Top 5 Bank Account Alternatives for Hong Kong SMEs

Definition and Types of Traditional Business Accounts

Among various bank accounts and financial service platforms, traditional bank accounts remain the primary tools for businesses to store money and manage their cash flow. Under the supervision of the Hong Kong Monetary Authority (HKMA), Hong Kong’s banking system is categorised into three tiers: Licensed Banks, Restricted Licence Banks, and Deposit-taking Companies. Most banking services used by individuals and businesses fall under the Licensed Banks category.

Each type of bank provides different banking services based on its licensing scope. In Hong Kong, the most commonly used traditional bank accounts for businesses include:

• Regular Savings Accounts: Ideal for storing money in the short term, offering interest returns but typically at lower rates.

• Checking Accounts: Designed for daily payments and transactions, such as issuing checks and wire transfers.

• Time Deposit Accounts: Lock funds for a fixed term, providing higher interest rates but with limited flexibility.

Traditional bank accounts are known for their comprehensive and stable banking services, and they are protected under the Deposit Protection Scheme, which insures deposits up to HKD 800,000 per depositor per bank. Until the rise of fintech platforms, traditional bank accounts were the go-to banking services for both large enterprises and SMEs in Hong Kong.

Limitations of Traditional Bank Accounts for Businesses

While traditional bank accounts are stable, they often present multiple limitations that can hinder the growth of SMEs and startups.

High Account Minimums and Fees

Most traditional banks require businesses to maintain a minimum balance to avoid fees. For example, HSBC, Bank of China Hong Kong, and Hang Seng Bank set the minimum monthly balance at HKD 50,000. If the account balance falls below the requirement, banks will impose administrative fees.

Additionally, opening a business bank account typically involves application fees and search fees, which can exceed HKD 10,000. This can be a significant expense for SMEs and startups.

Lengthy Approval Process and Time Costs

For new businesses or those with limited transaction history, banks often adopt strict review procedures. Applying for a business account usually involves submitting multiple documents, such as proof of funds, business plans, and company registration certificates.

The entire process can take weeks or even months, especially for startups that lack a financial track record. This lengthy process can be a major obstacle for SMEs that urgently need cash flow to support business operations.

Lack of Service Efficiency and Flexibility

Traditional banks often lag in terms of cross-border transfers and liquidity management. Although some banks provide online banking services, the speed and flexibility of processing fund transfers are still limited. This is particularly evident when compared to digital banks and emerging fintech platforms. Business account holders at traditional banks may still need to visit physical branches to complete certain transactions, limiting their ability to manage funds around the clock.

Moreover, the interest rates offered on traditional business deposit products are generally low, making it difficult for businesses to earn substantial returns on idle funds. In addition, traditional banks often lack competitive advantages in exchange rates and processing speeds for international payments compared to fintech platforms.

Top 5 Business Bank Account Alternatives

As more SMEs become dissatisfied with traditional bank accounts, they are increasingly seeking more flexible and cost-effective options. Here are five popular bank account alternatives for businesses in Hong Kong:

1. Virtual Banks/Digital Banks

Digital banks, previously known as virtual banks, operate without physical branches, providing a full range of banking services through online platforms and mobile apps. Since 2019, the Hong Kong Monetary Authority has issued digital bank licenses, leading to the launch of business banking services from banks such as ZA Bank, Livi Bank, Airstar Bank, and PAO Bank.

The core services of digital banks include deposits, payments, transfers, and business financial management. Most digital bank business accounts do not require a minimum balance and offer free or low-cost local transfer services, making them particularly appealing to SMEs that require greater cash flow flexibility. However, digital banks lack physical branches, cannot handle large cash deposits, and currently do not provide physical check services.

2. Fintech Platforms

In recent years, numerous fintech platforms have emerged in Hong Kong, offering financial services outside of traditional banks. Platforms that hold a Money Services Operator (MSO) license are considered strong alternatives to conventional business accounts. Aspire is an example of a representative MSO platforms in Hong Kong, providing businesses with comprehensive solutions for receiving payments, making transfers, and managing multiple currencies.

These platforms usually offer multi-currency accounts that closely resemble traditional business bank accounts. Businesses can open dedicated account numbers, make international transfers, receive foreign currency payments, and use corporate debit cards for payments and expense management.

The account opening process for Fintech platforms is entirely online, allowing business owners to complete document submissions, identity verification, and account setup without visiting a physical branch. These platforms generally do not charge account opening fees, making them accessible to SMEs and startups that may have been rejected by traditional banks due to high minimum balances or lack of transaction history.

Fintech platforms also excel in international payment services. For example, Aspire supports multiple currencies, enabling businesses to make international transfers or receive foreign currency payments without opening multiple accounts. This is particularly convenient for companies engaged in cross-border trade or those that frequently deal with overseas clients.

