Hong Kong banks launch first online banking consortium

Smaller banks team up to cut costs as online banking becomes commoditized.

Four Hong Kong banks have teamed up with ecommerce technology company iMerchants to launch NETAlliance, an online banking consortium. Asia Commercial Bank, Chekiang First Bank, International Bank of Asia and Liu Chong Hing Bank are the founding members of the service, which aims to help member banks minimize the cost involved in offering services over the Internet.

NETAlliance is open to membership by other banks and chairman Mike Murad says there have even been some inquiries from institutions that already have online banking services. "Some banks had already invested in 'stage one' online banking services, but as more functionality is required by demanding customers, they are looking to phase out their old infrastructure and offer new services in a cost effective way."

The bureau service offers a wider range of products online than the small and medium sized banks could offer on their own, adds Murad, and can be integrated with a bank's existing IT infrastructure within three to five months. Future phases of the service will extend to stock trading and corporate banking services.

The concept is similar to the Stockmartnet initiative that gives small and medium-sized stockbrokers in Hong Kong the ability to offer online trading services to their clients.

Since the first Hong Kong bank -- Bank of East Asia -- launched online banking in 1997, it has been seen as increasingly important for banks to offer online services, even though the popularity of banking over the Internet in Hong Kong has failed to live up to initial expectations.

NETAlliance will charge an unspecified monthly fee to the banks, but this, says Murad, will be much cheaper than the costs banks would incur in setting up their own services.