Asian Banking & Finance 2025 (January - March 2025)

Issue No. 117

DISPLAY TO 31 MARCH 2025

HONG LEONG BANK BETS ON NEW BRANCH STRATEGY Asian Banking & Finance

HONG LEONG BANK CEO REVEALS FIVE BRANCH MODELS MERGING LEGACY AND MODERNITY Lawrence Chan, CEO, NETS p. 16

HOW CAN BANKS TRY AI WITHOUT OVERINVESTING? CHINA’S PAYMENT SYSTEM GETS BOOST FROM RENMINBI RISE OCBC TRIPLES QUANTUM WORKFORCE TO BOOST CYBERSECURITY ASIAN BANKS FACE PROFIT STRAIN IN 2025

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f most banking services can now be accessed through mobile phones, then what do customers do in physical branches? We chat with Hong Leong Bank CEO Kevin Lam about his five-point plan to reimagine the role of physical branches for the digital age. Read more on page 14.

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AI is also expected to see over $1t in capital expenditure in the next few years. How can banks explore AI without overinvesting? We ask three industry leaders to share their insights on making smart tech investments on page 10.

Just as banks are getting in the groove with AI, quantum computing comes into the picture to shake things up. In Singapore, top bankers are mulling over the possibilities of quantum computing. OCBC bares its plan to triple its workforce to prep for cybersecurity risks that might come with its adoption, while Chia Der Jiun says it’s “not too early” to think of use cases for the tech. Read more on pages 20 and 22.

Developments are also prevalent around the payment space. More businesses in the African market have started to transact in renminbi because of their growing client base in China. Read more on page 24. Singapore-based NETS adds inventory features to its payment providers, and CEO Lawrence Chan shares the expanded data can help merchants improve their business operations. Read our interview on page 16.

Read on and enjoy.

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ASIAN BANKING & FINANCE | Q1 2025 1

CONTENTS

20

CEO INTERVIEW

SECTOR REPORT

LEONG BANK REIMAGINES BRANCHES 14 HONG FOR DIGITAL ERA

FIRST

PAYMENT SYSTEM GETS 24 CHINA’S BOOST FROM RENMINBI RISE

BRANCH WATCH

EVENT

06 Can Asian banks weather the profit squeeze in 2025?

07 Asia struggles with G20 payment targets 08 Japanese banks seek M&A deals overseas

12 Maybank adds ‘Instagrammable’ events café to its latest lifestyle branch 16 NETS adds inventory features to terminals for Singapore retailers

VOXPOP

22 Singapore’s top central banker touts potential of asset tokenisation

10 How can banks try AI and skip overinvesting?

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INTERVIEW OCBC TRIPLES QUANTUM WORKFORCE TO ENHANCE CYBERSECURITY MEASURES

COUNTRY REPORT

MIDDLE EAST: FDRK4467,Compass Building,Al Shohada Road, AL Hamra Industrial ZoneFZ, Ras Al Khaimah, United Arab Emirates

24 How slashing marketing stalls recovery for finance firms

COMMENTARY 32 Why is willful default a growing threat to Bangladesh’s financial stability?

For the latest banking news from Asia visit the website

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Your recognition, our honour.

Ever growing, ever innovating, with you.

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2024 • Domestic Retail Bank of the Year – Hong Kong • Branch Innovation of the Year – Gold • Digital Banking Award – Hong Kong • Digital Currency Award – Hong Kong • Analytics Initiative of the Year – Hong Kong • Financial Inclusion Initiative of the Year – Hong Kong • Hong Kong Domestic Trade Finance Bank of the Year • Hong Kong Domestic Digital Payment Initiatives of the Year

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ASIAN BANKING & FINANCE | Q1 2025 3

News from asianbankingandfinance.net Daily news from Asia

RETAIL BANKING

Let China’s small banks fail– analyst The Chinese government should allow its small banks to fail, provided they have a guaranteed fund pool as a buffer during bankruptcies. Betty Huang, an economist at BBVA Research, said that authorities should take a leaf out of Spain and create a credit guaranteed fund pool and fund debt banks.

CARDS & PAYMENTS

LENDING & CREDIT

Cambodian banks breach covenants as bad loans surge Three large Cambodian financial institutions have breached covenants on their borrowings, and more may follow in their footsteps as the number of bad loans rise, warned S&P Global Ratings analyst Ivan Tan. Cambodia’s NPLs are forecasted to rise between 7.5% to 8% of total loans in 2026, he said.

RETAIL BANKING

CARDS & PAYMENTS

Funding freeze hits BNPLs The Buy Now, Pay Later (BNPL) market is experiencing a significant downturn, marked by the bankruptcy of five BNPL-focused companies over the past few years as investment in the sector has waned. Whilst business is booming, with e-commerce adoption expected to grow to 4.1% by 2026, cash remains a core issue for BNPL firms.

RETAIL BANKING

How GoTyme kiosks transformed grocery stores into banking service

Mergers and closures loom for China’s 3,800 rural banks

Techcombank eyes more business clients with southern expansion

The population is ready, and the technology is available, but 34 million Filipinos still remain unbanked, according to data from the Bangko Sentral ng Pilipinas (BSP). GoTyme Bank, one of the Philippines’ first-ever digital banks, saw a way to reach these people: by putting GoTyme kiosks in supermarkets.

China is in the process of cleaning up its embattled rural financial institutions —a move that will not just lead to the mergers and closures of its 3,800 rural financial institutions, but also see the number of major banks shrink. In just one week in July, 40 banks disappeared. Of these, 36 were absorbed by Liaoning.

Vietnam Technological and Commercial Joint Stock Bank (Techcombank), the Southeast Asian nation’s biggest bank that is not state-owned, seeks to capture more business clients as it braces for slower profit growth in the second half. It is is looking to expand in Ho Chi Minh City and surrounding regions.

ASIAN BANKING BANKINGAND & FINANCE 2025 4 ASIAN FINANCE| Q1 | Q3 2021

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ASIAN BANKING & FINANCE | Q1 2025 5

FIRST Asia-Pacific, a slower China and softer global trade will hit revenue and growth.”

Banks will face loan repayment problems from the real estate sector and SMEs

Can Asian banks weather the profit squeeze in 2025?

ECONOMY

B

anking profits are expected to remain under pressure in many Asian markets in 2025, with lenders likely to post either modest improvements or manageable declines, according to analysts.

Thai banks will face loan repayment problems from small and medium enterprises (SME), whilst their Malaysian and Vietnamese peers face the same problem involving the property sector, according to a report by Fitch Ratings. “[Thailand’s] SME and retail client segments remain particularly vulnerable in the wake of pandemic-era debt restructurings, which reached 10% of total loans and amidst a slow economic recovery,” the debt watcher said.

Banks’ real estate exposures are also a problem in the Philippines and Malaysia, where commercial property vacancy rates remain elevated, S&P Global Ratings said in a separate country-by-country 2025 outlook report.

Malaysian banks have significant exposure to real estate development at about 8%, though they have gradually cut their loans to the sector, credit analyst Sue Ong wrote in the report. She expects credit demand to improve with faster economic growth, and profitability to stay range-bound.

Meanwhile, a dip in net interest margins could lead to a decline in Hong Kong lenders’ profitability next year, Shinoy Varghese, S&P 6 ASIAN BANKING & FINANCE | Q1 2025

primary credit analyst, wrote in the S&P report.

“We expect any potential negative impact on asset quality from Hong Kong and China commercial real estate to be manageable,” he added.

In China, banks should replenish capital as the state’s stimulus package puts pressure on their income, primary credit analyst Ming Tan wrote in the same report. “Loan growth is likely to be about 9%, as banks with strained profitability moderate asset growth to preserve capital.”

Impact of global trade policies The Asia-Pacific region’s credit landscape is set for more volatility and slower growth in 2025 amidst uncertain trade and foreign policies under US President-elect Donald Trump, S&P said in a December 2024 report.

Countries with a large trade surplus with the US like Vietnam, Thailand, Malaysia and India would be vulnerable to universal tariffs, it said, adding that a global trade slowdown could curb growth and squeeze Asia-Pacific currencies and exporters' revenues.