Unlike traditional banks that charge multiple fees and take longer to process transactions, Aspire offers lower fees and faster processing times, effectively improving cash flow management. Additionally, Aspire can integrate with existing accounting systems through API connections, allowing for automatic transaction data synchronization and quicker reconciliation processes, making it a strong alternative to traditional bank accounts.

3. Money Market Accounts

Money market accounts allow businesses to store money and invest idle funds in highly liquid, short-term instruments and monetary assets, providing stable returns. Typical assets in a money market account portfolio include treasury bills, commercial paper, bank acceptances, and other short-term debt instruments.

Unlike time deposits, money market accounts offer more flexibility in terms of withdrawals and transfers, though they may require a higher minimum balance.

In the United States, money market accounts are relatively common. In Hong Kong, however, they are typically available in the form of Money Market Funds, which are managed by asset management companies or banks. Businesses can purchase these funds through banking platforms or brokerage firms, investing idle cash in high-liquidity assets.

It is important to note that money market funds are not the same as bank deposits. Fund values fluctuate with market conditions, and funds are not covered under the Deposit Protection Scheme in Hong Kong.

4. Credit Unions

Credit unions, also known as savings and credit cooperatives, are member-based financial institutions where funds are pooled by members to provide loans to other members. Loans are typically restricted to members, who usually share a common background such as the same employer, union, or community group.

Unlike traditional banks, credit unions rely primarily on member deposits, offering lower loan rates and higher savings account interest rates.

In Hong Kong, credit unions must comply with the Credit Unions Ordinance and are regulated by the Agriculture, Fisheries and Conservation Department (AFCD). To establish a credit union, at least 15 members with a clear common bond are required. However, the number of existing credit unions in Hong Kong remains limited, and they are not considered mainstream banking alternatives.

In contrast, the United States has a well-established credit union system regulated by the National Credit Union Administration (NCUA), which insures deposits of up to USD 250,000 per member. While credit unions in Hong Kong primarily serve specific groups and lack a comparable deposit insurance mechanism, they remain less common in the commercial finance sector.

Community Banks

Community banks are smaller financial institutions that focus on serving local businesses and residents, emphasizing strong community ties and localized services. They offer tailored loan programs, business financing, and residential mortgages.

Compared to major banks, community banks are more flexible in their lending decisions, with faster loan approval processes. This makes them particularly attractive to small businesses that lack extensive financial records.

In the United States, community banks are widely available and are typically owned by local shareholders or government entities. They are regulated by the Federal Deposit Insurance Corporation (FDIC) or state authorities.

However, Hong Kong does not have a designated community bank system. All banks accepting public deposits, including traditional and digital banks, are regulated under the Banking Ordinance and must meet the same capital adequacy and risk management standards.

While Hong Kong lacks community banks similar to those in the United States, some smaller deposit-taking companies or fintech platforms function similarly, providing targeted banking and financing services to SMEs with limited funding needs.

How to Choose the Best Bank Account Alternative?

When selecting a bank account alternative, businesses should consider factors such as account opening requirements, funding size, transaction frequency, and cash flow flexibility:

• Account Opening Requirements: Startups or businesses with limited funds may struggle to meet the minimum balance or operational duration requirements set by traditional banks. For instance, Aspire does not require a minimum balance, and the entire account opening process is conducted online. Business owners only need to submit company registration documents and identification proof for account holders or authorized signatories. The account can be opened within one business day, significantly reducing the time cost.

• Fee Structure: Traditional banks often impose fees for cross-border payments, wire transfers, and maintaining minimum balances. In contrast, platforms like Aspire adopt a transparent fee structure with no hidden charges. Aspire’s multi-currency account offers lower transfer fees and competitive exchange rates, making it particularly beneficial for businesses that frequently conduct international payments.

• Cash Flow Flexibility: When choosing a bank account alternative, businesses should prioritize multi-currency account features that facilitate receiving and sending funds in different currencies. This is especially important for businesses involved in cross-border transactions, as it helps minimize exchange rate losses.

• Transaction Frequency and Automated Management: For businesses with high transaction volumes, accounts with API integration capabilities are worth considering. These services can connect with accounting systems to automatically synchronize transaction data, reducing manual entry errors and improving reconciliation efficiency.

• Mobile Banking Services: For businesses that operate on the go or need to monitor cash flow regularly, solutions with mobile banking apps are crucial. Mobile platforms should provide essential features such as checking account balances, viewing transaction history, monitoring transfer status, and tracking expenses. This enables business owners to access real-time financial data and make immediate payment adjustments as needed.

Aspire: A Flexible and Efficient Business Bank Account Alternative

Aspire offers a comprehensive financial solution for businesses, allowing companies to open multi-currency accounts and global payment services in as little as one business day. There are no account opening fees, minimum deposit requirements, or balance thresholds. This swift account setup is particularly beneficial for startups and SMEs, helping them reduce cash flow pressure and quickly commence business operations.

For fund transfers, Aspire supports the Faster Payment System (FPS) in Hong Kong, enabling users to make unlimited free local transfers and receive payments without transaction limits.