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Pursuing financial inclusion despite challenges 


The HKMA always attaches great importance to financial inclusion.  In particular, Hong Kong, being an international metropolis, is well-known for its convenient living environment and ease of doing business.  Hong Kong is also the world’s leading financial centre, with a large number of banks.  There should not be a situation that the general public is not able to gain access to basic banking services.

I have mentioned financial inclusion time and time again.  What exactly is financial inclusion?  It means that the general public and small- and micro- enterprises are able to open and maintain bank accounts and have access to basic banking services to meet the basic needs of their daily lives or the needs of fund transfers for their business operations.

The concept of financial inclusion looks simple.  It is however no easy task when it comes to practice.  Banks are commercial entities and accountable to their shareholders.  Having said that, banks differ from other businesses after all – the public have a special trust and relationship with banks and most people entrust their life-long savings and liquid assets with banks.  Accordingly, the public also has a higher expectation of banks to perform their social responsibilities as compared with other businesses.

The HKMA has been promoting financial inclusion in recent years.  Our efforts include driving all retail banks in Hong Kong to sign up to the “Treat Customers Fairly Charter” in 2013, abolish the dormant account fees, and waive the low-balance fees for vulnerable groups.  We have also asked banks to address and resolve the issues regarding the difficulties in opening bank accounts by ethnic minorities.

In addition, notwithstanding the fact that there are already a large number of bank branches and automated teller machines in Hong Kong, we see that there is still room for improvement in the coverage of banking services in some remote areas and public housing estates.  In view of this, the HKMA has been actively encouraging banks to employ new technologies and devise new solutions.  For example, two note-issuing banks in Hong Kong have in turn launched their “mobile branches” to serve customers in the public housing estates on a rotating basis.  Moreover, several banks have also introduced video teller machines recently.  I visited one of the banks a few days ago to understand the actual operation of one of these machines, and I can feel the bank’s efforts in promoting financial inclusion.

In recent months, we have received some comments from chambers of commerce, overseas companies and start-ups, indicating their difficulties in opening bank accounts in Hong Kong.  In addition, some existing bank customers also indicated that some banks had required them to provide a lot of documentation and information, failing which their accounts would be closed.  All these are not conducive to the implementation of financial inclusion in Hong Kong.

It cannot be denied that the international community has tightened the requirements and standards for combating money laundering, tax evasion and terrorist financing over the past few years.  Therefore, banks have put in place more stringent controls in their account-opening and customer due diligence (CDD) procedures.  For instance, if some offshore-incorporated companies would like to open bank accounts in Hong Kong but have no plan to conduct any substantive business here, it is very likely that they will be subject to a more rigorous account-opening process by the banks, which is also commonly seen in other jurisdictions.

We are more concerned on whether small- and medium-sized enterprises (SMEs) which are planning to carry out bona fide businesses in Hong Kong – no matter established by locals or foreigners – are subject to overly stringent requirements and treatment when opening bank accounts.  I have therefore issued a circular to all banks in Hong Kong today to elaborate on how the HKMA’s “risk-based” supervisory principle should be applied to account-opening applications and CDD measures for existing customers.  In brief, when conducting risk assessment, banks should differentiate the risk levels of individual customers in accordance with their backgrounds and circumstances, and apply risk-mitigating and CDD measures proportionately, rather than simply adopting a “one-size-fits-all” approach by applying a single standard of requirements and procedures to all customers.

What is regarded as a disproportionate “one-size-fits-all” approach?  From our exchanges with relevant parties including chambers of commerce and service providers which assist in opening accounts for their clients, they provided some examples, one of which is that some banks required the physical presence of all the directors and shareholders of overseas corporates in Hong Kong as a pre-requisite for handling their account-opening applications.  Another example is that some banks required their customers to provide voluminous or detailed old information on source of wealth when handling relatively low-risk accounts (such as Mandatory Provident Fund and small-balance accounts).

We have set out in our circular clearly that the “risk-based” approach does not require a “zero failure” outcome.  The HKMA’s supervisory stance is aimed at the effective implementation of anti-money laundering and counter-terrorist financing systems by banks and ensuring that there are no material failings in those systems.  We do not expect banks to eliminate all money-laundering and terrorist financing activities that would ever occur through bank accounts.  We hope that our elaboration on this supervisory principle will facilitate banks’ implementation of account-opening requirements and procedures that are “risk- based” and at the same time convenient to the public.

We note that the local subsidiaries and branches of some international banks may need to comply with the requirements and standards mandated by their head offices or overseas supervisory authorities, and therefore have adopted a more complicated CDD process.  However, if this leads to an undesirable effect on the implementation of financial inclusion in Hong Kong, the HKMA will communicate with the head offices of these banks and the overseas supervisory authorities concerned to review whether the existing CDD processes are overly stringent, whether there is any room for improvement, and how the local subsidiaries and branches of these banks can comply with both local and overseas regulatory requirements without compromising financial inclusion.

The HKMA requires the banks, upon receiving today’s circular, to carefully review their existing processes and practices to ensure that they are consistent with the “risk-based” supervisory principles outlined above.  Where there are any inconsistencies, the banks concerned should make appropriate adjustments and the HKMA will follow up with them.   

Financial inclusion is easier said than done, requiring the concerted efforts of the regulatory authorities and the banking industry, as well as the cooperation of the customers.  I am very pleased to see that recently some local and international banks have actively expanded their SME businesses in Hong Kong, providing greater convenience from account opening to business support.  I believe the general public and enterprises can find banks that suit their needs and provide thoughtful services.


Norman Chan
Chief Executive
Hong Kong Monetary Authority

8 September 2016


Financial inclusion series – fifth article

To review other articles in the series:

[1] Mobile Banking, Customer-Centrism, Financial Inclusion
[2] Video Teller Machines – Fostering “Financial Inclusion” with Technology
[3] From piggy bank to financial inclusion
[4] Follow-up work on issues concerning difficulties in opening bank accounts and obtaining bank loans by small and medium-sized enterprises

Last revision date: 8 September 2016
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