“More US tariffs against Chinese exports could slow China's export growth driver,” Eunice Tan, head of Asia-Pacific Research at S&P, said in the report. “For export-centric

Risk appetite On the other hand, declining interest rates might spur banks to move further down the risk curve to support their earnings, Fitch said. “This shift could manifest with increased exposure to higher-yielding assets, a trend already observed in the Philippines and India, particularly in unsecured retail lending where pressures are mounting.”

Banks might also pursue more overseas expansion in riskier markets, as seen in Thailand, it added.

Meanwhile, Bangladeshi banks’ weak profitability would continue in 2025, though the slowdown in credit growth should help ease the tight liquidity situation of its banking system, Varghese said. “As the central bank tries to tame inflation, interest rates are anticipated to stay high in 2025, potentially slowing loan growth.”

Slowing loan demand in Cambodia could ease funding strain, but covenant breaches pose risks, Ruchika Malhotra, primary credit analyst for S&P, said in the November report.

Optimism in sight Banks in Sri Lanka and Vietnam are expected to continue improving their financial performance in 2025. The political and economic crises in Sri Lanka are receding, according to analysts.

The country is reportedly close to completing its foreign-currency debt restructuring, which could lift its default status and improve its credit profile, according to Fitch. “Successful restructuring would ease the burden on banks’ financial profiles, boosting business generation and revenue prospects in 2025.”

In Vietnam, higher loan growth and lower credit costs are expected to sustain banks’ financial performance. “Banks are likely to continue to run down their reserve coverage as they become more optimistic about the economic outlook, leading to lower credit costs,” Fitch said.

Restructured loans under relief make up a modest proportion of system loans, and most large banks in Vietnam have fully provisioned for these, limiting the risks to their earnings and balance sheets, Fitch said.

Meanwhile, credit losses among Philippine banks are expected to be flattish, whilst earnings moderate in the next two years.

Credit growth could improve but costs might.

Banks are likely to continue to run down their reserve as they become more optimistic about the economic outlook, leading to lower credit costs

FIRST These systems are in place. But as soon as you cross borders, it’s not well set up

Only 5% of banks have achieved high scores in instant payment adoption, according to Capgemini (Photo from FasterPay)

Asia struggles with G20 payment targets

Mishal Ruparel

CARDS & PAYMENTS

A

sian banks are racing to meet G20 cross-border payment goals on speed, cost, and transparency, but dated infrastructure, high fees, and fragmented rules hinder near-realtime payment transfers.

“In most developed countries, domestic payment schemes are now instant,” Mishal Ruparel, chief commercial officer at Banking Circle, told Asian Banking and Finance at Sibos 2024.

“For example, in the UK, you’ve got FPS (Faster Payments System); in

Australia, there’s NPP (New Payments Platform); and in Singapore, there’s FasterPay. These systems are in place.

But as soon as you cross borders, it’s not well set up,” he added.

As the 2027 deadline nears, banks across 15 markets globally are struggling to keep up with the G20 target for 75% of cross-border payments to be credited to the beneficiary within an hour, according to Capgemini Research Institute’s World Report Series 2025 on payments. It said 67% of banks are in a “medium preparedness band” for

Susana Delgado

Francois Verlaine

business and technology, whilst only 5% have achieved “high business and technology” scores to solidify their position as instant payment adoption leaders. Ruparel said cross-border payments particularly in the businessto-business sector face friction because these involve multiple intermediary banks, leading to delays and additional fees.

Susana Delgado, managing director at SWIFT, said it is a challenge to scale about 80 instant payment systems globally for crossborder interoperability.

“The need for interoperability is there to scale up this model,” she said, citing the complicated process of seamless integration. Bilateral arrangements, such as those between Singapore and Thailand or Singapore and Malaysia, have shown how complex the process is.

Ruparel said complex legacy infrastructure is a big issue.

“Getting that level of adoption with some of the bigger operators can always take time.”

Widespread adoption of systems such as blockchain and other digital ledger technology solutions requires global payment systems to work together to overcome technical limitations and comply with rules, he added.

Delgado said compliance requirements for international and domestic transactions differ. She noted that real-time payment systems process transactions continuously and individually, not in batches.

THE CHARTIST: AI FINTECH FIRMS MAY RAISE $3.5B IN 2025

A

rtificial intelligence-focused financial this could mark a new wave of investor technology (fintech) companies in attention to the industry,” UnaFinancial said.

Asia are expected to attract $3.5b Amongst Asian countries, India, more in funding to $65.5b in 2025.

China, and Singapore are amongst the There will have been more than 7,200 powerhouses of AI fintech. fintech firms focused on artificial intelligence India accounts for 41.7% of active Asian (AI) by 2025, or 7% of all fintechs in Asia, AI fintech companies, China has a 12.2% according to estimates by UnaFinancial in a share, and Singapore has 9.8%. study in October 2024.

“India’s leadership is unsurprising given There were only 1,289 AI fintechs in the country's size, rapid fintech growth, and 2015, and 6,038 in 2023. deep AI integration into financial practices, Whilst the growth of new AI fintech supported by the government,”UnaFinancial companies in Asia had slowed down since said in a report. its peak during the COVID-19 pandemic, “In China, the growth is driven by the active adoption of AI by existing players will large economy, whilst Singapore boasts the help increase their number. proactivity of local fintech businesses, which “Investment volumes in the sector are position the country as a regional fintech expected to increase 2.2 times next year. If hub and trendsetter in Southeast Asia,”the the global socioeconomic situation stabilises, report read in part.

Number of Asian AI fintech companies

Source: Una Financial

ASIAN BANKING & FINANCE | Q1 2025 7

FIRST Frontier. Zap Energy develops fusion power and related technologies, which Mizuho said is “a potential game changer for the clean energy transition.”

The company also bought a nonvoting minority stake in Golub Capital, a private credit lender with more than $70b in capital under management. The stake sale positions Mizuho as Golub Capital’s exclusive distribution partner in Japan for its products, which target retail investors and the ultra-rich.

CHINA’S BIG FOUR BANKS FACE $100B SHORTFALL RETAIL BANKING

C

hina’s four biggest banks will likely count on the deposit insurance fund to address a multi-billion-dollar shortfall in lossabsorbing capital.

The big four– the Agricultural Bank of China, China Construction Bank, Bank of China, and Industrial and Commercial Bank of China– have not met their targets on total loss-absorbing capacity (TLAC).

The four banks will need about $100b (RMB738b) to meet the target, based on their first half 2024 financials, said S&P Global Ratings credit analyst Michael Huang.

This is a problem as the deadline to the first phase of the TLAC regime edges closer: the four banks will have needed to accumulate capital equal to 20% of their risk weighted assets by 1 January 2025.

"The banks need capital to fund lending growth, which supports China's economic growth. The Big Four will need to maintain their capital buffers as they continue lending, to be in compliance with the TLAC rules,” said Huang.

This is where the China's Deposit Insurance Fund (DIF) toward their TLAC. The fund could be used to support a bank resolution, if needed, Huang said.

The TLAC gap will fall to just RMB300b to RMB340b, if each of the four banks count the full amount of the balance in the DIF as part of their TLAC funding. Huang estimates that the fund is likely to grow to RMB100b to RMB110b by year-end.

Impact of government stimulus Apart from the expected capital shortfall, banks in China will also grapple with the effects of the government’s stimulus, which will pressure their net interest margins (NIM). S&P Global Ratings director Ming Tan estimates that this will reduce banks’ NIM by 20 basis points.

8 ASIAN BANKING & FINANCE | Q1 2025

Mizuho Bank bought stakes in US-based Zap Energy and Golub, a private credit lender

Japanese banks seek M&A deals overseas INVESTMENT BANKING

J

apan’s biggest banks pursued mergers and acquisitions (M&A) of local and foreign fintech firms in the second half of 2024 in search of better revenue, as the yen sank to a 34year low amidst relaxed regulations.

In November 2024, MUFG announced its bid to acquire all common shares of WealthNavi, Japan’s biggest wealth management roboadvisor with more than $8.6b (JPY1.3t) in assets under management, for about $661.85m at an 89% premium.

Three months earlier, MUFG bought an 8% stake in Globe Fintech Innovations, the operator of Philippine e-wallet giant GCash, for $393m.

Its investment helped push up the valuation of GCash — the Philippines’ largest e-wallet with over 80 million users — to $5b.

