Asian Banking & Finance (July - September 2024) by Charlton Media Group

Issue No. 115 DISPLAY TO 31 SEPTEMBER 2024

HOW ZA TECH BUILDS A WEB3 BANK

INSIDE CEO DEVON SIN’S RAPID STRATEGY TO DOMINATE HK’S DECENTRALISED WEB

ZED ATTRACTS 34,000 TO WAITLIST FOR NO-INTEREST CREDIT CARD CHINESE BANKS DOMINATE AS JAPANESE, SOUTH KOREAN ASSETS FALTER SG BANKS TURN TO UPSKILLING AS HIRING SENTIMENT TURN ‘CAUTIOUS’ TECH IS NOT THE FOCAL POINT OF BANKS’ DIGITAL TRANSFORMATIONS

Asian Banking & Finance

Helena Ooi Head of Strategy, Maybank SG p. 16

Devon Sin ZA Bank CEO

GO ASEAN with krungsri

Unlock seamless connectivity to the region

via the MUFG network with our Call 1572

www.krungsri.com

ASEAN LINK service. Krungsri Simple

FROM THE EDITOR PUBLISHER & EDITOR-IN-CHIEF EDITORIAL MANAGER

Tessa Distor

PRINT PRODUCTION EDITOR

Eleennae Ayson

JOURNALIST

Frances Gagua

GRAPHIC ARTIST

Emilia Claudio

COMMERCIAL TEAM

Janine Ballesteros Jenelle Samantila Cristina Mae Posadas

ADVERTISING

Shairah Lambat shairah@charltonmediamail.com

AWARDS

Julie Anne Nuñez awards@charltonmediamail.com

ADMINISTRATION

Eucel Balala accounts@charltonmediamail.com

EDITORIAL

ith Hong Kong opening its industry to more Web3.0 development, ZA Bank is now the bank of choice for many tech clients. We sit down with CEO Devon Sim and discuss how tech could be a key driver for the region’s economic development and how banks can fill this niche. Turn to page 10 to know more.

Tim Charlton

abf@charltonmediamail.com

In the fintech space, new players challenge banking norms by reinventing long-established models. One such player is Zed, launching a no-interest, no-fee credit card in the Philippines, based on a new way of assessing credit history. Know more on page 12. Meanwhile, Lendela addresses the growing loan demand in Singapore and presents its case for collaborating with fintechs to onboard quality clients through innovative risk assessment processes. Turn to page 13 to read the story. We also present the latest bank rankings across Singapore, Hong Kong, and the broader APAC region. These rankings provide insights into the competitive dynamics of the banking industry, highlighting institutions that excel in operational efficiency and customer service. Read the stories on pages 18, 20, and 24.

SINGAPORE 101 Cecil St., #17-09 Tong Eng Building, Singapore 069533 +65 3158 1386 HONG KONG Room 1006, 10th Floor, 299 QRC, 287-299 Queen’s Road Central, Sheung Wan, Hong Kong +852 3972 7166

Top leaders in the annual Asian Banking & Finance Forum share their insights on crisis management, tech investments, and digital transformations. Read our event coverage on pages 29-31. Read on and enjoy.

MIDDLE EAST FDRK4467,Compass Building,Al Shohada Road, AL Hamra Industrial Zone-FZ,Ras Al Khaimah, United Arab Emirates www.charltonmedia.com

Can we help?

Tim Charlton

Asian Banking & Finance is a proud media partner and host of the following events and expos:

Editorial Enquiries: If you have a story idea or press release, please email our news editor at abf@charltonmedia.com. To send a personal message to the editor, include the word “Tim” in the subject line. Media Partnerships: Please email abf@charltonmedia.com with “partnership” in the subject line. Subscriptions: Please email subscriptions@charltonmedia.com. Asian Banking & Finance is published by Charlton Media Group. All editorial is copyright and may not be reproduced without consent. Contributions are invited but copies of all work should be kept as Asian Banking & Finance can accept no responsibility for loss. We will however take the gains. *If you’re reading the small print you may be missing the big picture   



MICA (P) 249/07/2011 No. 67

ASIAN BANKING & FINANCE | Q3 2024 1

CONTENTS

CEO INTERVIEW

ZA BANK TARGETS 10 WHY HK’S WEB3 CLIENTS

EVENT NEWS

SCB ADAPTED TO CRISIS WITH 30 HOW STRATEGIC INVESTMENTS

FIRST 06 How banks should rethink pricing 07 Islamic finance to become a $6.7t industry by 2027: LSEG

FINANCIAL TECHNOLOGY 12 Startup Zed attracts 34,000 to waitlist for no-interest card

