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THE ASIAN BANKING MONITOR w www.rfigroup.com t twitter.com/RFiMediaGRB

RFi GROUP INSIGHT

TECHNOLOGY

PRIVATE & PRIORITY

15 India’s recent demonetisation drive for market participants

18 Blockchain technology comes to South East Asia

20 Singapore has the highest average wealth in Asia


Welcome to the January 2017 edition of the Asian Banking Monitor – a newsletter designed to give you a quick update on news and trends within the Asian banking market. We cover movements in all areas of the market – economics and regulatory, retail banking, priority and private banking, and technology. As your new editor, I am excited to assume my responsibilities of providing our readers with the unique perspectives and insights shaping our industry, testament to the standard set by The Asian Banking Monitor. In the January edition, we see that HSBC has brought its line of credit card facilities to China integrating services with WeChat’s payments and card systems. On the technology front news of OCBC deploying blockchain technology in its domestic and international payment funds transfer between its subsidiaries OCBC Malaysia and Bank of Singapore marked a first in ASEAN. The focus of our insights piece takes a closer look at the fallout of the recent

demonetization initiative undertaken in India and the implications this has had on the country’s economic participants. We also examine the opportunity for digital payments in addressing the resulting cash crunch. Finally, regulators in the region have been proactive in ensuring compliance with Malaysia reinforcing its ban on offshore trading of the Ringgit and Indonesia looking to closely monitor the activities of emerging P2P lending platforms. Wishing all of you a very prosperous New Year! Kind regards,

Mobasher Zein Kazmi Editor RFi Media mkazmi@rfintelligence.com D +65 6597 7027 I M +65 9035 6307


CONTENTS JANUARY 2017

06 RFi GROUP INSIGHT India’s recent demonetisation drive for market participants

10 SPECIAL FEATURE Philippines: an industry in transition

16

20

ECONOMIC & REGULATORY

RETAIL BANKING

Indonesia to regulate P2P lending by fintech companies

HSBC launches its first credit cards in China

24

28

TECHNOLOGY

PRIORITY & PRIVATE

Blockchain technology comes to South East Asia

Singapore has the highest average wealth in Asia


TOP 10 DECEMBER ST BASED ON RFi GROUP'S LINKEDIN PAGE (DAILY STATS FROM 1 DEC 2016 - 31 DEC 2016)

79% of UK savings account holders use online banking to interact with their primary savings account provider

90% of auto insurance holders in Canada have been with their current provider for over 12 months

Visa dominates the credit card market in the US, with 54% of top of wallet credit cards Visa branded.

27% 16% of Mexican retail banking customers hold a home loan

of UAE consumers use digital banking (internet or mobile banking) at least once a week


TATISTICS

#RFiGroupDailyStats

12% of all retail banking customers in Vietnam hold home loans

In the UK, 13% of consumers looking to open a new savings account would consider an online only bank

25% of Taiwanese banking customers rated having a comfortable retirement as their top financial goal

68%

In Australia, cardholders who use mobile payments are on average 27 years old

banking customers in the Philippines have used their savings to fund their lifestyle


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RFi GROUP INSIGHT

WORDS MOBASHER ZEIN KAZMI

I

t was an eventful November 8th for both the world’s largest and most powerful democracy. While the upset in the US presidential elections became an immediate source of concern across world capitals, the announcement that night by Indian Prime Minister Narendra Modi to withdraw 500 and 1,000 INR from circulation was equal in shock value for residents of the country. India’s Ministry of Finance took a categorical position arguing that those notes were being used to facilitate transactions across the length and breadth of the country’s undocumented black economy. The government was now taking steps in preventing the use of counterfeit curreny for illicit drug sales, graft and terrorism financing and believed the best approach was to remove these notes given that they comprised roughly 80% of the currency in circulation. Effectively, what that translated to was $224 billion worth of currency recall with newly designed 500 and 2,000 rupee denominated legal tender to replace the defunct notes. Indians were given till year end to have their notes either replaced or to have the cash equivalents deposited in their bank accounts. The intent was clearly designed to widen the dragnet over users of illicit funds with the government anticipating some degree of currency being unredeemed altogether. While such an initiative would be of benefit to the Reserve Bank of India its efficacy in combatting “black money” may be limited in scope given that a large portion of the country’s ill gotten wealth is locked in assets such as real estate property, bullion and jewellery.

