Three-Tier Banking System in Hong Kong - Complete Overview

Hong Kong's banking system is well-developed, tightly regulated, and offers one of Asia’s most internationally connected financial environments. It remains a leading international financial centre in 2025. However, if you're new to banking in Hong Kong, the system might seem unfamiliar at first.

From how local banks operate to the growing presence of digital alternatives, understanding the structure can be helpful if you're doing or planning to do business here. That’s why I’m sharing an overview of how the system works, who regulates it, and the options typically available. 

This article covers

✅ How the three-tier banking system works  

✅ Virtual and fintech options  

✅ What to expect when transferring funds locally or internationally  

✅ The basics of opening a bank account in Hong Kong  

Hong Kong’s banking system is tiered and tightly regulated by the Hong Kong Monetary Authority (HKMA) to ensure financial stability and consumer protection. 

Banks in Hong Kong are classified into three tiers:

1. Licensed banks: These are the primary financial institutions, offering full retail and commercial banking services. Think HSBC, Bank of China (Hong Kong), and Standard Chartered.
2. Restricted license banks: Focused on merchant banking and capital markets. These institutions deal with larger, often corporate clients, and don’t offer regular deposit accounts.
3. Deposit-taking companies: Usually subsidiaries of finance companies, offering consumer finance, leasing, and term loans. These are regulated but operate on a smaller scale than licensed banks.

As of 2025, there are over 100 authorised institutions in Hong Kong, including many international banks operating under local licenses, such as Citibank and BNP Paribas.

Licensed banks in Hong Kong are the first tier of banking institutions under the HKMA's regulatory framework – they are generally allowed to do the most. 

Licensed banks are authorised to:

• Accept deposits of any size and maturity
• Offer current, checking, savings, or similar accounts to retail customers
• Issue loans
• Handle cheque collection and payment for customers
• Use the title "bank" without limitation

Licensed banks in Hong Kong are part of the Deposit Protection Scheme, which allows maximum protection of up to HKD 800,000 per depositor.

Here are the five largest licensed banks in Hong Kong by assets

Restricted Licence Banks (RLBs) can accept deposits and offer banking services, but with some limits. They may only accept time, call, or notice deposits of HKD 500,000 or more, with no restriction on maturity.

RLBs often focus on merchant banking and capital markets. They may advise companies, help with investments, or act as a link between investors and securities issuers.

These banks are not covered by the Deposit Protection Scheme.

Here are the five largest restricted licensed banks in Hong Kong by assets

• Bank of Shanghai (Hong Kong) Limited
• KDB Asia Limited
• Kasikornbank Public Company Limited
• The Korea Development Bank
• J.P. Morgan Securities (Asia Pacific) Limited

Deposit-taking companies are usually subsidiaries of banks or otherwise connected to them. 

They can accept deposits starting from HKD 100,000 with the original term to maturity of over three months. They may also engage in commercial lending, securities business, and consumer finance.

They cannot refer to themselves as a bank, are excluded from the Deposit Protection Scheme, and do not participate in the HKD Real Time Gross Settlement (RTGS) system, also known as CHATS, which facilitates interbank HKD payments.

Hong Kong regulators may abolish the deposit-taking company tier as part of banking reforms, requiring firms to become restricted-licence banks or leave the market.

Here are the five largest deposit-taking companies in Hong Kong by assets

• Kexim Asia Limited
• Public Finance Limited
• Woori Global Markets Asia Limited
• KEB Hana Global Finance Limited
• Vietnam Finance Company Limited

Aside from traditional banks, there are other financial service options gaining traction in Hong Kong. These alternatives are growing rapidly and playing an increasingly important role in the local financial ecosystem. 

The term “virtual bank” was originally used in Hong Kong until the HKMA officially renamed it “digital bank” in late 2024. 

They are banks that operate entirely online and are licensed by the Hong Kong Monetary Authority (HKMA). They provide a wide range of banking services without physical branches, which lowers their operating costs. 

Internationally, terms like virtual banks, neobanks, and challenger banks are often used interchangeably. However, in Hong Kong, only institutions holding a valid banking licence issued by the HKMA can legally refer to themselves as virtual banks or digital banks.

Digital banks are popular with both individuals and businesses, especially for digital-first services.

There are only 8 digital banks:

Financial technology (fintech) companies are institutions that are not licensed as banks but operate under other relevant licenses to provide financial services, such as Money Service Operators (MSOs). 