13 Why banks need fintechs to buoy loan growth

BANK RANKINGS CHINESE BANKS DOMINATE AS JAPANESE, S. KOREAN ASSETS FALL

EVENT NEWS

INTERVIEW 16 Maybank aims to fix charity cash flow problems

BANK RANKINGS 20 SG banks turn to upskilling as hiring sentiment turn ‘cautious’

24 HK banks ramped up hiring but investment bankers laid off

29 Why tech is not the focal point of banks’ digital transformations

31 Thai central bank’s digital payments on ‘top of the world’

COMMENTARY 32 Generative AI’s role in the evolution of banking

CASE STUDY 21 Credit Data Smart ushers in new era of credit scoring in Hong Kong

Published quarterly by Charlton Media Group Pte Ltd 101 Cecil St. #17-09 Tong Eng Building 2 ASIAN BANKING & FINANCE AND FINANCE | Q3 | MARCH 2024 2019 Singapore 069533

For the latest banking news from Asia visit the website

www.asianbankingandfinance.net

ASIAN BANKING & FINANCE | Q3 2024 3

News from asianbankingandfinance.net Daily news from Asia

RETAIL BANKING

CARDS & PAYMENTS

WEALTH MANAGEMENT

Bold strokes: UOB crafts banking strategy with artistic flair

How HomePay is combating renovation scams in Singapore

How have banks’ wealth management pivots played out in China?

When you’ve had a storied 30-year career spanning a handful of banking markets, including being the CEO of UOB’s Greater China and Hong Kong businesses for a decade, where do you expect the next stage of your career to take you? Veteran banker Christine Ip comes full circle by revisiting the arts.

In October 2023, the Singapore Police Force arrested a man for allegedly swindling a total of $198,000 in a series of renovation scams. This is just one example of the thousands of renovation-related complaints that had been reported in the Lion City.

For the last half decade, whenever it’s time for lenders to make the quarterly or mid-year update on their earnings, you can bet to hear one of three things: lower profits; another restructuring; and the potential of wealth management as the driving force for profitability.

BANKING TECHNOLOGY

ECONOMY

WEALTH MANAGEMENT

OCBC builds the the next pipeline of tech and engineering talent

What makes Malaysia the next great investment banking frontier

How BPI Private Wealth strategically courts 25% of the local HNW market

In 2021, Mayda Lim took the next step: she returned to Singapore to spearhead the development of OCBC’s engineering team Just over two years later, Mayda has successfully scaled the team, quadrupling the number of experts in the team by hiring more than 600 software engineers.

Malaysia is emerging as a prime place for investment banking activity in Southeast Asia, buoyed by its government’s commitment to renewables and advantageous geographic location. Other investment hotspots include electric vehicles and takaful insurance.

The Philippines’ oldest bank aims to double the assets that it manages for the ultrawealthy and to clinch a 25% share in the Philippines’ growing wealth management market over the next two years, according to BPI Private Wealth president and CEO Maria Theresa Marcial.

4 ASIAN BANKING AND & FINANCE FINANCE | Q3 | Q3 2024 2021

Your ﬁnancial needs. Our top-most priority. Looking for an instant hassle-free loan? Get cash within minutes in your account with Flash Cash. Flash cash benefits: Zero processing fees

Low EMIs

Get loans up to 4X

Zero paperwork

100% digital application

Know more: mashreq.com/flashcash

Looking for a Credit Card to match your lifestyle? Earn Salaam Points on all local and international spends and redeem them on Air Miles, noon gift cards, cashback, etc.

Know more: mashreq.com/cards

Mashreqbank PSC is regulated by the Central Bank of the United Arab Emirates

T&C Apply.

ASIAN BANKING & FINANCE | Q3 2024 5

FIRST “As a result [of ignoring consumers’ willingness to pay], banks may drive top-line growth but do not fully capitalise on the opportunity to deliver sustainable profitability,” Rohan Bhalla, vice president of Business Solutions for Asia Pacific at Collinson, told Asian Banking & Finance. For banks, the dilemma is intertwined with the need to deliver profitability and grow revenues in ways that do not create additional business risk or inflate costs. Bhalla noted that rethinking pricing to drive bottom-line impact is essential.