In June, MUFG served as the lead investor in Thai fintech unicorn Ascend Money’s $195m fundraising move. MUFG was not the only Japanese megabank involved in stake purchases in late 2024.

Meanwhile, Mizuho Bank bought a stake in US-based Zap Energy through its innovation unit Mizuho Innovation

Japan-related deals accounted for more than 20% of Asia’s entire transaction volumes for 2023, the highest in four years

Japan-linked M&As at four-year high MUFG and Mizuho joined a wave of Japanese companies looking to expand overseas on the back of market reforms and the search for growth elsewhere as the yen sank to a 34-year low.

Government and market reforms have encouraged a wave of dealmaking in Japan, according to an August 2024 report by J.P. Morgan. Momentum took off after initiatives implemented by the Ministry of Economy, Trade and Industry on corporate takeovers and the Tokyo Stock Exchange, it said.

The volume of M&As linked to the country was up 20% in the first half from a year earlier.

Japan-related deals accounted for more than 20% of Asia’s entire transaction volumes for 2023, the highest in four years, J.P. Morgan said, citing data from Japanese M&A Research Report.

The ministry outlined guidelines to ensure fair and transparent procedures, encouraging boards to enhance corporate value and shareholder interests by considering credible takeover proposals, J.P. Morgan said.

The Tokyo bourse also announced an initiative including guidance for companies to encourage better valuations, asking for stock prices to go beyond a price-to-book ratio of 1. The measure has been widely embraced by Japanese companies, J.P. Morgan said.

For 2025, Japanese banks are expected to enjoy the effect of higher base lending rates and “wellcontrolled” interest rates on deposits, according to S&P’s Kensuke Sugihara.

This enables the banks to seek higher net interest incomes.

“Rate hikes will remain gradual, whilst vulnerable consumer sentiment is a risk to economic growth. Recovery of consumption will improve the sustainability of economic growth and wage increases are likely to continue.

ASIAN BANKING & FINANCE | Q1 2025 9

VOX POP

How can banks try AI without overinvesting?

BANKING TECHNOLOGY

Arnaud Caudoux Deputy Chief Executive Officer BPIfrance As banks lend or invest in [AI] companies, for sure you have to be cautious. It's a massive new wave of technology. Each and every time you have over-investment in the sense that there are too many companies, some will fail— but you have to be there. You have to invest. You have to have your own network of companies. So just choose the right ones, which means make sure you have the right teams inside to assess who are the right ones. Make sure you have good partnerships with the good VC firms.

Selectivity is key. You don't necessarily need to be investing in frontier models, for instance, which are massively capital consuming.

If you drill down to very specific use cases… you can see that it's much lighter in terms of capital, and it's much I think it's easier to go for this very vertical, focused company than to go for general models, for instance.

German Soto Sanchez Chief Product & Strategy Officer Broadridge The first thing I like to tell companies is that you don't have to spend a lot of money to start getting engaged. You can get engaged in three parts. The first part is you can engage with the ecosystem. That means reach out to journalists, reach out to venture capitalists, reach out to regulators, reach out to academics, and reach out to the practitioners. That's free.

The second thing I highlight is you should start to experiment, and you can experiment small, and then eventually, gradually, to experiment big. Get your feet wet, get your toes wet. You definitely want to fire up a team, and just start doing some use cases, get familiar with it. And then the third thing that I highly recommend to people, is now that you've experimented [and] engaged with the ecosystem, you want to partner. So seek out partners. Seek out firms. Start to partner with them regarding your experimentation.

Ronit Ghose Head of Future of Finance Citi Gen AI is the latest iteration or addition to artificial intelligence and machine learning, which banks, financial institutions around the world have been working with [and] investing in for years.

What Gen AI does is it provides an interface that allows us to use human language to treat this technology in a way like we would talk, and because it's so easy to use, it's so intuitive, it's become very popular.

Inside banks, the main use case around the world is encoding and coder productivity…to help their developers and coders become better, faster, and automate or semi automate some of their more boring parts of their job. All of us in banking use it for fraud detection, for research, information management [and] gatherings.

The next step is, how can we use AI to rethink business models? Now we're not there yet as an industry, but that's the next emerging step.

PRODUCT WATCH

DBS Bank Indonesia’s ‘green’ credit card targets Gen Z

B

ank DBS Indonesia is intensifying its green push by launching its digibank Z Visa Platinum credit card, which is made from recycled PVC plastic.

The Singapore-based lender, the largest in Southeast Asia by assets, is also targeting the younger generation, particularly Gen Z and Millennials who have been known to patronise sustainable brands.

“Gen Z and millennials care deeply about the future of our planet,” Ari Lastina, head of Card and Loan Business at Bank DBS Indonesia, said in a statement. “Therefore, through the launch of this recycled credit card, we want to provide them with a financial solution that is not only functional but also aligned with their environmental values.”

“We believe that by combining modern financial technology with a commitment to sustainability, we can support the younger generations in their journey towards a more

10 ASIAN BANKING & FINANCE | Q1 2025

sustainable future,” she added.

Almost three-quarters of young consumers are willing to pay more for environment-friendly products, the Indonesian lender said, citing a 2021 study from First Insight. A similar study

by McKinsey & Co. in 2023 showed that Gen Z and Millennials consider personal, social, and environmental impacts when buying things.

Bank DBS Indonesia’s newest credit card, which is created in partnership with Visa Indonesia and Waste4Change, cuts plastic waste by 3.18 grams and carbon emissions by 7 grams per card, it said.

The digibank Z Visa Platinum card offers key benefits, including the 0% Pay Later feature for up to six months. It also allows cardholders to manage their finances 24/7 through the DBS app.

Users also get exclusive promotions such as Buy 1, Get 1 Free deals, 50% discount at select merchants, and 20% savings on Grab electric vehicle rides.

digibank Z Visa Platinum card (Photo from DBS)

ASIAN BANKING & FINANCE | Q1 2025 11

BRANCH WATCH: MAYBANK

Maybank adds ‘Instagrammable’ events café to its latest lifestyle branch The Malaysian bank’s newest branch has a bright space that brings a sense of tranquility.

M

aybank Singapore Ltd. has opened its second lifestyle banking space with a café that will double as a venue for workshops, seminars, and gatherings for customers.

“A lot of banks are closing branches, they have been downsizing,” Adam Tan, head of Community Financial Services at Maybank Singapore, said in an interview with Asian Banking & Finance.

“But for Maybank, we have been keeping our branch premises intact, largely because we believe that the branches are the place for our customers to engage with us. It's a place for high-value transactions,” he added.

The newest branch of Maybank Singapore, which has the most branches amongst foreign banks in Singapore at 18,

1

Adam Tan

features Joe & Dough, which serves both breakfast and lunch.

It also has a grand piano that auto plays music at the lounge.

“It's our key touchpoint with our customers, and that's the differentiating part of Maybank — we're not shy in investing a bit to make the branch a more welcoming space,” Tan said.

“We also have alfresco dining. It took us a while to get the permit approved, but it is finally set up. We can now accommodate even more customers, especially those who enjoy the warmer outdoor environment. They can enjoy their coffee there,” he added.

The expanded space of MSpace@Maybank Tower offers enough room to host events. “We can easily accommodate 30 to 40 people for small seminars, ranging from lifestyle events to financial and investment talks,” Tan said.

2

1 The new

“Instagrammable” branch also features sustainability-focused designs.

2 Lunch and dinner is

served at Joe & Dough.

3

4

3 Customers are

welcomed by a grand piano that auto plays music at the lounge.

4 The glass windows

allow for more natural light to enter.

5

6

5 The cafe space

doubles as an event space for workshops, seminars, events, and gatherings for customers.

6 MSpace@Maybank

Tower is one of the bank’s 18 branches across Singapore.

12 ASIAN BANKING & FINANCE | Q1 2025

ASIAN BANKING & FINANCE | Q1 2025 13

CEO INTERVIEW

Hong Leong Bank transforms branches to solve non-virtual problems CEO Kevin Lam reveals five branch models that merge tradition and technology.

MALAYSIA

H

ong Leong Bank Bhd is revamping its branches all over Malaysia as part of a digitalisation push under its branch transformation program, according to its top official.

“Not all branches will be the same in the future,” Kevin Lam, group managing director and CEO at Hong Leong Bank, told Asian Banking & Finance in an interview.

