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7 Challenges Decoded : Mastering Hong Kong Bank Account Opening for Startup Success
Hong Kong Bank Account Opening is hot-button issues, especially to entrepreneurs of startups and small businesses. We receive enquiry phone calls and emails daily, majority of them are asking for help of incorporation for doing new business followed by banking in Hong Kong.
7 challenges of Hong Kong bank account opening
We can tell startups and small businesses that Hong Kong company formation is quick and simple, as everyone can make it happens remotely in 5 days. But opening an account for your company in Hong Kong banks is difficult because:
- Hong Kong banks require nearly every key person of your company to visit Hong Kong for the account opening interview with their bankers as part of their “Know-Your-Customer” policy.
- Hong Kong bankers, who you will meet, need to check your business operational documents, plus your explanation as proof. So you can earn their trust that your business is legit.
- Hong Kong banks’ compliance department spends weeks and even months on their due diligence analysis in the backstage, as a part of due diligence requirement.
- Hong Kong bank’s due diligence is not transparent. The banks refer this step as a part of their internal procedures. Even the bankers you met do not know the bank’s marking scheme, so the customers are not able to assess the chance to open.
- Hong Kong bank’s compliance requirement may change (i.e. being tightened, usually) after the submission of your application, without any prior notice.
- Hong Kong banks can require supplymentary documents from you during their review unexpectedly.
- Hong Kong banks keep your application for years in case it failed. It is extreme difficult for applicants to open accounts in the same banks in the future.
Therefore, we can hear that startups feel Hong Kong banks are unfriendly to them because the bank account opening process:
- lacks transparency
- varies from banks to banks / time to time
- requires a lot of effort to prepare
- waits too long for their backend procedure
- most critically, reject their application without explanation
“Do Hong Kong banks hate my money?”
No way. However, there are 2 reasons behind the complication of the bank account opening:
Risk Factor
The banks are very defensive about the opening of accounts to avoid massive penalties from the regulatory bodies. Their compliance officers of the banks are working so vigilantly that a tiny mismatch in their clients’ profile is unacceptable. Not to mention new clients, some banks see account opening service, which means starting business relations with unknown entities, is a risky business.
Profitability
The banking industry is profit-driven. Small businesses and startups are not attractive to the banks since they are unlikely to buy the lucrative “value-added” goods from the banks, like investments, savings, insurances, and loans. Some banks are closing their business accounts of low volumes to cut their operational cost.
Under the backdrop of the bank’s reluctance to serve small business and startups, emerging financial technology takes place to help. Let’s check it out later.
Recently, the Hong Kong fin-tech plateforms are offering online banking account for small businesses, so that you can open your business banking accounts online and remotely.
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