Prominent economists have questioned the effectiveness of such a move underscoring the notion that the costs of such a demonitisation efforts far outweigh any accrued or perceived benefits. American economist Larry Summers opined that without new measures to combat graft, “corruption will continue albeit with slightly different arrangements.” The Modi regime’s abrupt decision has created unnecessary alarm and disruption in India especially for ordinary citizens and these types of initiatives normally need to be phased in gradually to avoid any adverse reactions in the marketplace. The impact on India’s economy has been pronounced with a contraction in growth expected due to an ill-planned execution of the demonitisation drive. The hardest hit have been the poorer segments of society that largely rely on cash for their ongoing transactions. Apart from the developing trust deficit in the currency, the long lines of ordinary customers queuing for hours to be serviced has stretched bank resources especially in far flung rural areas that often do not have new currency notes available for conversion. This loss of confidence in the monetary system has had a detrimental effect which is likely to undermine the country’s productive capacity. However, in every crisis there remains an opportunity that banks and related stakeholders need to be mindful of. Perhaps the most apparent and overt result of the current cash crunch has been the rise of Paytm, which has seen 5 million plus new sign-ups since the new policy was announced with a

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RFi GROUP INSIGHT

% LIKELY TO TRY DIFFERENT TYPES OF PAYMENTS IN INDIA Total Market

80% 60%

48%

43%

45%

Wearable technology

Mobile payments

40% 20% 0% Biometric payments

Source: 16H2 RFi Group Data

surge in overall traffic and influx of funds added to Paytm wallets. Interestingly, Paytm now registers more transactions than the combined average daily usage of credit and debit cards. Paytm’s campaign centred on offering deals on taxi rides and cash back at petrol pumps has demonstrably resonated with the market. Similarly, FreeCharge another local payments application has seen its average wallet balance increase almost 12 times since the Modi announcement. FreeCharge is also seeing a mainifold increase in requests from retail merchants seeking to sign-up with the platform given the concerted push by the market. Clearly, digital payments are the logical primary beneficiary of this push for demonitisation but more work is needed to support the local infrastructure in India in terms of enabling a wider acceptance of payment requests to merchants. RFi Group research indicates that different payment types are gaining wider momentum in India; whether they are mobile based, wearables or biometric enabled, customers are looking to try these alternatives. Going forward while “cash remains king” at an overall market level the penetration of Paytm and other digital wallets has begun to trail closely. In fact, digital wallets are fast emerging as the second preferred choice for settling taxi fares and there

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is every expectation that such type of digitally led transactions will continue to gain traction across other payment scenarios.

As the dust settles on the latest endeavour of the Modi administration to combat corruption in India what is emerging is an opportunity to service customers through various digital platforms. As the dust settles on the latest endeavour of the Modi administration to combat corruption in India what is emerging is an opportunity to service customers through various digital platforms that has the added benefits of costsavings, rewards and convenience. With an estimated 300 million smartphones in play in India the potential for mobile payments in the country remains quite promising. It remains to be seen whether this capability can be leveraged through a more conducive market environment.


RFi GROUP INSIGHT

TABM - RFi MEDIA 09


SPECIAL FEATURE

WORDS RITIN MALHOTRA

O

n 6th and 7th December 2016, RFi Group was pleased to attend the Retail Payments Summit at the Dusit Thani Hotel in Manila along with 300 delegates from around the world. The summit was aimed for card-issuing and acquiring financial institutions, domestic bank card networks, e-payments operators, international payment schemes as well as telco providers and central banks, to explore the most important issues driving the consumer payments landscape in Asia.

