI requires also a selfie and a video with some head movements, which seems to be a more secure way to authenticate a customer.

  • Financial terms

Both banks provide an initial credit line of HK$10,000 ($1,273), which can be increased when customers submit additional documents, such as bank statements.

DBS’s Compass Card’s annual fee is HK$300 while the InMotion card charges a hefty HK$1,200, and while this charge is waived for the first three years, it’s more expensive than some traditional players such as China UnionPay and Enjoy Card, which waive all annual fees for a lifetime.

Both charge interest rates about double the rate of a traditional bank card. CNCBI imposes an interest rate of 34.39% and a punitive rate of 42.58% for customers that fail to pay after two months. DBS’s Compass Card charges 35.7% interest which can come down if users submit more information or prove their creditworthiness.

These examples suggest banks in Hong Kong have yet to amass the kind of data that can help them price risk for online customers.

But they understand the risks of competition. CNCBI charges a HK$800 handling fee if customers terminate the card in year one. The bank is in land-grab mode, locking in users now before the competition in virtual banking becomes all too real.

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