INVESTORS TURN TO HIGHER RISK AS RETURNS DISAPPOINT WEALTH MANAGEMENT

igh net-worth (HNW) investors in Singapore and Hong Kong have expressed dissatisfaction with current returns and intend to allocate more to private market strategies and hedge funds. In Hong Kong, over three in five (62%) HNW investors intend to allocate more to private market strategies and hedge funds in 2024, according to a study by Singapore-headquartered digital wealth platform, Endowus, and YouGov Singapore. This comes amidst dissatisfaction with existing portfolio returns. About one in three (33%) investors expressed that their returns “have room to grow,” the study found. As a result, over two in five (41%) of the HNW investors surveyed said that they are willing to take some risk to grow their capital meaningfully, whilst one in five (26%) indicated an appetite for greater risk to maximise returns. Same tune in Singapore Singaporean HNW investors have also expressed frustration over “generally underwhelming performance” related to their returns. About 48% of respondents said that their returns have room to grow, much higher than Hong Kong investors, expressed a similar sentiment. Over two in five (42%) of Singaporean HNWs said that they are actively seeking better returns and intend to allocate more funds to private market strategies and hedge funds. The study surveyed 266 individuals in Singapore between February to March 2024 who have an annual income of at least S$300,000 and above and personal investable assets of at least S$1m as well as financial assets of S$1m and above. Meanwhile, a total of 226 individuals in Hong Kong with an annual income of at least HK$1.8m and above, and personal investable assets of at least HK$12m as well as financial assets of HK$6m and above, were surveyed for the Hong Kong study.

6 ASIAN BANKING & FINANCE | Q3 2024

Banks should view customers as the new “C-Suite” and actively understand their preferences and behaviours.

How banks should rethink pricing

RETAIL BANKING

here’s no such thing as a “one size fits all” approach in banking nowadays. The battlefield has shifted to providing personalised, empathetic customer experiences, with over seven in 10 customers valuing these services, according to separate studies by Capco and Accenture. This presents an additional challenge for banks to align their pricing models with consumer willingness to pay. A separate report by Forrester highlighted the need for customers to feel a personal connection with their bank. Similar to Capco and Accenture, Forrester found that seven in 10 customers in the Asia Pacific are more likely to be loyal and spend more money in financial institutions that they believe empathise with their personal financial needs. One critical junction in the frontlines of clinching customer loyalty is pricing. Unfortunately, banks often do not factor in consumers’ willingness to pay: too much, and you miss out on potential customers; too little, and it may give your target customer the wrong impression.

[By ignoring consumers’ willingness to pay,] banks may drive top-line growth but do not fully capitalise on the opportunity to deliver sustainable profitability

Rohan Bhalla

Smarter pricing One common strategy suggested by experts is for banks to adopt smarter pricing. Bhalla encouraged banks to view consumers as the new “C-Suite,” highlighting the need to clearly understand their preferences, behaviours, and aspirations. “With this understanding, banks can in turn prioritise and tailor offerings that resonate with different customer segments and charge differential pricing based on consumer willingness and ability to pay,” Bhalla said. “The customer value proposition needs to be realigned to the pricing model to ensure allocation of the right benefits and incentives to the right audience. This customer-centric approach is paramount to creating sustainable profitability and genuine customer engagement and loyalty,” Bhalla noted. One example is offering travelrelated perks. In a 2023 study by Collinson, over eight in 10 or 83% of the respondents from Asia Pacific said that travel-related rewards and benefits encouraged them to stay with a bank. Over seven in 10 (73%) of the respondents also said that they would choose a bank based on the availability of such rewards, Collinson found. “Rethinking pricing is not just about numbers; it’s about understanding the evolving expectations of consumers and using this knowledge to further strengthen the organisation’s customer value proposition,” Bhalla noted. He added that by leveraging such insights, banks can capture more than just short-term revenue — they deepen relationships with their most valued customers and in turn, drive longer-term commercial returns.

FIRST Malaysia, Saudi Arabia, and Indonesia were named the most developed Islamic finance jurisdictions

ESG sukuk issuance reached $214.9b in 2023, up 9.9%

Islamic finance to become a $6.7t industry by 2027: LSEG

ISLAMIC BANKING

hilst the global Islamic finance industry is poised for significant growth, reaching an estimated $6.7t by 2027, it faces three challenges: slower asset growth, declining profits in Islamic banks, and substantial drops in Islamic funds. Despite these setbacks, the industry shows promise with the rising prominence of ESG sukuk and increased efforts to enhance awareness and knowledge ofdifferent systems under Islamic finance The industry’s assets grew by 11% to $4.5t in 2022, slowing from a