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SPECIAL FEATURE

Several prominent speakers shared their views on the future of retail payments, EMV, contactless & mobile proximity payments, as well as on the role of transport for contactless payment adoption in the Philippines. We heard from Nestor A. Espenilla, Deputy Governor at Bangko Central Philippines on the current state of EMV chip cards migration in the Philippines. Douglas Swansson, Senior Director of Merchant Partnership Development at Visa shared his views on the technological advances and adoption of contactless cards in Asia. Alex Boorman, Research Director at RFi Group shared his insights on the global trends for contactless payments and opportunities for the Philippines. Philippines is still in a nascent stage of development for cashless payments, with massive opportunities for players in financial services. Largely a cash dependent society, Philippines is making a slow but steady progress towards technology adoption. The internet penetration is at 54%, smartphone penetration stands at 42% and mobile users penetration at 35%. The key drivers behind retail payments revolve around customer experience, IOT (internet of things) and innovation. Another major theme discussed on retail payments was security. There is broad consensus that EMV Chip and PIN cards are more secure than magnetic stripes and drive down card frauds. Asia is in a state of transition with regards to EMV Chip Cards. After the central bank mandate, local banks are in process to replace the magnetic stripe cards to chip and pin cards, expected to complete distribution by 2018. Indonesia is expected to complete the migration by 2021 and India in an unexpected move by the government is on a fast track towards a digital economy. After demonetizing 86% of the currency in circulation, the government has issued a mandate for 260 million prepaid cards to be issued by 2018. Presence of contactless cards is negligible in the Philippines. Most consumers are still relying on cash or magnetic stripe cards for payments. There is broad support by the local banks towards EMV cards due to well established benefits of security, safety, and convenience of making retail payments. Though, how fast the merchants adopt to the change remains to be seen, as they perceive EMV chip cards to delay the speed of transaction. Merchants also have a resistance to change their current habits (swiping and asking consumers to sign as opposed to entering a pin). A major challenge for the local banks is integrating contactless payment technology into a predominant cash based economy, which is still coming to terms with using cards as

a payment method. The solution lies in parallel introduction of technology with payment players like Visa and Mastercard playing a crucial role in expanding contactless payments in the Philippines. Visa’s Paywave has been a huge success globally with presence in more than 100 countries and is working with the banks and merchants to bring that into the Philippines.

A major challenge for the local banks is integrating contactless payment technology into a predominant cash based economy, which is still coming to terms with using cards as a payment method. For consumers to adopt new technology for contactless payments, including mobile payments (using NFC technology), their payment behavior needs to change. Public transport and supermarket retailers play a huge role in changing consumer payment habits. Australia and UK have been leading examples of this where adoption of contactless cards is among the highest in the world. Mobile Payments is another major future trend expected to grow at a fast pace. By 2019, M-commerce in the Philippines is expected to rise to PHP 4.8 T, smartphone penetration to reach 57% and around 150 million cards to be in circulation. Mobile payments hold promise in the Philippines as mobile phones with NFC technology can also be used as card readers and can provide an alternative solution to merchants. However, high MDR rate, co-ordination between multiple vendors and difficulty of implementation are some of the major challenges facing mobile payment providers in the Philippines. 80% of the online sales are still cash on delivery and current ratio of cards to POS terminals stands at 500:1 which is way behind developed economies (40:1). In the current ecosystem, there needs to be greater collaboration between all the stakeholders including banks, merchants, OEM players, telco providers, payment processors and remittance processors to successfully implement mobile payments. This is in line with research and case studies shared by RFi Group at the summit. London Tube supporting both open and closed loop contactless payments and Australian supermarket chains like Woolworths leading the way as shared by RFi Group’s Alex Boorman in his presentation were cited and acknowledged by various speakers. Data from RFi Group also showed an inverse rate of adoption between mobile payments and contactless cards and the current state in emerging economies like the Philippines.

TABM - RFi MEDIA 11


SPECIAL FEATURE

WORDS RITIN MALHOTRA

O

n 16th and 17th November 2016, RFi Group was pleased to attend the Cards and Payments Conference at the Pullman Hotel in Jakarta along with 500 delegates from around the world. The conference focused on the current state of e-commerce in Indonesia, which is seeing rapid development with new infrastructure, expansion among both local and international retailers to second-tier cities and forecastedstronger growth for the industry in the years ahead. The conference saw participation from leading banks, merchants and fintech’s like PT Bank Danamon, ANZ, DBS, Lazada, PT Mitra Adiperkasa Indonesia, Bitcoin and Samsung Electronics, who represented views of the cards and payments industry. A range of issues were discussed from innovation in the payments space, bockchain technology to current the state of fintech and micro finance in Indonesia.

of economic activities efficiently and globally connected. The roadmap also promotes the creation, innovation, and invention of new economic activities among the young generation. This policy will prioritize and protect the national interest, particularly for SMEs and start-ups. In addition, it also will improve the skills of e-commerce actors. Moreover, it will be a reference for the government and other stakeholders to set or adjust sectoral policies for e-commerce development. The e-commerce roadmap encompasses eight key aspects including funding, tax incentives, consumer protection, education and human resources, e-commerce logistics, communication infrastructure and cyber security.