“We’re in the process of rolling this out in our branch transformation program.”

Some branches of Malaysia’s sixth-biggest bank by assets will offer services across retail and investment banking, as well as wealth management, whilst others will be strategically located inside the buildings of partner companies in the car and property sectors, he said.

A key part of this revamp is their pivot to automation using artificial intelligence (AI). In March 2024, Hong Leong Bank started using an AI bot that managed to make 300,000 calls to customers who were late on payments, replacing 20 human roles.

“We collaborated with a Chinese AI company to bring over 300,000 calls to customers, and the success rate was just as good as what a human could do,” Lam said. “By doing that, we're able to save about 20 headcounts in this particular area of function by the end of this financial year.”

Here’s the excerpt from the interview.

What do you think will be the future of branch banking?

Branches will naturally transform into a place where it’s about solving problems that you cannot do virtually, and also about providing advice and engagement and building relationships, rather than just the normal transactions.

The way Hong Leong Bank is looking at it, not all branches will be the same in the future. We’re actually in the process of rolling this out in our branch transformation programme, where there are five categories. Category one is what we call iconic branches, where it’s going to be full-scale and full-service, where you have everything — from corporate banking, investment banking, to wealth management.

Then there’s category two which we call a flagship branch, with a lot of services particularly focused on wealth management. Category three is a call-servicing branch and under category four, we have kiosks with virtual interactions and self-service kiosks.

Category five are actually partnership models, where we partner with automotive dealers, property developers, even cinemas, to have some sort of presence in some locations.

Why is AI crucial for the future of banking?

AI is important in our generation because, I think for the first time in the human race, we have a tool that can actually think on behalf of humans. It’s not just banking; every industry is looking at how to capture the opportunities that AI is giving us in the coming years.

At Hong Leong Bank, we have a top-down and bottom14 ASIAN BANKING & FINANCE | Q1 2025

Kevin Lam, Hong Leong Bank group managing director and CEO

Branches will naturally transform into a place where it’s about solving problems that you cannot do virtually

SCAN FOR FULL STORY

down approach to AI. By top-down, I mean that myself, as a group CEO, am personally driving the AI strategy. I make it a point to be really updated with the latest happenings in AI, not just in financial services.

At the same time, we have a bottoms-up approach. What we’ve done at Hong Leong Bank is to encourage what we call AI champions across all functions.

Recently, we did an AI ignite challenge within the company, and we got about 40 different colleagues representing many divisions of the bank to put forth AI ideas and pitch these ideas to senior management. From there, we picked the top 10, and finally the top three.

The prizes to those individuals for coming up with those ideas is that basically they would win management time and resources to translate those ideas that they have into AI initiatives within their own lines of businesses. The winning one was in the retail credit area. There were a lot of ideas about AI opportunities in the area of applying artificial intelligence in credit management.

How do you balance legacy and digitalisation?

At Hong Leong Bank, we see it as a one-bank approach.

It’s not so much about striking a balance that ‘this is more traditional, and this more digital.’

Over a number of years, Hong Leong Bank has embarked on a strategy of being digital at the core. A lot of our customer transactions and engagements are done with a digital end-to-end mindset in place now.

ASIAN BANKING & FINANCE | Q1 2025 15

CEO INTERVIEW

NETS adds inventory features to payment terminals for Singapore retailers It is using data from its payment system to help businesses improve operations.

SINGAPORE

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etwork for Electronic Transfers (NETS) expects its expanded payment terminals, which now include inventory capabilities, to help Singapore’s small and medium enterprises (SME) improve their operations.

“If the retailer doesn’t have my shoe size, they can use the NETS terminal to scan the shoe box, and the retailer can tell me that they are selling the size online, or that another branch of their store has it,” NETS CEO Lawrence Chan told Asian Banking & Finance in an interview at the Singapore Fintech Festival 2024.

“Helping our merchants manage their inventory through our terminal is one way in which we can help them better manage their operations,” he added.

Aside from inventory, NETS also lets merchants know how they are doing in a specific customer segment. “Many offline or face-to-face merchants actually don’t know their customers very well, because customers don’t have to register with the merchant,” Chan said.

Asian Banking & Finance spoke with Chan to learn more about NETS’ expanded services and the challenges faced by Singapore SMEs. How has NETS transformed itself from being a payment to a solution provider?

NETS, fundamentally, is a payment provider. We would like to think that we offer solutions to our merchants, and we would like to think that we understand the pain points of our merchants, and therefore we can help them solve their payment and nonpayment-related pain points as a result of our service to them.

The solutions that we provide to our merchants are a result of us understanding their business and how we can make them more efficient. In the research that we have done in Singapore with our merchants, [we found that] what's important with our merchants is they definitely want more business. Reducing costs is also a very important part of the business, especially for SMEs. We can help them be more efficient in doing business. That is one way we definitely can add value to our merchants.

How can NETS help Singapore businesses solve operational challenges?

We have started three merchant categories, where we have some scale, and where we are offering solutions.

Let me start with one industry I’d like to speak about a lot — the hair salon industry. In the hair salon industry, one of the main pain points is in managing commissions. The owner of the hair salon alone has to give a commission to the hairstylist who works with a customer. Normally, they have to write down that so and so came and worked with a customer, or which hairstylist did that job.

We can help the owner of the hair salon link directly to the customer, so that the hairstylist can be paid more easily for the good work they have done for a customer. That’s one solution where we understood the pain point and provided

16 ASIAN BANKING & FINANCE | Q1 2025

Lawrence Chan, Network for Electronic Transfers (NETS) CEO

The new payment terminals can be linked to a retailer's offline and online inventories (Photo from NETS)

the solution. We also provide solutions for the food and beverage (F&B) industry, where they use point-of-sale (POS) equipment that many merchants use, costing a few thousand dollars. Today, this point-of-sale terminal can be input into our own payment terminal. They don’t have to purchase another POS terminal.

The solutions that we provide to our merchants are a result of us understanding their business and how we can make them more efficient

How do you help SMEs unlock revenue streams?

One of the things that my team has been working very hard a few years back during COVID was to enable cross-border payments. Today, we are very privileged that we have a few corridors where customers from Malaysia, Thailand, Indonesia, China, and India can scan a NETS QR and make payments. This is a huge advantage for our merchants.

Whether they are actually staying in Singapore or visiting Singapore as a tourist or for business, they can now go to a hawker centre in Singapore, scan the NETS QR, and make payments without changing the local currency. That means our merchants potentially can have new customers. And that's a great value that we can share with our merchants — that we can bring them new customers.

Another value that we can help our merchants with is through data. Through data, we can help our merchants understand who their customers are.

ªTake wealth possibilities to greater heightsº We’re the bank bringing you international expertise and solutions to grow your wealth across the world’s most dynamic markets.

Find out more at sc.com/hereforgood

ASIAN BANKING & FINANCE | Q1 2025 17

FINTECH AWARDS 2024

ENTERPRISE PAYMENTS AWARD - SINGAPORE CROSS-BORDER PAYMENTS SOLUTION AWARD - SINGAPORE

Unlocking global expansion with Payoneer’s seamless and reliable payments solutions Payoneer empowers small and medium-sized businesses (SMBs) worldwide, simplifies global commerce, and enables entrepreneurs to grow with confidence and ease through its cross-border payment solutions.

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Payoneer: Empowering businesses anywhere

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ayoneer is a financial technology company empowering the world’s small and medium-sized businesses to transact, do business, and grow globally.

Payoneer was founded in 2005 with the belief that talent is equally distributed but opportunity is not. It is their mission to enable any entrepreneur and business anywhere to participate and succeed in an increasingly digital global economy.

Since its founding, it has built a global financial stack that removes barriers and simplifies cross-border commerce. They make it easier for millions of SMBs to connect to the global economy, pay and get paid, manage their funds across multiple currencies, and grow their businesses.

AI and global expansion According to their annual flagship survey, “SMB Ambitions Barometer,” published in 2024, SMBs are facing an ever-growing number of macro challenges and are preparing to drive efficiencies by adopting AI technologies, partnering with more vendors, and breaking into new trade corridors.

Despite the challenges ahead, 40% of them are prioritising Europe and Central Asia to grow their customer base over the next five years. They hold their firm belief that it is the company’s utmost priority to ensure any business, in any market, the technology, connections, and confidence to participate and succeed.