17% rise in 2021 amidst “economic headwinds”, the London Stock Exchange Group (LSEG) reported. Higher losses This comes as Islamic financial institutions and activities reported lower metrics during the period. As of 2022, almost one in four Islamic banks reported lower profits or higher losses. Islamic banks held $3.2t in assets as of the end of 2022. Islamic funds also declined significantly. Most Islamic funds in most markets–both mutual funds and exchange-traded funds (ETFs)–

reportedly posted negative growth in 2022. Assets under management dropped by 10% from 2021 to $220b, whilst the number of new Islamic funds declined significantly from 223 in 2021 to 71 in 2022. Growth in ESG sukuk There are bright spots, however. ESG sukuk is expected to grow in the coming years, with several governments reportedly indicating their intent to rebuild their economies more sustainably. Total sukuk issuance reached $214.9b in 2023, up 9.9% from 2022. This is ESG sukuk’s seventh consecutive record year since market inception in 2017, LSEG noted. ESG sukuk issuance rose by 42% to $13.4b in 2023. Green sukuk issuance made up 58.1% of the total in 2023. Islamic sustainable finance is also expected to continue being highlighted thanks to the United Arab Emirates hosting COP28 in November and December 2023. The industry is also seeing increased efforts towards developing knowledge and awareness of Islamic finance. For example, Indonesia is implementing a diversity of means to raise awareness for Islamic finance as part of its regulators’ national strategy for financial literacy. Amongst 136 markets studied by LSEG, Malaysia, Saudi Arabia and Indonesia were named the most developed Islamic finance jurisdictions.

CHINA’S MEASURES TO FIX PROPERTY SLUMP RAISES RISKS FOR BANKS

ecent measures to address China’s property slump are expected to significantly impact banks, especially in cities with declining property prices. Analysts from S&P Global Ratings warned that these measures, which include reducing down payment requirements and removing the floor on mortgage rates, could lead to increased mortgage defaults and additional costs for banks as property values fall. Lower down payments On 17 May, the People’s Bank of China (PBOC) announced that it would cut the down payment requirement on mortgages for firsttime homebuyers by 5 percentage points (ppt) to 15%. The central bank also removed the lower limit on mortgage rates, which will allow banks to cut interest charges.

These moves are expected to boost demand for mortgages, which in turn carry the risk of straining banks focused on lower-tier cities, where property prices are slated to decline by about 14% between 2024-2025. “Given that first-time homebuyers now only have to make a 15% downpayment, they could plausibly be pushed into negative equity if prices continue to fall in the third year of ownership. That may encourage some who have multiple ‘first homes’ to walk away from their units, and default,” warned Ming Tan, S&P Global Ratings credit analyst. Banks would then be left holding onto houses that are worth less than the mortgage loans, the expert added. The removal of the floor on mortgage rates will also give lenders less buffer to absorb potential losses when defaults do happen.

The minimum downpayment for first-time homeowners is 15%, down 5pp

ASIAN BANKING & FINANCE | Q3 2024 7

Cebuana Lhuillier Bank: Redefining Rural Banking in the Philippines The bank has been expanding access and empowering communities through innovative banking solutions.

Cebuana Lhuillier Bank at the Asian Banking & Finance 2023 Awards Nightactively understand their preferences and behaviours.

n the diverse and dynamic landscape of the Philippine financial sector, Cebuana Lhuillier Bank has emerged as a financial empowerment champion, particularly in rural areas. Established in 1998 as the banking arm of P.J. Lhuillier, Inc., the parent company of the leading microfinance service provider, Cebuana Lhuillier, Cebuana Lhuillier Bank has embarked on a mission to foster financial inclusion amongst the unbanked and underbanked Filipinos. Reaching the Unreachable The bank has taken rural banking to the next level with its dynamic and customercentric approach. By blending technology with its strong commitment to service, the bank achieved its core mission of empowering Filipinos towards an affordable banking lifestyle. To effectively reach as many Filipinos as possible, Cebuana Lhuillier Bank opened its first branch in Bacoor in 1998. This marked the beginning of a transformative journey for the bank. Over the next few years, the bank continued to expand its reach with five other branches in Calatagan, Cebu,

8 ASIAN BANKING AND & FINANCE | Q3 2024 ASIAN BANKING FINANCE | DECEMBER Q3 2021 2019

Davao, Makati City and Nasugbu. In 2024, the bank has grand plans to even reach more communities with ambitious expansion in General Santos City in Mindanao and Angeles City in Central Luzon. The bank’s journey was one of continuous growth and dedication. With each branch opened, it extended its financial services deeper into the heart of the rural Philippines bringing the benefits of banking closer to the lives of countless Filipinos. Its extensive branch network became the lifeline for many individuals and micro, small and medium-sized enterprises (MSMEs) seeking access to affordable financial services. Dynamic Banking In addition to its bullish expansion, Cebuana Lhuillier Bank quickly evolved into a financial powerhouse that rivalled national banks in the Philippines. Its commitment to financial inclusion is unwavering. Over two decades, the bank worked diligently to provide revolutionary banking services to individuals and MSMEs in local communities. Its transformative efforts

