HSBC, Standard Chartered, and Bank of East Asia face a potential consumer backlash in Hong Kong over recent protests. In adverts published in local papers the three banks condemned the recent violence and disruption. They cited the need to uphold the social order and “guard the status of Hong Kong as an international financial centre”.
Unsurprisingly, consumers perceived this move as the banks siding with the Beijing government over the pro-democracy protests currently sweeping the nation and Hong Kong.
This misjudgement of consumer sentiment couldn’t come at a worse possible time. GlobalData’s 2019 Banking and Payments Survey found that HSBC, Standard Chartered, and Bank of East Asia account for a combined market share of 45% of main bank accounts in Hong Kong. But the country recently granted eight digital banking licences to firms that are ready to disrupt incumbent banks’ market share. The three major banks risk losing irate customers to these new challengers.
Banks are also likely to feel the heat in other, more indirect ways. After 12 weeks of civil unrest, the protesters are helping to push Hong Kong into recession. Economists have predicted capital flight in markets such as property, which could cause major equity issues for the country’s banks. Just as problematic is the potential reaction from mainland Chinese consumers. The majority of these individuals remain hostile to the protesters, and could punish banks that do not show pro-Beijing sentiment by taking their business elsewhere.
Banks may draw upon bland responses to crises as a way to navigate their way through these tense, political times. But with their efforts backfiring, the three banks in question should be wary of consumer desertion. The protesters – having swelled to around 1.7 million in recent days – are intent on causing short-term disruption in pursuit of the freedoms they believe will ensure Hong Kong’s long-term economic prosperity. Banks that get in the way of that goal will inevitably face their wrath.