Connect, receive payments, expand Payoneer’s secure platform empowers global SMBs to connect with customers, vendors, and suppliers and grow across borders.

By using Payoneer, customers can receive payments in multiple currencies directly into Payoneer’s local accounts, making it easy to receive funds worldwide and enabling SMBs to be “local” to their customers regardless of where they are. Additionally, Payoneer supports withdrawing funds to a local bank account at competitive fees, providing customers with the flexibility to access funds conveniently.

Payoneer’s secure platform empowers global SMBs to connect with customers, vendors, and suppliers

18 ASIAN BANKINGAND & FINANCE 2025 ASIAN BANKING FINANCE| Q1 | DECEMBER 2019

Payoneer is now a partner for more than 2 million active enterprises across 190 countries and territories globally. Payoneer's recent acquisition of Skuad, a Singaporebased global HR and payroll startup, positions the company to better serve SMBs that operate internationally.

Excellence in payments in financial technology was recognised at the ABF Fintech Awards 2024, where the company won the Enterprise Payments Award Singapore and the Cross-Border Payments Solution Award - Singapore. These accolades highlight Payoneer’s innovative solutions and dedication to empowering SMBs with seamless, reliable, and efficient crossborder payment services.

The ABF Fintech Awards, presented

by Asian Banking & Finance, celebrates excellence and innovation in financial technology. This awards programme recognises companies, from startups to industry leaders, for their contributions to advancing the financial industry and fostering impactful collaborations.

Empowering global growth Powering growth for customers ranging from aspiring entrepreneurs to the world’s leading digital brands, Payoneer offers a plethora of opportunities to its end users that help enhance their experience and make it more efficient and reliable. They will continue their best practice to provide seamless crossborder payment solutions for businesses, connecting SMEs from above and beyond.

Join their community now to embark on your journey of global expansion: https://www. payoneer.com/

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ASIAN BANKING & FINANCE | Q1 2025 19

INTERVIEW

OCBC triples quantum tech workforce to enhance cybersecurity measures The Singapore bank expects significant tech advancements in the next five to 10 years.

SINGAPORE

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versea-Chinese Banking Corp. Ltd. (OCBC) is tripling the number of workers in quantum computing as it tries to boost security using the technology that it expects to take off in as short as five years.

“The potential of quantum technology is twofold — it can enhance the protection of banking systems but can also render such protection useless if the technology is in the wrong hands,” Peter Koh, head of group technology architecture at OCBC, told Asian Banking & Finance.

“It is therefore essential for banks to not just explore and experiment with quantum technology, but to take charge of it,” he added.

The Singapore-based bank has been exploring quantum technology, when it outlined its quantum roadmap. Part of the plan is to establish a “quantum-ready workforce.”

“We intend to triple the number of employees who are of an intermediate proficiency level in quantum computing,” Koh said in in the interview.

The roadmap also includes modernising the bank’s technology architecture and boosting its capabilities in blockchain and quantum computing.

“The timeline for quantum to become a mainstream technology in banking is still uncertain, but many experts believe that we could see significant advancements within the next five to 10 years,” he added.

Here are excerpts from the interview.

What are the possible uses of quantum computing?

Quantum security is a big aspect of quantum technology.

We recognise this and this is why we are partnering with Singtel, becoming the first financial institution to trial the use of Singtel’s quantum-safe network. Singtel’s quantumsafe network uses quantum key distribution and advanced encryption algorithms to protect the network from quantum threats.

We have also signed a memorandum of understanding with the Monetary Authority of Singapore (MAS), along with other banks, to collaborate on quantum security and study the application of QKD (quantum key distribution) in financial services. Additionally, we are partnering with institutes of higher learning to explore quantum computing applications in pricing models and fraud detection.

What risks should be addressed before adopting the tech?

Specific to the technologies surrounding quantum computing, several key risks need to be addressed. These include the challenges associated with error-corrected qubits to improve the reliability of quantum computations, entanglement-based QKD protocols and further refinements needed for the implementation of post-quantum cryptography.

There could also be regulatory challenges. Although standards like ETSI (European Telecommunications Standards Institute) exist, the lack of established certifying bodies hinders our ability to scale the procurement of

20 ASIAN BANKING & FINANCE | Q1 2025

Peter Koh, OCBC head of group technology architecture

It is therefore essential for banks to not just explore and experiment with quantum technology, but to take charge of it

quantum hardware effectively. A gradual approach will enable us to navigate these uncertainties.

How might quantum technology influence the competitive landscape in banking?

Many experts predict seeing a fully fault-tolerant quantum computer by 2035. Should that happen, McKinsey estimates quantum computing could create $798b (US$594b) in value for the finance industry if utilised to improve existing processes and for transformative use cases. Collaboration initiatives with institutes of higher learning, fintechs and government incentives continue to play a pivotal role, especially for smaller financial institutions, to enable adoption.

What are the ethical considerations?

Quantum technology is essential for enhancing the bank's security and protecting customers. It can revolutionise portfolio and risk management, particularly in trade finance and collateral optimisation, due to the high value and complexity involved. However, quantum technology also poses a cybersecurity risk by potentially breaking current cryptographic encryption. Therefore, we are actively exploring quantum computing applications in cryptography to protect customer data from future quantum threats.

How do you expect regulation to change?

Given that the technology is rapidly advancing, regulators could play a critical role to support the adoption of quantum computing by financial institutions. MAS issued an advisory in February 2024 that warned financial institutions about cybersecurity risks associated with quantum technology and offered guidance on mitigating the identified risks.

Such guidance is necessary to enable financial institutions to capitalise on this technology.

Be positive All possible

Running for Sustainability Asian Banking & Finance Corporate & Investment Banking Awards 2024 Green Deal of the Year in Taiwan Euromoney Awards for Excellence 2024 Best Bank for ESG in Taiwan The Asset Tripe A Sustainable Finance Awards 2024 Best Social Loan – Financial Institution in India Best Sustainability-Linked/Green Loan in Taiwan Best Sustainability-Linked Loan – Display Technology in Taiwan Best Sustainability-Linked Loan – Leasing in Vietnam

Leader in ESG Financings in Taiwan Provided the first Sustainability-Linked Loan Arranged the first Syndicated Green Loan Completed the first Supply-Chain Sustainability Finance Program

ASIAN BANKING & FINANCE | Q1 2025 21

COUNTRY REPORT: SINGAPORE

Singapore’s top central banker touts potential of asset tokenisation The tech must be regulated, which can be a challenge.

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sset tokenisation is one of the key areas that Singapore is exploring for its “potential” to improve the financial system, although its top central banker noted that it is still a challenge to realise its full potential.

Tokenisation is expected to cut duplication and costs, as well as increase speed of settlements, said Chia Der Jiun, the managing director of the Monetary Authority of Singapore (MAS). “[Global financial institutions] know that it works, and the economic benefits are clear to all participants,” Chia told attendees of the Singapore Fintech Festival 2024, where he spoke at a fireside chat.

Project Guardian Chia touted MAS’ tokenisation efforts under Project Guardian, where it worked private and global financial institutions to explore tokenisation use in a plethora of finance functions.

Use cases were identified in multi-currencies, payment settlement, foreign exchange, treasury management, collateral management, and security settlement.

Despite these use cases, Chia said that there it is still a challenge to get to that potential.

Amongst challenges are the need to set up regulation for exchange, industry frameworks, and standards.

Regulators also have to form a “high quality settlement asset” or a digital money that is on-chain.

MAS will also need to set up an infrastructure that is interoperable across networks so that different tokens can be connected; as well as compatible with compliance.

For their part, MAS has already set up a stablecoin regulatory framework in 2023, and are working on legislation as of 2024, Chia said.

Chia also touched upon quantum technology, saying that “it’s not too early” for it.

22 ASIAN BANKING & FINANCE | Q1 2025

This has the potential to transform cross border payments and make it much more accessible in a low cost, fast way

“I think that’s the thing that most people have in their minds, because quantum computers are still in the lab and not commercial grade. But is it too early? No, it’s not too early, especially on the security front,” Chia said.

Chia warned of hackers who reportedly already harvest data to break later when quantum technology becomes available.