began to yield visible results as more and more Filipinos turned to the bank for their financial needs. The cornerstone of this transformation was the introduction of the Cebuana Lhuillier Micro Savings Account. In 2019, Cebuana Lhuillier Bank collaborated with its parent company, Cebuana Lhuillier, to launch this groundbreaking product. It is an interest-bearing deposit account with a low initial deposit requirement and no maintaining balance. What set this product apart was its innovative structure. It is a product owned by Cebuana Lhuillier Bank and carried by Cebuana Lhuillier Pawnshop as its cash agent. This unique feature allowed close to 3,500 Cebuana Lhuillier branches to accept select transactions on behalf of the bank. The result was an exponential increase in accessibility. The unbanked and underbanked population in the Philippines began to experience the benefits of affordable banking through Cebuana Lhuillier Micro Savings. It was a pivotal moment in the journey of the bank and it underscored its dedication to

RURAL/COOPERATIVE BANK OF THE YEAR - PHILIPPINES empowering the lives of millions. Since its launch, Cebuana Lhuillier Micro Savings has reached 7.6 million account holders as of December 2023. Embracing Technology for Financial Inclusion The bank not only expanded its physical presence but also its digital reach, further bridging the gap for those who lacked access to traditional banking services and raising its profile beyond the limitations of rural banking. Cebuana Lhuillier Bank has embraced technology to meet the ever-evolving needs of its clients. In 2020, the bank introduced the eCebuana mobile app, which allowed users to open Cebuana Lhuillier Micro Savings accounts online. This innovation made affordable banking even more accessible to Filipinos, offering the convenience of banking at their fingertips. Since its introduction, the app’s transactions skyrocketed by 128% and the transaction value of the app also rose significantly in 2022. Partnerships and Technological Innovations Cebuana Lhuillier Bank’s commitment to technology did not end there. The bank has strategically partnered with BancNet and UnionPay to expand its card network coverage, ensuring increased ATM and POS access worldwide. Additionally, the bank has embraced online fund transfers through its participation in Instapay and PesoNet. In 2022, InstaPay transactions surged by more than fivefold, reaching 2.1 million transactions, with settlement values rising by over tenfold, from US$17m in 2020 to US$205m the following year. Another noteworthy milestone for Cebuana Lhuillier Bank was its early adoption of QR technology in the Philippines. Tapped by the Bangko Sentral ng Pilipinas (BSP) for the pilot launch of QR PH in 2022, the bank showcased its dedication to staying at the forefront of technological advancements in the banking sector. Furthermore, in a significant stride towards modernisation, Cebuana Lhuillier Bank selected Temenos to revamp its core banking platform. This decision allowed the bank to gain the flexibility and agility to manage customer accounts and transactions with improved efficiency. By modernising its core banking platform, Cebuana Lhuillier Bank will unlock the ability to introduce personalised products and affordable new lending products, such as motorcycle loans. These innovations are aimed at attracting new customers whilst ensuring sustainable growth.

Revolutionary Loan Products Cebuana Lhuillier Bank has also strengthened its loan portfolio to make it more intuitive for the needs of ordinary Filipinos. As of 2023, Cebuana Lhuillier Bank’s total bank loans stood at USD 65 million, led by growth in business loans and in housing loan portfolios. The substantial increase was also a result of the launch of its Teachers Loans programme. Financial Literacy Campaign Aligned with the bank’s core vision to promote financial inclusion, Cebuana Lhuillier Bank continues to conduct its financial literacy campaign, known as “Iponaryo,” in partnership with Cebuana Lhuillier. The campaign educates Filipinos about the value of saving for rainy days or unexpected situations through its Micro Savings account. Collaborating closely with local governments, non-government organisations (NGOs) and schools, the Iponaryo movement remains at the core of the bank’s evolving identity as one of the Philippines’ most innovative rural banks. “Pioneering financial inclusion is our ethos at Cebuana Lhuillier Bank. We recognise that true progress comes from ensuring every Filipino, regardless of location and financial situation has the tools for safe, accessible and affordable banking. These revolutionary products are just the start of our journey. As we continue to shape the future of rural banking in the country, our commitment to inclusivity

remains steadfast,” said Jean Henri Lhuillier, President and CEO of Cebuana Lhuillier and Vice Chairman of Cebuana Lhuillier Bank. Commenting on Cebuana Lhuillier Bank’s impressive journey, its President Dennis Valdes said, “Cebuana Lhuillier Bank’s journey is a reflection of our promise to redefine the banking experience. Our footprint, fueled by cutting-edge initiatives and strategic partnerships with industry titans, is a cornerstone of our identity. We will continue to build on our legacy of becoming the reliable companion for ordinary Filipinos seeking innovative banking solutions.” Cebuana Lhuillier Bank’s efforts have not gone unnoticed, gaining recognition even on the regional scene. The bank earned back-to-back wins as Asian Banking and Finance’s Rural/Cooperative Bank of the Year for 2021, 2022, and 2023. The bank was recognised as one of the BSP Outstanding Stakeholders in 2021, named the Top UnionPay International Issuer for Debit Cards in the Philippines, and ranked amongst the Top 12 Debit Card Issuers in BancNet. Cebuana Lhuillier Bank’s journey from its rural roots to national prominence is not just a narrative of banking growth; rather, it is a testament to the transformative power of financial inclusion, technological innovation, and the obligation to the financial empowerment of every Filipino.

