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HSBC is set to launch a payments app in the UK that will offer cheap foreign exchange to retail consumers as the global lender seeks to compete with fast-growing digital rivals such as Revolut and Wise.
The UK-based bank on Tuesday said it would launch a multi-currency app and debit card named Zing that will allow customers to hold money in 10 different currencies, spend money abroad cheaply and make international transfers across more than 30 currencies.
The app will be available in the UK from Wednesday while the lender plans to expand into new markets later this year. Zing has plans to be available in at least two more continents by the end of 2024, according to a spokesperson.
“Now is the time for a new kind of international payments solution; one that combines cutting-edge innovation with the support of an experienced global bank,” said Zing chief executive James Allan.
The move is an attempt by the global bank to compete with fintechs that have soared in popularity over the past decade, with London-based Revolut attracting more than 38mn users, and cross-border payments rival Wise reporting about 10mn customers in its latest annual filings.
Shares in Wise, whose 2021 flotation was hailed as a success for London capital markets and the UK’s fintech sector, retreated as much as 6 per cent on Tuesday.
Benjamin Toms, an analyst at RBC, described the launch as a long-term “defensive” move designed to attract a younger generation of customers and convert them to other HSBC products. Zing will be free to download for people who do not bank with the lender, unlike similar services it already offers to existing clients.
The Zing app, which will be available on Google and Apple app stores, will be regulated by the Financial Conduct Authority as an e-money institution rather than a bank. Its deposits will not be protected under the Financial Services Compensation Scheme.
HSBC’s push into fintech also follows a foray by US-based investment bank JPMorgan into the UK’s digital banking market with the launch of Chase UK in 2021, as the Wall Street bank sought to compete with incumbents and neobanks such as Monzo and Starling.
The move by HSBC comes despite a souring outlook for fintechs. Payment companies and the wider fintech sector’s valuations boomed in the run-up to the pandemic as the availability of cheap cash fuelled a frenzy of deals but in the past year, investors under pressure from higher interest rates have cut their valuations as they focus on profitability over growth.
HSBC made a push into the UK fintech sector in 2022 with a $35mn investment in Monese, a UK-based start-up that offers current accounts to people underserved by mainstream banks. A spokesperson said at the time that the “strategic partnership” would help HSBC “deliver digital wealth and financial tools at pace and scale”.
In accounts filed on Tuesday, Monese posted a £30.5mn loss for 2022, a near-70 per cent increase on the previous year. The fintech also warned of “material uncertainty over the success of raising future fundraising and therefore the going concern status of the company”.
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