Billed as the next frontier in e-commerce after global e-commerce juggernauts, China and India, Indonesia’s market is expected to achieve an annual growth of 50% yearly. The Indonesian government has a vision to position Indonesia as the largest digital economy in Southeast Asia’s in 2020 by targeting 1,000 technopreneurs with a business valuation of USD10 billion and e-commerce value of USD130 billion.

E-commerce transactions stand at USD 24.6 billion in 2016 in Indonesia. Indonesia is currently one of the world’s biggest Internet user with around 93.4 million people (34%) and smartphone users that reach 71 million people. The social media user base stands at 30% with 353 million mobile connections. The government plans to expand the internet usage with the “Palapa Ring Project”, which will introduce fiber optics connectivity across all counties in Indonesia by 2019.

To that end, the government issued the Presidential Decree on the E-Commerce Roadmap on 10 November at the Presidential Palace. It aims to encourage the improvement

With the government backing and vision to transform the e-commerce landscape in Indonesia, the fintech industry has received a major boost. Fintech transactions in Indonesia

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SPECIAL FEATURE

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SPECIAL FEATURE

FINTECH LANDSCAPE INDONESIA

YEARS IN OPERATION AT 2016

8% 6%

8%

9%

7%

10%

44%

15%

78% 15%

Payments

Lending

Aggregators

1 year

5-10 years

Personal or financial planning

Crowd funding

Others

1-2 years

3-4 years

Source: Fintech Indonesia

stand at USD 14.8 billion in 2016, with majority of fintech operating in payments (44%), lending (15%) and as aggregators (15%). There has also been a massive influx of new players entering the booming industry with 78% starting operations in 2016. They aim to address the massive unmet needs of the unbanked population (64%). Bank branch penetration stands at 1/6th the level of bank penetration in Europe. Around 49 million SMEs operating in Indonesia are unbanked with financing needs of Rp 988 trillion. They also seek to address the P2P lending market which saw transactions up to Rp 150 billion. The cards industry is also in its infancy with only 9% consumers using credit cards for payments and 75% of online payments not done with cards. 44% of consumers are still lending through their friends and family. There is huge potential for fintechs to fill some of the gaps and move Indonesia towards financial inclusion over the next decade. Microfinance is another major sector picking up pace in Indonesia with fintechs playing the role of micro lending agents. Around 203 million Indonesians (79%) still earn

14 TABM - RFi MEDIA

between USD 150-300 per month. Most of those are untouched by the main MFIs operating in Indonesia. Even most of the SMEs have difficulty in seeking loans from the banks. Fintechs are addressing the non-performing loan market segment and helping SMEs overcome issues of collateral requirements, short credit history and short term bridging capital. Another major trend observed is emergence and increased acceptance of blockchain technology providers in the payments industry. Fintech leveraging on bitcoins seek to address the last mile issue for the unbanked population. Perceived advantages of Bitcoins as a currency include speed, transparency, security, and fraud prevention. They also provide an efficient way for remittances and money transfers among the unbanked population. Indonesia is in an exciting phase of growth and development and it will be interesting to see who wins the race for digital transformation in Asia among the emerging economies. As shared by RFi Group’s insights, Indonesia remains a strong contender with rapid development in e-commerce and consumer adoption towards digital banking.


SPECIAL FEATURE

THERE IS HUGE POTENTIAL FOR FINTECHS TO FILL SOME OF THE GAPS AND MOVE INDONESIA TOWARDS FINANCIAL INCLUSION OVER THE NEXT DECADE. MICROFINANCE IS ANOTHER MAJOR SECTOR PICKING UP PACE IN INDONESIA WITH FINTECHS PLAYING THE ROLE OF MICRO LENDING AGENTS.