The bank’s journey was one of continuous growth and dedication. With each branch opened, it extended its financial services deeper into the heart of the rural Philippines bringing the benefits of banking closer to the lives of countless Filipinos

Cebuana Lhuillier Bank Calatagan Batangas Branch

ASIAN BANKING ASIAN ASIAN BANKING AND BANKING FINANCE AND & FINANCE | DECEMBER | Q3 2021 2020 2024 9

CEO INTERVIEW

Why ZA Bank targets HK’s Web3 clients The bank has expanded services to cater to stablecoin issuers and Web3 companies.

HONG KONG

A Bank has rolled out dedicated banking services for stablecoin issuers looking to do business in the city — positioning itself as one of the first banks in the market to specifically cater to this segment. The move is part of ZA Bank’s widened scope of services, which has seen the virtual-only bank expand to offering business banking services especially for Web3 companies and start-ups, says Devon Sin, alternative chief executive for ZA Bank. “For the Web3 agenda, we want to move faster because we are very optimistic about the rapid development of Hong Kong, and we believe that this is going to be one of the key drivers of potential growth engines for the Hong Kong economy,” Sin told Asian Banking & Finance in an exclusive interview. “We put more resources there, but that doesn’t mean we are just doing that. We still support a lot of the start-ups doing the account opening, even though they’re not Web3 related — it can be restaurants, start-ups in e-commerce and in trade, all kinds of start-ups,” he added. Sin played up two advantages that ZA Bank has over traditional lenders in servicing Web3 companies. First is their knowledge about Web3 itself. “We know the Web3 ecosystem players, we know how each of these players play their roles in this ecosystem,” he said. Second is ZA Bank’s agile nature when it comes to technological integration with Web3 clients. In this Asian Banking & Finance exclusive, Sin sheds light on many questions about the new service for stablecoin issuers and ZA Bank’s Web3 mandate. Tell us more about the new service for stablecoin issuers. As a bank, we offer custodian services. From the stablecoin issuer, especially in the Hong Kong regulatory framework, that’s supposed to be 100% asset-backed. That means for the issuer, if they want to mint or issue $100 worth of stablecoin, they have to have an equivalent $100 of assets. They can hold this in cash, time deposit, or like T-bills. In the bank’s agenda, we help to facilitate putting [their] client’s money in a bank account. So we are called a reserve bank or custodian banks for the stablecoin issuer. This is one of the key services that we provide them. The money they get from their clients for minting a stablecoin for whatever purpose they want, that money is going to be kept in the bank. This… is a brand new service in Hong Kong. The first point is that stablecoin is a new thing. We have to work closely with the regulators on how the bank should support 10 ASIAN BANKING & FINANCE | Q3 2024

Devon Sin, alternative chief executive for ZA Bank

the stablecoin issuer on the asset arrangement. And the second point is how we have to provide transparency about, for example, this stablecoin issuer has indeed got 100% backed fiat or asset for their minted stablecoins. That is something the banks will have to provide.

A knowledge standard difference [still gives us] a bit of an advantage over the traditional banks

Has the Web3 client base always been a target of ZA Bank? In your view what makes ZA Bank the bank of choice for Web3 customers? When we launched four years ago, we didn’t have any kind of business banking services. At first, we supported retail banking for the locals; that is what we launched in 2020. After two years, we started the SME business. We were not just focusing on the Web3 industry… we were focused more on doing micro financing [and] SME loans products because these are also one of the underserved markets in Hong Kong. Even today, when many people say, ‘Oh, [ZA Bank] is going to be the go-to bank for the Web3 industry,’ we are not just handling Web3. We are still offering the other SME [services], the trading [and] the other government-backed loans. I will say we are still a more diversified business. For the Web3 agenda, we want to move faster because we are very optimistic about the rapid development of Hong Kong, and we believe that this is going to be one of the key drivers of potential growth engines for the Hong