“We have to look into security, post quantum encryption, as well as quantum key distribution,” he said.

Beyond security issues, Chia said that it’s also not too early to think of use cases for quantum, citing its potential to grant computing power greater than classical computers.

Improving local, cross-border payments Chia also discussed Singapore’s efforts to make its local payments more interoperable whilst pushing cross-border payments to be faster

and cheaper.

Chia highlighted MAS’ efforts with Project Nexus in order to achieve their vision for a low cost, accessible, fast domestic payments and cross-border payments.

“We think [Project Nexus] is a game changer…it’s like a central switch, and it [has] single framework standards, so that you won’t have to form bilateral linkages,” Chia said in a fireside chat.

Chia noted how much time and resources it took to form bilateral linkages with several Asian countries like India, Malaysia, and Thailand.

In contrast, with a central switch like Project Nexus, the markets will just need to connect to the central switch and adopt a single framework, and they can have access to the whole framework.

“This, I think, has the potential to transform cross-border payments and make it much more accessible in a low cost, fast way,” Chia said.

Chia Der Jiun, managing director at the Monetary Authority of Singapore (MAS), at the Singapore Fintech Festival

ASIAN BANKING & FINANCE | Q1 2025 23

SECTOR REPORT: CARDS & PAYMENTS

More clients in the African market have started to transact in renminbi

China’s payment system gets boost from renminbi rise Cross-border renminbi use for trade in services grew 22.3% YoY to $165b.

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ore global financial institutions are joining China’s cross-border interbank payment system amidst the renminbi’s rise as a trade currency, according to financial analysts.

"We’ve noticed a shift towards an increased use of the renminbi for payment and trade requirements," Michael von Fintel, head of Financial Institutions at Absa Corporate and Investment Banking Ltd., told Asian Banking & Finance.

The pan-African bank said the African market is primarily driven by the US dollar, though more clients have started to transact in renminbi due to the bank’s growing client base in China.

In the first eight months of the year, cross-border renminbi payments and receipts rose 21.1% year-on-year (YoY) to $5.94t, the People's Bank of China (PBOC) said in October.

Cross-border renminbi use for trade in services grew 22.3% YoY to $165b, accounting for 31.8% of total settlements.

The PBOC, China’s central bank, plans to enhance the systems governing cross-border renminbi 24 ASIAN BANKING & FINANCE | Q1 2025

Ellen Kumwenda Mtine

Michael Ho

David Runacres

transactions, widen access to financial markets, upgrade infrastructure, and improve regulations.

China's cross-border interbank payment system has had limited adoption due to complex regulations, high currency conversion costs, and security concerns.

Its network had 1,573 participants as of October, up 6.3% from a year earlier, but pales in comparison to SWIFT’s 11,500 members. About 1,051 of the indirect participants in the Chinese payment network were from Asia, including 560 from the Chinese Mainland, according to government data.

“Whilst the Chinese renminbi has progressed relatively slowly, we are observing a growing frequency of requirements for renminbi transactions,” von Fintel said.

China in March mandated that payment service providers disclose how they process user data and obtain consent before their transfer. Two months later, it sought compliance with rules on cross-border payments, renminbi transactions, foreign exchange management, and data flows.

Foreign institutions wishing to offer cross-border payment services to Chinese users must set up an office in China. Foreign companies processing payments outside China are not covered.

Africa’s small and medium enterprises (SME) benefit from China’s continued financial openness because they get the same level of service as larger corporate clients.

"Our trade and working capital solutions are designed to meet SME needs,” Ellen Kumwenda Mtine, managing director at Absa CIB, told Asian Banking & Finance.

“Our risk optimization tools, including letters of credit, help our SME clients mitigate sovereign, counterparty, and other risks," she added.

Trade between Africa and China ballooned to $282.1b in 2023 from $11.67b in 2000, according to an August 2024 whitepaper by payment solution company Klasha.

Absa opened an office in Beijing in May so it can deal with Chinese clients directly and guide them on trade finance and payments, liquidity, foreign exchange controls, and risk mitigation.

“Historically, developed markets have been well-connected with each other, whilst many emerging markets had limited ties to the global supply chain network,” Michael Ho, a partner and head of Corporate and Transaction Banking for the AsiaPacific at Oliver Wyman, separately told Asian Banking & Finance in an interview in Beijing.

Digital currencies David Runacres, president of Asia Pacific at Broadridge Financial Solutions, Inc., cited the likely expansion of China Connect programmes, which enable crossborder trading between Hong Kong and the mainland.

“You can expect an increase in the limits on the China Connect programs, both inbound and outbound, which will gradually lead to much larger capital flows,” he said in a separate interview in Beijing.

Beyond traditional assets like stocks and bonds, Chinese investors are expected to show greater interest in more complex asset classes as their understanding of international markets deepens.

Top Broker in Southeast Asia, 45-year legacy of success.

With a rich history elevated by our strong Chinese parentage, CGS International is proud to be Asia's Global Investment House and your partner in a rising Asia.

We provide clients with extensive global market access and a wide and comprehensive suite of services to cater to diverse investment needs. Our comprehensive research coverage provides clients with the data and insights to make the right decisions, at the right place and time.

We are honoured and grateful for this award, and the trust from our investors.

We will continue our efforts to be a leading, world-class investment bank in Asia – All to fulfill our mission of uplifting communities and individuals by empowering them to make better investments decisions for a more sustainable future.

Asian Banking & Finance Corporate & Investment Banking Awards 2024 Securities House of the Year – Singapore

Thank you

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ASIAN BANKING & FINANCE 2025 25 ASIAN BANKING ASIAN BANKING AND FINANCE AND FINANCE | DECEMBER || Q1 Q3 2021 2020

CUSTOMER EXPERIENCE INITIATIVE OF THE YEAR - INDONESIA

BTN Prioritas wins prestigious international award - Retail Banking Awards It was awarded the Customer Experience Initiative of the Year - Indonesia for PLUS by BTN Prioritas. at the Retail Banking Awards 2023.

Currently, PLUS by BTN Prioritas not only functions as a loyalty platform but also as an acquisition platform with the presence of the PLUS Acquisition feature, which BTN Prioritas receives the Customer Experience Initiative of the Year - Indonesia has also been live accolade at the Asian Banking & Finance Retail Banking Awards 2024 since October 2023 to provide TN Prioritas has once again flexibility for customers in placing funds successfully won the international with benefit options that can be adjusted award Customer Experience Initiative to customer needs and can be selected of the Year - Indonesia at the Retail Banking through PLUS by BTN Prioritas. This makes Awards 2024, organised by Asian Banking PLUS Acquisition a breakthrough in the and Finance. This was made possible through priority banking segment. Meru also revealed the launch of a new unique value proposition, some features that will be developed “Defining Your Priority," followed by the such as Global Access Lounge, Interior launch of PLUS by BTN Prioritas as the Design Service, Hotel & Gym Membership, first digital loyalty platform in the Priority Complimentary Gift at the Airport, PLUS Banking segment aimed at translating Acquisition with benefit services such as “Defining Your Priority.”.

Airport Lounge, Airport Transfer, Medical Check-up, and Airport Handling.

Commitment to innovation “The Customer Experience Initiative of The Year award proves that the initiatives carried out by BTN Prioritas through the launch BTN Prioritas will always present of a new unique value proposition, namely the best innovations to keep up ‘Defining Your Priority,’ followed by PLUS with technological developments

by BTN Prioritas, are in line with our initial goal of increasing customer engagement, experience, satisfaction, and loyalty. This also proves that BTN is more than just a mortgage bank. Going forward, BTN Prioritas will always present the best innovations to Simplified redemption processes keep up with technological developments Before the launch of PLUS by BTN Prioritas, by optimising the performance and features the distribution of benefits for BTN Prioritas of PLUS by BTN Prioritas," explained customers was carried out manually and Meru Arumdalu, Wealth Management decentralised, making loyalty costs high Division Head, after receiving the award, and uncontrollable. PLUS by BTN Prioritas accompanied by Yan Putro, Head of Affluent creates fair mechanisms of loyalty benefit Solutions Department. redemption by having a membership-level This is the second time BTN Prioritas system that regulates what customers with obtained this award. In the previous year, higher total funds are entitled to, compared BTN Prioritas, through PLUS by BTN to those with smaller total funds.