TABM - RFi MEDIA 15


ECONOMIC & REGULATORY

WORDS RUSSELL QUAH

17 Indonesia Government to regulate peer-to-peer lending by fintech companies 19 Stronger fiscal intervention for South Korea’s economy 19 Malaysian central bank enforces offshore trading regulation

16 TABM - RFi MEDIA


ECONOMIC & REGULATORY

Indonesia Government to regulate peerto-peer lending by fintech companies

HOW HAS THE ANNUAL REVENUE OF YOUR BUSINESS MOVED OVER THE LAST TWO FINANCIAL YEARS? H1 2016 - By global annual revenue in USD

P

eer-to-Peer lending (P2P), a digital platform which connects borrowers with lenders has been gaining popularity in recent years especially in Indonesia. This platform connects borrowers - mainly SME owners seeking to grow their business with lenders who are mainly investors. This platform offers borrowers loan without collaterals at low interest rates giving P2P lending an edge over traditional banks. Their popularity in Indonesia has attracted considerable attention from the Financial Services Authority (OJK) and Indonesia Central Bank (BI) with the market expecting some regulation to be forthcoming.

Increased by 50% or more

Increased 25% - 50%

Stayed the same

8%

Increased less than 25%

Decreased

8%

11% 32%

As per RFi Group data from the 16H1 Indonesia SME Banking Council, borrowing products is the second likeliest product that SME owners are intending to take up in the next 12 months with 45% of the market having indicated their preference for this type of financing. Loan demand is driven by industry growth with 8 out of 10 SME owners in Indonesia having increased their annual revenue in the past 2 years and looking to expand their businesses.

37%

Source: RFi Group – Indonesia SME Banking Council (16H1)

Loan demand is driven by industry growth with 8 out of 10 SME owners in Indonesia having increased their annual revenue in the past 2 years and looking to expand their businesses.

WHAT PRODUCT DOES YOUR BUSINESS INTEND TO TAKE UP IN THE NEXT 12 MONTHS? H1 2016 80%

72%

60% 45%

43%

Borrowing products

Trade related products

40%

40% 20% 0% Business operating account

Investments

Source: RFi Group – Indonesia SME Banking Council (16H1)

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ECONOMIC & REGULATORY

18 TABM - RFi MEDIA


ECONOMIC & REGULATORY

Stronger fiscal intervention for South Korea’s economy South Korea’s finance minister Yoo Il-ho mentioned that he will “strengthen the government’s role in creating jobs and stabilizing the people’s livelihood…” further adding that “the government will make full efforts to meet the target of scheduled government spending for next year”. South Korea’s economy is currently in a rough position with its exports experiencing a slow recovery and unenthusiastic local demand coupled with its political stability issues. Many banks and institutions have revised their 2017 outlook for the Korean economy, with many of them downgrading their estimations. According to RFi Group data for South Korea H2 2016, 41% of Korean banking consumers express concern over their current financial standing. The Korean finance minister has pledged to minimize the political impact on the economy while doing their best to try and improve the economic condition for the people.

Malaysian central bank enforces offshore trading regulation The central bank of Malaysia, Bank Negara Malaysia, enforced its ruling on prohibiting offshore ringgit trading after it fell to its lowest in 12 years against the US dollar in overseas markets. The ringgit fell 5% to 4.5395 per dollar overnight, prompting the intervention of the central bank to halt the selling of ringgit for US dollars by Malaysian banks. In a statement released, the bank said that the country’s currency is noninternationalized and therefore, any offshore trading of the Malaysian ringgit is not recognized. A weakened currency can bring about imported inflation and for a country like Malaysia where imports play a large part in the economy, it would not bode very well. Data from RFi Group 16H1 show that inflation is the second most concerning issue for Malaysians, coming in with a score of 3.65 out of 5.

TABM - RFi MEDIA 19


WORDS RUSSELL QUAH

21 HSBC launches its first credit cards in China 22 Cross border payments in Thailand 22 Millennials and online shopping


RETAIL BANKING

HSBC launches its first credit cards in China

HSBC’s head of retail banking and wealth management in Asia-Pacific Kevin Martin has stated that instead of tackling the payment giants in China head-on, HSBC has decided to “embed themselves in the digital ecosystems that consumers in China are already using.”

I

n a first for the bank, HSBC has brought its line of credit card facilities to China. Setting a milestone in the bank’s expansion plan in the Pearl River Delta region. With its current offerings in premier banking and mortgages, HSBC is set to introduce personal loan facilities in test phase in the coming year. HSBC’s head of retail banking and wealth management in Asia-Pacific Kevin Martin has stated that instead of tackling the payment giants in China head-on, HSBC has decided to “embed themselves in the digital ecosystems that consumers in China are already using.” The credit cards offered will have integrated services with WeChat’s payments and card systems. Furthermore, payments can be made via China UnionPay online and Alipay-linked mobile payments. RFi Group data indicates that having a satisfactory level of credit limit ranked highest on most

influential factor when choosing a new credit card among consumers in China. Coming in second was the ease of making card repayments followed by the brand image of the credit card provider. If HSBC intends to hit its medium-term goal of having three million card users, it needs to address these consumer preferences.