CEO INTERVIEW Kong economy. We put more resources there, but that doesn’t mean we are just doing that. We still support a lot of the start-ups doing the account opening, even though they’re not Web3 related — it can be restaurants, start-ups in e-commerce and in trade, all kinds of start-ups. What unique challenges do Web3 companies face that traditional financial service providers cannot meet?I think [one] challenge is about the regulatory pacing. That means they need a licence to operate in Hong Kong properly. If those companies need to invest more in their Hong Kong operations, they need to have a clear licensing regime or actually get the licence. Before they get a licence, they can’t form a very big team in Hong Kong. But as we see, after they get their regulatory licence in Hong Kong, they expand very fast. That is very important for the business momentum or the economy momentum of Hong Kong. When the licences are there, those companies are going to invest, and they’re going to make more business opportunities. They think about how to do tech business here and in a proper way. What makes ZA Bank the preferred financial service provider for Web3 clients? We will say we have two advantages over the traditional banks. The first thing is we know what those guys are doing. We know the Web3 ecosystem players; we know how each of these players play their roles in this ecosystem. This is indeed very critical. For the due diligence part, the fundamental or the essence of [this] is about what you know about that company and what their business is, and how they interact with different ecosystem players in the industry. This is not easy because we actually spend months not only for the frontline; we also need to align with all players, the SEC, the compliance, the risk guys, to say, “Oh, when we provide service to our clients, we have to be more clear [about] this service, [it] has to solve what kind of problem.” This is more a knowledge standard difference, [and we] have still a bit of an advantage over the traditional banks. The second one is about tech key element costs. Most of our

Understanding the Web3 ecosystem players is ZA Bank’s key to building their client base.

New regulations for Web3.0 could be key drivers of Hong Kong’s economic growth

We want to move faster because we are very optimistic about the rapid development of Hong Kong

clients, especially the Web3 clients, they expect technical integration with the banks, like some APIs (application programming interface) within the internet banking; to provide some personalised service; and also some of them — because they have to handle a lot, mainly the licencing one, they have to handle a lot of the client money — they need us to have like segregated accounts. Although I do think… [whilst] it’s not something much like rocket science or something very new, this is not [something] many traditional banks can provide in a very standardised way and [in] a very fast pacing. This is also how we can differentiate ourselves right now with the traditional banks. What future services can we expect to see from ZA Bank? The next stage — after [the client] gets their licence, and they can operate properly in Hong Kong in [an official manner] — we will provide more client money services to them. That is going to be the next phase of our products: maybe something around a virtual account service for them. That is something that is going to be happening in the coming months. And for the retail banking side, we should have crypto trading services coming soon. This is one critical agenda for the bank. Right now we have more than 750,000 retail customers. These guys are mainly between the ages of 22 and 45. We do believe crypto trading is something that they need as an investment option. In this case, if we can provide a proper channel, a very customer-centric channel for them to do the crypto trading. That’s going to be something that is maybe… we can “wow” the market. That’s going to be the next one; that is what we are thinking about in the coming quarters. ASIAN BANKING & FINANCE | Q3 2024 11

FINANCIAL TECHNOLOGY: ZED

Startup Zed attracts 34,000 to waitlist for no-interest card The soon-to-be-launched card will underwrite based on present and future income, not just past financial records.

PHILIPPINES

ed’s journey to building a credit card with no interest, no foreign transaction fees, and no annual fees in the Philippines traces its inspiration from an unlikely constant in the country: traffic. “Danielle [co-founder] and I were on our way to meet some friends in Makati [business district] for dinner. It should have been only a five-kilometer drive. But what should have been a 20-minute trip ended up taking over an hour. And when I started to ask folks… what was going on, that’s when I was introduced to the concept of payday Friday,” Steve Abraham, Zed co-founder, told Asian Banking & Finance in an exclusive interview. “These people had high disposable incomes. But when bills came, there wasn’t a credit card in sight,” Steve recalled. He and co-founder Danielle Cojuangco-Abraham have since heard story after story of young Filipino professionals with good income backgrounds, who were denied credit cards from traditional banks — including Danielle’s own brother, a lawyer in a big law firm. This is because traditional banks in the country have the tendency to look across the whole historical financial file of an individual customer, which may not reflect

Even if you’re a well-educated, well-paid, well-employed young professional, you still are being prevented from accessing a credit card simply because of a bank file