Prioritas, had won the award for Wealth One of the standout innovations of PLUS Management Loyalty Platform of the Year

by BTN Prioritas is its simplification of the

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26 ASIAN BANKINGAND & FINANCE 2025 ASIAN BANKING FINANCE| Q1 | DECEMBER 2019

redemption process. With the new system in place, benefits are now distributed efficiently, targeting the right customer segments through a membership tier system that rewards clients based on their total funds under management. This strategic approach ensures that customers with higher balances receive the most optimal privileges and benefits.

Driving customer engagement and business growth

By May 2024, an impressive customer had logged in to PLUS, accounting for over 50% of the total qualified BTN Prioritas clients.

Additionally, as many as 94,148 benefits had been redeemed by 66,993 customers.

Data from May 2024 reveals that customers who have engaged with PLUS

by BTN Prioritas have contributed to a higher total asset under management (AUM) compared to those who have not.

The incremental total funds managed by BTN Prioritas year on year reflects the platform's ability to incentivise clients to increase their funds under management with the bank in exchange for more optimal benefits through PLUS by BTN Prioritas.

The platform also drives product holdings, with customers who engage with PLUS showing a higher average of product holdings than those who do not.

Expanding of PLUS by BTN Prioritas BTN Prioritas has also taken PLUS further by introducing a customer acquisition feature, called PLUS Acquisition, which went live in October 2023. This allows new clients to experience a flexible and customisable way to place funds.

The future of PLUS by BTN Prioritas looks promising, with plans to expand its services even further. Upcoming developments include Global Access Lounge privileges, hotel and gym memberships, complimentary gifts at airports, and enhanced airport services, amongst others.

The success of PLUS by BTN Prioritas underscores the power of a well-executed digital platform in transforming customer experiences and driving business growth, making BTN Prioritas a leader in the Indonesian priority banking market.

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ADVERTORIAL

BTN Wins Award at ABF Wholesale Banking Awards 2024

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T Bank Tabungan Negara (Persero) Tbk (BTN) won an award at the Asian Banking & Finance (ABF) Wholesale Banking Awards 2024 on Thursday, July 4, 2024. BTN received the award in the Indonesia Domestic Technology & Operations Bank of the Year category.

“We highly appreciate the recognition given by Asian Banking & Finance (ABF).

This award motivates us to continue our efforts towards improvement and progress,” said BTN President Director Nixon LP Napitupulu in a written statement on Thursday, July 4, 2024.

According to Nixon, this award is a testament to the successful achievement of BTN’s structured and well-planned digital transformation milestones. BTN, as a company in the financial services sector, ensures that the continuity between information technology and company operations is the result of collaboration, coordination, and teamwork from all parties within the company, as well as support from all customers and users of BTN’s

financial services.

BTN Information Technology Director Andi Nirwoto added that the award from the ABF Wholesale Banking Awards 2024 was due to the company’s consistent emphasis on the use of information technology to provide reliable and trustworthy banking services. The orchestration of information technology in all aspects of the company’s operations, from customer service to efficiency in business transaction processing, drives BTN to continuously improve and enhance its capabilities in delivering the best information technology services in Indonesia.

“The award from the ABF Wholesale Banking Awards 2024 as Indonesia Domestic Technology & Operations Bank

of the Year is a testament to BTN’s success in realizing its vision to be the best bank in information technology services in Indonesia,” Andi said after receiving the ABF Wholesale Banking Awards 2024 in Singapore.

He expressed that the recognition in technology and operations capability demonstrates BTN’s ability to run banking services efficiently and effectively. The ability to achieve a balance between information technology and operations showcases BTN’s maturity in technology development, ensuring data security, resilience, and innovation aspects are well managed. “Being a leading bank in information technology implementation, especially in Indonesia, is an integral part of BTN’s vision and is inseparable from every step the bank takes,” he said.

Furthermore, Andi emphasized that the key to BTN receiving this award is the implementation of continuous innovation.

Innovation is the foundation that has made BTN the leading bank in information technology services in Indonesia.

Innovation is applied across all layers of business, technology, and operations.

Currently, BTN is focusing on adopting emerging technologies such as Artificial Intelligence to enhance smarter, faster, more efficient, and customer-oriented services. “BTN is committed to becoming a leading player in the adoption of banking technology in Indonesia,” he explained.

To implement a reliable information technology (IT) system, BTN has allocated around 8% for IT innovation implementation, which includes enhancements and developments in IT innovation covering Artificial Intelligence, Blockchain, Cloud Computing, Open API, and Machine Learning. “BTN is investing in IT innovation not only within BTN but also within the BTN digital ecosystem, with the goal of accelerating technology not only at BTN but also in the financial services sector in Indonesia,” Andi concluded. l

The award from the ABF Wholesale Banking Awards 2024 as Indonesia Domestic Technology & Operations Bank of the Year is a testament to BTN’s success in realizing its vision to be the best bank in information technology services in Indonesia.

ASIAN BANKING & FINANCE | Q1 2025 27

EVENT NEWS: ASIAN BANKING & FINANCE SUMMIT

How slashing marketing slows recovery for finance

Marketing expert tells three strategic approaches for turbulent times.

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echnological disruptions and shifting customer expectations have made 2024 an uneasy year for the finance industry, placing significant pressure on marketing teams, where budgets are often the first to be cut when economic uncertainty strikes.

In 2023, marketing budgets within the financial sector experienced deeper cuts than other industries.

Whilst slashing budgets may seem like a prudent, short-term solution— one that would certainly make CFOs happy—it is fraught with long-term consequences. "Cutting marketing budgets might seem like a quick fix," Jackie They general manager at The Dubs Singapore, explains.

"But it is in fact a short-term gain at the expense of long-term growth,” They told the delegates of the Asian Banking & Finance and Insurance Asia summit at Andaz Singapore.

The cost of cutting marketing They highlighted the findings from an institute which revealed that brands reducing their marketing spend during economic downturns risk severe long-term consequences.

The institute's research shows that a pause in advertising can lead to a 16% drop in sales after the first year and up to 25% after two years, particularly for brands that were struggling before the downturn.

These findings stress the importance of maintaining a brand's presence, even in difficult times, as it positions the company for a stronger rebound once the economy recovers.

This decline in sales is not only problematic in the short term but presents a significant disadvantage when the economic environment normalises. As They elaborate, "Brands that cut their marketing budgets face significant risk. They struggle to reclaim pre-downturn sales and profitability."

The strategic decision to continue or increase marketing spend, even during economic hardships, could

28 ASIAN BANKING & FINANCE | Q1 2025

yield considerable benefits. Research cited by They shows that increasing the share of voice during a downturn can lead to an increase in market share, positioning companies for growth when the economy recovers.

SCAN FOR FULL STORY

Cutting marketing budgets might seem like a quick fix, but it is in fact a short-term gain at the expense of long-term growth

Balancing marketing and demand They also emphasised the critical distinction between brand marketing and demand generation, two components often misunderstood within the financial sector.

Brand marketing, according to They, "is about building a strong brand that resonates with consumers," whilst demand generation focuses on immediate sales and conversions.

The latter offers quick results but often lacks long-term impact.

The challenge for companies lies in finding the right balance between these two approaches.

"Whilst short-term tactics can generate immediate profit, the most significant and sustainable profitability comes from long-term brand building," she stated.

Brand marketing does more than just drive sales; it also insulates companies during inflationary periods, allowing them to raise prices without significantly impacting customer loyalty. It also plays a critical role in shareholder value.

"The long-term loss in sales, profits,

Jackie They, general manager at The Dubs Singapore, urges financial institutions to reconsider budget cuts for their marketing teams

and shareholder value from reduced marketing far outweighs any shortterm savings," They stated. This is especially true in a sector where trust and reputation play pivotal roles in customer decision-making.

To stay competitive, companies need to build strong brand equity, which acts as a buffer during difficult times. Strong brands, as They pointed out, "gain affinity in the minds of consumers, increasing their perceived value and trustworthiness."

This is particularly crucial in the financial sector, where customers tend to rely heavily on their perception of trust when selecting products and services.

Strategies for turbulent times They also offered practical advice on how companies can optimise their marketing efforts in these uncertain times.

One key recommendation is to maintain a "beginner's mindset" by staying open to new ideas and fostering curiosity amongst teams.