IF YOU WERE TO CHOOSE A NEW CREDIT CARD, WHAT WOULD INFLUENCE YOUR CHOICE OF CARD? By Affluence

Mass Market

Emerging Affluent

Affluent

Total

The credit limit

22%

17%

18%

17%

Ease of making card repayments

7%

10%

7%

9%

Brand image

3%

7%

11%

9%

The annual fee

9%

10%

7%

8%

It’s from the bank I am currently using

7%

6%

7%

8%

Shopping/ retail discounts

11%

7%

5%

7%

* Mass Market: Net investible assets of less than RMB 100K Emerging Affluent: Net investible assets of RMB 100K-500K Mass Affluent: Net investible assets of more than RMB 500K

Source: RFi Group – China Priority & Retail Banking Council (16H2)

TABM - RFi MEDIA 21


RETAIL BANKING

Cross border payments in Thailand Thailand’s fifth largest commercial bank, Bank of Ayudhya (BAY) plans to offer cross border payments in Myanmar with their target demographic being migrant Myanmar workers in Thailand. The new cross border payments system would allow for a lower fee per transaction according to Thakorn Piyapan who is head of digital banking and innovation at BAY. The bank would be working with a local bank in Myanmar to facilitate the new system. Additionally, Kasikornbank (Kbank) is also launching its own cross border payment system with its focus on countries

22 TABM - RFi MEDIA

... of those who hold overseas banking products in Thailand, 24% of them use those providers because of remittance purposes. like Cambodia, Laos, Vietnam and Myanmar as well. The services offered by Thailand’s fourth largest bank would be targeted at both personal and commercial banking clients. KBank would also be working with a host of local banks in the respective targeted countries. RFi Group data for H2 2016 show that of those who hold overseas banking products in Thailand, 24% of them use those providers because of remittance purposes.


RETAIL BANKING

Millennials and online shopping Data from United Overseas Bank (UOB) Malaysia found that millennials are spending more on online shopping using their credit cards. Compared to the previous period the year before, UOB has seen its banking millennials show a 38% increase in their online spending. UOB Malaysia Managing Director and Personal Financial Services country head Ronnie Lim mentioned that because millennials would “soon make up the largest demographic of consumers,” their spending behavior would heavily influence the country’s economy. Therefore, UOB has been actively

Compared to the previous period the year before, UOB has seen its banking millennials show a 38% increase in their online spending. targeting this segment of the population by offering cash-back offers and deals through their credit cards. Coinciding with RFi Group data for Malaysia Council 16H2, millennial banking customers nominated the best cashback program as their top reason why they use that credit card, followed by having a credit limit that suits them and thirdly having the best rewards program.

TABM - RFi MEDIA 23


WORDS RUSSELL QUAH

25 Blockchain technology comes to South East Asias 26 Automated banking application on the horizon 21 HSBC launches its first credit cards in China for Singapore 22 Cross border payments in Thailand 27 Standard Chartered launches biometric login in 22 Malaysia Millennials and online shopping


I

n a move that is first tested regionally, Oversea-Chinese Banking Corporation (OCBC) Bank has operated an integrated blockchain technology in its domestic and international payment funds transfer between its subsidiaries OCBC Malaysia and Bank of Singapore. A blockchain is a data structure that creates a digital ledger in a network. Each transaction in the network is recorded and timestamped, creating a “block�. These blocks are then added to the previous blocks creating a chain, which cannot be retrospectively edited. A payment system that uses blockchain technology will not only be more secure but it will also increase processing time, increase transparency and ultimately result in a lower operating cost for the bank. On a larger scale, the Monetary Authority of Singapore (MAS) is launching an initiative with eight banks in Singapore to use blockchain technology for interbank payments. The move by OCBC is in line with the goals of MAS, turning the country into a smart financial centre. Per RFi 16H1 Singapore Retail Banking Council data, internet through PC/desktop is the top used channel for customers to interact with the bank followed by mobile banking app. In average customer connect with the bank up to 4 times a month through their device.

