HSBC will launch a payment app in the UK, which will offer foreign exchange at a low price to consumers. The global lender is looking to compete against digital rivals like Revolut and Wise.
The UK-based Bank on Tuesday announced that it will launch a multicurrency app named Zing and a debit card. This will allow its customers to have money in ten different currencies and spend money abroad at incredibly low rates. They can also make international transfers using more than 30 currencies.
The app will become available in the UK on Wednesday, while the lender has plans to expand its services into other markets later this summer. Zing plans to expand to at least two other continents by 2024, according a spokesperson.
James Allan, Zing’s chief executive officer, said: “Now is the right time to create a new type of international payment solution that combines cutting edge innovation with the backing of a global bank.”
The move was made by the global banking giant to compete against fintechs, which have become increasingly popular over the last decade. London-based Revolut has attracted more than 38mn subscribers, while cross-border payments competitor Wise reported about 10mn clients in its most recent annual filings.
The shares of Wise, which were hailed for their 2021 IPO as a great success for London’s capital markets and UK fintech, fell as much as six per cent on the Tuesday.
Benjamin Toms, RBC analyst, described the launch of Zing as a “defensive”, long-term move to attract a new generation of customers to HSBC and convert them into other products. Zing is free for those who don’t bank with HSBC, in contrast to similar services that it offers its existing customers.
The Financial Conduct Authority will regulate the Zing app as an electronic money institution, not a bank. The Financial Services Compensation System will not protect its deposits.
HSBC’s move into fintech follows a similar foray into digital banking by US investment bank JPMorgan in the UK with the launch Chase UK in 2021. The Wall Street bank was looking to compete with incumbents, neobanks like Monzo and Starling.
HSBC’s move comes despite a deteriorating outlook for fintechs. The valuations of payment companies and the fintech sector as a whole soared before the pandemic, as cheap cash fuelled an explosion of deals. But in the last year, investors have been under pressure due to higher interest rates. They are now focusing on profitability rather than growth.
HSBC invested $35mn in Monese in 2022, a UK start-up offering current accounts for people who are not served by mainstream banks. A spokesperson at the time said that the “strategic partnerships” would enable HSBC to “deliver digital assets and financial tools with speed and scale”.
Monese, in its accounts filed Tuesday, posted a £30.5mn (roughly 70%) loss for 2022. This is a significant increase over the previous year. The fintech warned that “material uncertainty exists over the future success of fundraising and, therefore, the status of the business as a going concern”.