"You need to encourage curiosity amongst your teams. Create a safe space for brainstorming where all ideas are welcome," she advised.

Second, They also emphasised the importance of cross-industry learning, suggesting that financial marketers look to sectors such as fastmoving consumer goods (FMCG) for inspiration. "There’s a lot of samelooking marketing in [the financial] space. So you want to learn from your counterparts in fast-moving consumer goods and see what you can adapt for your strategy," she said.

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ASIAN BANKING & FINANCE | Q1 2025 29

ANALYTICS INITIATIVE OF THE YEAR - MALAYSIA

The way forward – GXBank leads the charge in transforming the local banking scene GXBank is empowering the financially underserved through tech-driven solutions.

Pei-Si Lai, CEO of GXBank

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hilst digital banking in Malaysia is still in its infancy, there is no doubt that it can act as a bridge to offer services—or lack thereof—to those who are financially underserved.

This form of banking has led to greater financial inclusivity in many other markets and would help 55% of Malaysia’s adult population deemed underbanked. There are many reasons for the gaps in financial inclusivity in the country.

Demographics aside (only 39% of Malaysians are deemed eligible for bank loans), geography also plays a part. Those with limited access to physical banking infrastructure have lost out on financial solutions, as have those with low financial literacy.

Digital banks recognise the key role that technology and data play in fulfilling the needs of the financially underserved. A case in point is South Korea’s KakaoBank. The digital bank ingeniously integrated its financial services with the popular digital platform KakaoTalk, thus leading to rapid adoption and customer engagement of its services.

Revolutionary in many senses, digital banking changes the way we interact with financial institutions.

Retail customers have greater accessibility and tailored solutions for their financial needs, whilst businesses often see enhanced opportunities that help them to operate more efficiently in a rapidly evolving market. In Malaysia, GXBank is the first of the five digital banks to be launched, commencing operations just 17 months after 30 ASIAN BANKINGAND & FINANCE 2025 ASIAN BANKING FINANCE| Q1 | DECEMBER 2019

receiving its banking license from Bank Negara Malaysia in April 2022.

Analytics Initiative of the Year - Malaysia from the Asian Banking & Finance Retail Banking Awards 2024.

Going above and beyond Like other industry leaders, GXBank is striving to set that gold standard for digital banking in Malaysia. It is leading the charge towards transforming the country’s banking industry by addressing inclusion gaps and enhancing user experience with the help of technology, data, and AI, thus ensuring more Malaysians have seamless access to financial services. This is in no small measure inspired by Grab Malaysia’s legacy of offering greater economic opportunities to those who need it.

It isn’t only about economic empowerment - GXBank advocates for financial empowerment by offering financial services to those who have been disadvantaged by the traditional banking system. Under its Impian GIGih plan specifically tailored to drive greater financial inclusion, the Bank has embarked on initiatives such as backto-school bursary support, scholarships, and financial literacy programmes to help those in need take a step closer to achieving their dreams.

The response from Malaysians and the wider industry has been an overwhelmingly positive one. GXBank is now serving more than one million customers after just one year in operation, and its efforts to meet and surpass industry norms have also been recognised, as evidenced by the awards it has received. To date, GXBank has been the recipient of more than 15 banking awards, GXBank 1st Anniversary amongst them the

Looking ahead Whilst GXBank has recorded substantial successes in its short one-year journey, it is not resting on its laurels. Recognising that there is still a long way to go to serve the financially disadvantaged, GXBank launched ‘GX 2.0 – Next Starts Now’ in conjunction with its first anniversary. GX 2.0 represents an exciting vision for the year ahead through the use of innovative features and technology that help to further personalise and enhance the banking experience.

Consisting of accessible, affordable, and user-friendly financial products for consumers and soon to be extended to businesses, the range—GX FlexiCredit and GX Business Banking, amongst them—is designed to help underserved Malaysians and Micro, Small, and Medium Enterprises (MSME) achieve their financial goals.

But this is not where it ends. GXBank continues to strengthen partnerships with regulators, industry players, and FinTech companies in its efforts to build a stronger financial ecosystem for Malaysia.

For change to ensue, the country’s digital banks must also work together to help further transform the country’s financial landscape in order to increase the capabilities of those who are underserved.

GXBank is striving to set that gold standard for digital banking in Malaysia

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ASIAN BANKING & FINANCE | Q1 2025 31

OPINION

TOUHIDUL ALAM KHAN

Why is willful default a growing threat to Bangladesh’s financial stability?

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angladesh’s banking sector faces a growing challenge that threatens its financial stability: willful defaulters. These borrowers, despite having the means, deliberately refuse to repay loans, severely exacerbating the country’s already high levels of nonperforming loans (NPLs).

By the end of 2023, defaulting loans amounted to Tk. 145,633 crore—9% of total outstanding loans— marking a 20.7% increase from the previous year. This alarming rise signals a need for stronger governance and more rigorous accountability measures to address the escalating problem of willful default.

The issue of willful default Willful default refers to borrowers intentionally withholding repayment despite having sufficient resources to meet their obligations. Such defaulters often engage in deceptive practices, including underreporting cash flows, diverting borrowed funds, or misusing them for unapproved purposes. These actions directly contravene the principles of a debt contract, where borrowers are expected to repay loans on a set schedule.

This challenge is further complicated by the information asymmetry between banks and borrowers.

Lenders often lack sufficient insight into the true financial conditions of borrowers, who may conceal crucial information about cash flow or business performance. This concealment leads to rising nonperforming assets (NPAs), creating a significant strain on bank balance sheets and undermining the financial system’s overall health.

In developing countries like Bangladesh, the problem is even more acute due to weak legal enforcement and regulatory oversight. Lax supervision and informal financial systems create an environment where willful defaulters can exploit loopholes, deepening the NPL crisis and putting the country’s financial stability at risk.

MD. TOUHIDUL ALAM KHAN Managing Director and CEO National Bank Limited, Bangladesh

Bangladesh Bank’s response: A framework for accountability In response to the alarming rise in willful defaults, Bangladesh Bank introduced a set of stringent guidelines aimed at holding borrowers accountable.

These guidelines are part of a broader effort to reduce the country’s defaulted loan ratio to less than 8% by 2026. The framework imposes hefty penalties on both defaulters and banks that fail to comply with the new rules. Fines can range from Tk. 50.00 lakh to Tk. 1.00 crore, with additional daily penalties for ongoing violations.

Under these new guidelines, banks are required to

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set up a dedicated "Willful Defaulters Identification Unit" tasked with identifying and investigating cases of willful default. Once a borrower is flagged, they have 14 working days to respond before further actions are taken.

The consequences for willful defaulters are severe: they are barred from holding directorial positions in financial institutions, excluded from receiving national awards, restricted from foreign travel, and prohibited from participating in certain property transactions until their loans are fully repaid.

National Bank Limited’s bold move Amongst the first to take action under Bangladesh Bank’s guidelines, National Bank Limited (NBL) recently declared four borrowers as willful defaulters in its 509th Board meeting—an unprecedented move in Bangladesh’s banking history. This decision signals NBL’s strong commitment to enforcing governance and accountability within its operations. It is a clear message to defaulters that they will no longer be shielded from the consequences of their actions.

The NBL Board’s decision underscores the importance of strong leadership in tackling willful default. By setting an example, NBL is paving the way for other banks to follow suit, strengthening the overall integrity of the financial system. This move also marks a turning point in Bangladesh’s approach to addressing willful default, reflecting a shift from leniency to firm enforcement.

The broader context: Weak regulatory systems The willful default issue is not unique to Bangladesh; many developing countries struggle with similar problems due to weak regulatory environments and incomplete legal frameworks. Compared to developed nations where strong regulatory oversight and judicial systems effectively hold defaulters accountable, countries like Bangladesh lack the necessary infrastructure to curb financial misconduct.

In Bangladesh, the problem is compounded by incomplete debt contracts and a reliance on informal financial systems. The lack of transparency and enforcement mechanisms creates opportunities for defaulters to evade repayment, leading to a buildup of NPAs and eroding public confidence in the banking sector. Additionally, the tight bank-borrower relationships prevalent in the country further exacerbate the issue, as borrowers often rely heavily on a single bank for financing, limiting the bank’s ability to enforce stringent penalties.

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