A payment system that uses blockchain technology will not only be more secure but it will also increase processing time, increase transparency and ultimately result in a lower operating cost for the bank.

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TECHNOLOGY

Automated banking application on the horizon for Singapore The Singapore government is launching a trial program for a few banks to integrate the use a government database for banking applications. The database, known as MyInfo, consists of citizens’ personal information resourced from several government bodies. A spokesperson from the government body overseeing the database said that the pilot program for the selected banks will run for a few months starting early 2017, which will allow sufficient time for adjustments to be made before it is launched on a larger scale. Head of OCBC e-business Aditya Gupta commented that having the ability to open an account with just one-click via MyInfo would radically

… initiative is in line with the Singapore government’s vision of pushing the country towards being a smart financial centre. simplify and quicken the banking experience. Furthermore, Mr. Gupta also thinks that MyInfo would see use in credit card and loan applications. The initiative is in line with the Singapore government’s vision of pushing the country towards being a smart financial centre. RFi Group data shows that consumers in Singapore have a strong preference for digital channels when it comes to current and savings account application – 54% of consumers prefer digital channels. With the integration of MyInfo, the use of digital channels will be cemented even further.

PREFERRED CHANNEL FOR CASA APPLICATION Market Level 50% 37% 30%

25% 17% 8%

6%

1%

0% Bank’s branch

Image credit (above right): Myinfo homepae screen, www.myinfo.gov.sg

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Bank’s website/ internet banking portal

Via mobile banking

Through my relationship manager

Over the telephone with the bank

Source: RFi Group – Singapore Priority and Retail Banking Council (16H1)

Other


TECHNOLOGY

Standard Chartered launches biometric login in Malaysia Standard Chartered Malaysia has launched the country’s first biometric login for mobile banking. Country head of Retail Banking, Standard Chartered Bank Aaron Loo has stated that the biometric features will allow greater ease of convenience for customers to perform payment services or transfers that are safe and secured. The biometric login that Standard Chartered is using requires customers to have their fingerprints scanned, making it much more secured than conventional login systems. Per RFi Group 16H1 data, 46% of Malaysian banking customers are likely to be the first adopters of new banking technology.

Per RFi Group 16H1 data, 46% of Malaysian banking customers are likely to be the first adopters of new banking technology.

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PRIORITY & PRIVATE BANKING

WORDS RUSSELL QUAH

29 Singapore has the highest average wealth in Asia 31 Private banks in Asia dropping clients 31 More acquisitions to come from Singapore banks

28 TABM - RFi MEDIA


PRIORITY & PRIVATE BANKING

Singapore has the highest average wealth in Asia

… on average Singaporeans own US$180,000 on financial assets…

C

redit Suisse Research Institute - a research group which provides trends and insights on wealth just launched its annual wealth report. The Global Wealth Report placed Singapore as the top wealthiest country in Asia and seventh globally. The report noted that on average Singaporeans own US$ 180,000 on financial assets – which comprises currency, deposits and equity. Furthermore, this number is forecasted to be increased by 2.2% annually to reach US$309,000 in the next 5 years. This growth has been driven by supportive government

policies, which are tailored to target different class segments. In the past few years, new policies have been implemented to support the lower income household and encourage the affluent class in giving back more to support society. Consistent with this finding, RFI Group data from Singapore Retail Banking Council shows that consumer concern in the domestic economy has been on the decline in the past 18 months.

HOW CONCERNED ARE YOU ABOUT HOW THE FOLLOWING ISSUES MIGHT AFFECT YOU OVER THE NEXT 12 MONTHS? Trended H1 2015

3.8 3.7 3.6

3.7

3.67

H2 2015

H1 2016

3.63 3.57

3.57 3.51

3.5

3.42

3.4

3.39 3.41 3.41

3.42 3.42

3.41

3.36

3.33

3.28

3.3

3.32 3.17

3.2 3.1 3.0 2.9 2.8 Singaporean economic outlook

Inflation

Unemployment

Changes in interest rates

The Asia-Pacific economic outlook

Instability of the banking sector

Source: RFi Group – Singapore Priority & Retail Banking Council (16H1)

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PRIORITY & PRIVATE BANKING

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PRIORITY & PRIVATE BANKING

Private banks in Asia dropping clients In compliance with new global tax regulations, private wealth management banks are dismissing clients who do not meet new regulatory standards. Starting in 2017, global tax regulations are taking place among a hundred different countries including Singapore, Hong Kong and Switzerland. The new tax regulation will collect tax information on clients to combat tax evasion globally. Banks have mentioned that monitoring account activity and transaction are going

Banks in Asia have seen antimoney laundering regulation since 2014 but the crackdown has sped up in the region due to recent events that have come to light. to cost more than doing away with clients. Banks in Asia have seen anti-money laundering regulation since 2014 but the crackdown has sped up in the region due to recent events that have come to light.

