Differences in Retailing Banking Systems of US and Hong Kong–a Customer’s Perspective

Some ten years ago, I moved to HK for a faculty post after living in the US for over 15 years. Although I was born in Mainland China. Believe me, there was a cultural shock. Part of this shock comes from the peculiar mix of the British system and Chinese culture in HK. In this essay, I will highlight only customer interfaces of the banking system.

Account Opening and Personal Information Update

US banking: I will  When I came to the US in 1998, to open an account, I  needed to provide a permanent resident address and social security number. I had neither. At that time, I was temporarily staying in the living room of a friend’s apartment and had yet to find my own apartment; as to my social security number, I had yet to run to the social security office to get one. However, the clerk still helped me open my checking and saving account after seeing my student status document, i.e., the  I-20 form issued by the international student office of my school, He only requested me to update both information once I settled in: social security number and my permanent address. 

Technology has advanced since the end of the last century. Nowadays, if you have an address and social security number, you can open a banking account easily as the octopus-like powerful information system keeps track of your steps more loyally and accurately than the most powerful of human memory! 

As a result, you do not need to visit a physical office of a bank from the moment of opening to the closing of an account, and depositing, transferring, or any other activities. If I forget a password or want to update my personal information, I can do it without having to call or visit an office, provided that I set up security questions that are only known to me.

Hong Kong Banking: Forward to 2013, I moved to Hong Kong. There, the situation is very different. First of all, the population density cannot be denser. Internet banking is possible, banking website is often very basic. To open an account, the rules are strictly enforced. Without a permanent address–proof of utility bill, lease contract–, and ID document, it is impossible to open a banking account. After seeing all legal documents etc., the clerk would say, ” OK, I will open it for you. However, you will need to stop by to show us the required documents after you get it.” If you are expecting this scenario which is very common in the US, you are hallucinating.  All rules are strictly followed. At best, the clerk will consult his/her supervisor who will say No—rules are much more rigid.  If you move to HK, you need to be more patient: obtain all documents the bank requires before you can open an account.  Once you move out of HK, your account will be closed by the bank automatically because your HKID register has expired.

 If you want to update any personal information, such as a residential address, ID documents, or phone number, you cannot simply log onto your internet banking, and do it there by yourself. You will need to walk into a physical bank office, wait in line, and fill out a bunch of forms to get it done.   Fortunately, since the city is super dense, it will not take too much trouble to get to a bank office; they are ubiquitous, popping up in a shopping mall, near a subway/train station, or the downstairs of your flat unit.   I made a huge mistake by calling the 800 number following my old habit acquired living in the US. Those who are authorized to make changes to your account are managers at bank branches, not service representatives in the call center.  They are there to provide information   This difference can be ascribed to cultural differences: the US culture is much more flatter and frontline workers have much more authority than those in HK to make changes to your bank account.   Rooted in Chinese culture and heavily influenced by the British, HK society is much more hierarchical than US society.

Fund Transfers

In the US, P2P transfer is easy, you use platforms such as Paypal, and Venom. All required is that you link your checking account with these platforms, once you know the payee’s email address, you can transfer funds seamlessly without a cost. Of course, another old-fashioned way is to write a personal check. In HK, the most common way to pay/receive rent is through direct transfer via ATM machine, providing that you and your landlord use the same bank. Otherwise, you go with the old-fashioned check. Landlords often prefer the ATM method because if you continue to rent their place, they can hide income from rental when the time comes for filing personal income tax.

An interesting way to pay and shop in HK is the octopus card. Almost everyone will take the subway or bus even those who are super rich like movie stars or billionaires. You can add money to your Octopus card. To take public transportation, you just swipe your card, fares will be taken off from the card. You can also use the card to buy things at shops or groceries. Most retail stores accept it. Octopus card is safer than Debit cards because if you lose it, your loss is limited to the funds you store in it.

As to interpersonal payment, the most common is the old traditional way, using paper money, if the total sum is small. Physical money plays a much greater role in HK, and perhaps other parts of the world than in the US.

Security System

As someone who does not like to carry a cell phone around, one of my biggest complaints when I first arrived in HK is the double-security system. That is, you will need to enter pins received from your phone to access my account every time I  log on to your account from the internet. There is no such requirement in the US. It is certainly somewhat inconvenient.    Interestingly, four or five years later since I came back to the US, the US banking system has been catching up.  all my financial-related accounts, banking, stock brokerage, crypto accounts, and even my workplace email account use dual verification: password plus text/voice verification via phone, app, or email.

Fees

HK is one of the most important financial centers in the world with a very low tax rate. Despite this,  stock brokerage or banks charge much higher fees almost on all financial-related matters, be stock transactions or fund transfers. For example, they charge a hefty service fee if your stock receives dividends and for transactions.  Now, nearly all stock exchange brokers in the U.S. offer free purchases—there is still a low fee for selling at Vanguard brokerage–since two or three years ago.

Summary

• As the most powerful country with the most advanced technology, the banking and financing system in the US is the most efficient one compared with other parts of the world (or at least for the part of the world that I have experienced, China, and HK). As a result, it offers the best service at the least cost (fees are much lower than its counterparts in HK). Additionally,
• For many reasons that are not listed here, the financial system in the US seems more trusting than in other parts of the world–HK and the banking system in mainland China based on my limited experiences—, therefore the security system was far better in HK than in the US although not without friction costs—more time-consuming both for both customers and banks in HK. The multi-verification system was adopted much earlier in HK and China than in the US. Despite that, the financial institutions in HK  and in China rely more on old-fashion methods in many aspects —paper works—rather than digitalized systems.