Because they are not licensed banks, fintech firms cannot provide ‘banking services’. Instead, they focus on specific financial products such as payment solutions, lending, investment, or insurance.

Many deliver their services through mobile apps or web platforms, appealing to consumers who prefer managing their finances digitally.

One example of fintech in Hong Kong is Statrys. It is a licensed Money Service Operator (MSO) that offers services focused on multicurrency business accounts and payment solutions for businesses engaged in cross-border transactions.

The Hong Kong Monetary Authority (HKMA) serves as the territory’s central banking institution. Its main responsibilities is to maintain currency stability by keeping the value of the Hong Kong dollar steady through the Linked Exchange Rate System, which ties the HKD to the USD within a narrow range. 

Another key role of the HKMA is licensing and supervising banks to ensure regulatory compliance, protect depositors, and maintain public trust.

In addition, the HKMA sets the Base Rate, which is the main interest rate in Hong Kong. This rate is adjusted depending on the demand and supply of Hong Kong dollars. Lastly, the institution monitors the overall health of the financial system to promote long-term stability.

Hong Kong uses the Hong Kong Dollar (HKD) as its official currency. It is abbreviated as HK$ and often denoted simply as $ when used locally. The Hong Kong Dollar is pegged to the US Dollar at a rate that fluctuates within a narrow band, typically around HKD 7.75 to HKD 7.85 per USD 1, under a system managed by the Hong Kong Monetary Authority.

This stability reduces currency fluctuations, making it easier for businesses and people to trade.

Whether you are sending money within the jurisdiction or abroad, the banking infrastructure supports a wide range of secure transfer options.

Hong Kong residents and businesses benefit from fast and reliable local bank transfers. The most commonly used methods include

• Faster Payment System (FPS) allows instant, 24/7 transfers between banks and e-wallets using mobile numbers, email addresses, or QR codes. It's often free for personal users and widely adopted across banks and payment apps.
• CHATS (Clearing House Automated Transfer System) is a Real-Time Gross Settlement (RTGS) system used for large-value transactions in Hong Kong dollars (HKD) and several foreign currencies. It's more common for corporate and institutional users.

Sending money from Hong Kong to other countries is quite straightforward, thanks to the city's open financial system and global banking links.

• SWIFT Transfers: Most banks in Hong Kong support international wire transfers through the SWIFT (Society for Worldwide Interbank Financial Telecommunication) network. SWIFT is a global messaging system used by financial institutions to securely transmit payment instructions. These transfers can be used for both personal and business purposes. It usually takes 1 to 5 business days. There are usually service fees and intermediary bank fees, which can vary by country and currency.
• Foreign Currency Accounts: Some Hong Kong banks offer foreign currency or multi-currency accounts, primarily HKD, RMB, and USD. Some of these account allows customers to hold and send money without immediate conversion.

Opening a bank account in Hong Kong can be simple or surprisingly complicated.

It depends on who you are, what kind of account you need, and how well you understand the process. 

Opening a personal bank account is usually straightforward for individuals if they have proof of identity (usually a HKID or passport if the bank accepts non-residents), address, and a valid visa or residency status. 

Things can get trickier for businesses, especially foreign-owned or newly established ones. Banks in Hong Kong are required to conduct thorough due diligence, which can result in long processing times and rejection if documentation isn’t complete or clearly presented. You’ll typically need to prepare incorporation documents, a business plan, proof of business activity, and details about shareholders and directors. Most banks request an in-person interview.

Many entrepreneurs choose to work with a local service provider or consultant to help navigate these requirements. Another growing option is to explore virtual banks and fintech platforms, which often offer faster onboarding, lower fees, and more flexible account options for startups and small businesses. 

Opening a business account with a traditional bank in Hong Kong can be slow and document-heavy, especially for startups or foreign-owned companies.

At Statrys, 85% of accounts are opened in 3 business days. Statrys is not a bank but a licensed Money Service Operator that offers multi-currency accounts to manage international payments, all fully online and designed with entrepreneurs in mind.

The highlights are

✔️ 100% online onboarding

✔️ No monthly fees, no initial deposit, no minimum balance
✔️ Hold 11 major currencies, including HKD, RMB, USD, GBP, EUR and more
✔️ Dedicated account manager for support via phone, chat, WhatsApp, WeChat, and email
✔️ Competitive FX rates and a FX helpdesk