More acquisitions to come from Singapore banks DBS Group Holdings and Bank of Singapore have openly stated their stance on capturing a greater share of Asia’s growing millionaires. DBS consumer and wealth head Tan Su Shan stated in an interview with Bloomberg that the bank “would look at any deal that fits with its strategy and is at the right price”. CEO of Bank of Singapore, Bahren Shaari has stated that the bank “will definitely evaluate” any opportunities the bank comes across.

Furthermore, Bank of Singapore will continue expanding as it needs the scale to operative in a cutthroat environment. RFi Group data for Singapore Council 16H2 show that 7% of the banking population are looking to open a priority account within the next 12 months while 29% are unsure. Besides expanding by increasing the share of the pie, banks could look at increasing the size of the whole pie by tapping into the 29% of unsure customers.

...7% OF THE BANKING POPULATION ARE LOOKING TO OPEN A PRIORITY ACCOUNT WITHIN THE NEXT 12 MONTHS WHILE 29% ARE UNSURE. BESIDES EXPANDING BY INCREASING THE SHARE OF THE PIE, BANKS COULD LOOK AT INCREASING THE SIZE OF THE WHOLE PIE BY TAPPING INTO THE 29% OF UNSURE CUSTOMERS.

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ABOUT RFi GROUP

RFi Group is a global intelligence and digital media provider focusing exclusively on financial services. We specialise in data and information gathering, customer based insight generation and business decision support for the world’s leading financial service providers. Our aim is to combine global intelligence and local knowledge to provide insightful, valuable and actionable recommendations, with a core focus on the provision of exceptional client service. OUR BRANDS

Covering 44 key global markets with regional offices in San Francisco, Toronto, London, Singapore, Hong Kong and Sydney, RFi Group consistently provides clients with tailored advice and independent intelligence relevant to their specific markets and business needs. EXCLUSIVE FOCUS ON BANKING AND FINANCE RFi Group’s expertise and deep understanding of the banking and finance sector delivers high-value outcomes. Our areas of expertise include: Retail Banking Mortgages Transaction Accounts Savings Accounts Consumer Lending Cards and Payments

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Our markets include Australia, Argentina, Belgium, Brazil, Canada, Chile, China, Colombia, Egypt, France, Germany, Hong Kong, India, Indonesia, Ireland, Israel, Italy, Japan, Korea, Kuwait, Lebanon, Malaysia, Mexico, Netherlands, New Zealand, Nigeria, Peru, Philippines, Poland, Qatar, Saudi Arabia, Singapore, South Africa, Spain, Sri Lanka, Switzerland, Taiwan, Thailand, Turkey, UAE, UK, Uruguay, USA and Vietnam.

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RFi Group’s syndicated research RFi Group is a global intelligence and media provider focused exclusively on financial services. We specialise in data and information gathering, customer based insight generation and business decision support for the world’s leading financial service providers. Our syndicated research is delivered via our Financial Councils model. Upcoming Asian Financial Council research includes:

RESULTS OUT NOW 2016 Asia Payments Council 2016 International Banking Report H2 2016 Singapore Priority & Retail Banking Council Report

COMING SOON H2 2016 Hong Kong SME Banking Council Report H2 2016 India SME Banking Council Report

H2 2016 Vietnam Priority & Retail Banking Council Report H2 2016 Thailand Priority & Retail Banking Council Report

Find out how you can access RFi Group’s latest business intelligence! For further information, contact Adeline Wong or Ritin Malhotra on awong@rfigroup.com / +1 416 644 8524 or rmalhotra@rfigroup.com / +65 6597 0926

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Profile for Adelle Grisaffe

The Asian Banking Monitor - January 2017 edition  

An RFi Group publication

The Asian Banking Monitor - January 2017 edition  

An RFi Group publication