SCAN FOR FULL STORY

Danielle Conjuangco-Abraham and Steve Abraham, co-founders of Zed

12 ASIAN BANKING & FINANCE | Q3 2024

their current financial stability and high incomes. “Even if you’re a welleducated, well-paid, well-employed young professional in the Philippines, you still are being prevented from accessing a credit card simply because of a bank file,” Steve said. As a result, only 8% of Filipinos own a credit card, according to data from the Bangko Sentral ng Pilipinas (BSP). The two decided to bring together their combined banking and engineering backgrounds to found Zed and launch a credit card in the Philippines. Zed’s Mastercard Titanium credit card boasts of no interest, no foreign transaction fees, no annual fees, and is tied to an app. The up-and-coming credit card app, whilst still in their pilot stages, have already raised $6m in a funding round that included Peter Thiel, the founder of PayPal. Filipinos are also excited: despite not yet launching, Zed already has over 34,000 people joining its waitlist. The future, not the past “One of the things that we do is we underwrite based on current and future income, which not only opens up access to a lot of these hybrids of professionals who have high and stable incomes,” Steve said. This also ends up providing

smarter credit limits, with the cofounders saying that their future customers’ credit profiles do not necessarily represent their past and current earning power. Zed’s in-house-built tech stack and positioning as a fintech means that the company will not have to worry about overhead costs from physical bank branches or manual back-office processes. “Because of that, we’re able to pass those savings back to our customers in the form of the no fees, the no revolving interest and just generally better customer service,” Steve said. Separate balances Balances will also be held separate for different transactions, enabling customers to avoid bigger interest payments. “One way we think traditional credit cards have really led people to unsustainable spending habits is by having that one single balance that includes everything from the very big purchases,” Danielle noted. For example, an individual makes a big furniture purchase alongside groceries and other small daily purchases. What ends up happening is as the balance is combined, when you end up having to roll-over your payments to the next month, you have to pay interest on both. “I don’t think anyone considers that a success to have ended up paying interest on your grocery purchases because of just one balance on one card,” Danielle said. Going home Zed wasn’t their first company venture: the two had earlier cofounded a fintech company called Simple in the US, where they have been living and working for the past two decades. “As we were wrapping up the acquisition of that company in late 2019, we happened to be visiting my family here in the Philippines. And at that point, we thought, ‘What’s next?’” recalled Danielle. “I really wanted to come home, turn my attention to this problem, and to be able to use technology to be able to help this next generation have both better access as well as a better experience around financial services,” she added.

FINANCIAL TECHNOLOGY: LENDELA

Fintechs like Lendela make it cheaper for banks to acquire high-quality customers (Photo from Lendela)

Why banks need fintechs to buoy loan growth Banks saw a 150% rise in loan demand through fintech partnerships.

SINGAPORE

nstead of competition, financial institutions should see fintechs as a complementary firms who could help drive loan growth. For example, banks who collaborated with fintechs already saw their loan volumes double. “We believe the path forward involves leveraging fintech innovations to streamline and modernise traditional banking operations and financial services,” Bryan Tay, Singapore country manager at Lendela, told Asian Banking & Finance in an interview. Tay expects borrowing and spending to ramp up further in the near future. Organic loan demand has grown beyond 150% over the past two years, whilst data from Google’s Keyword Planner shows that search volume for personal loans in Singapore has doubled over the past year, he noted. The bridge Tay primarily sees the role of fintechs in the lending and financial space as that of a bridge: reconciling the gap between legacy systems and modern financial needs. For that,

We make it far cheaper to acquire high-quality customers with strong intent from the get-go with our unique matching model and Lendela’s acquisition machinery

partnerships are in order. One way that fintechs — and in particular lending platforms like Lendela — can add value to the lending space is through introducing better models for loan matching and information dispensing. “As competition intensifies in the lending space, information will become overwhelming for consumers, which often leads to less informed and more impulsive decisions,” Tay said. “This is where loan matching and the reverse auction model become especially useful to consumers, because they won’t have to deal with any of that but will still be able to access the most competitive rates available to them.” Fintechs like Lendela can help introduce more transparency and better inform the public, as well as to serve as a partner for banks and loan providers, helping them assess customers and manage customer acquisition costs, Tay said. Striking harmony Tay believes that beyond competition, it is collaboration between lenders and fintech that will

be key to improving the customer experience and driving the growth of the lending industry. “Banks and loan providers have great infrastructure and may have built strong brand loyalty, but leveraging fintech platforms will benefit their acquisition strategy, unlock customer segments at scale, and also take pressure off customer support capabilities,” he said. Fintechs like Lendela can help banks and lenders lower acquisition costs. “We make it far cheaper to acquire high-quality customers with strong intent from the getgo with our unique matching model and Lendela’s acquisition machinery,” Tay said. For example, Lendela also provides a layer of risk assessment to lenders whilst taking on the often resource-intensive work of providing personalised customer support. It’s a win-win situation for both, Tay said, as banks leveraging fintechs can bypass challenges related to their legacy systems and regulatory burdens, whilst fintechs can surpass hurdles in scaling and earning customer trust. “For fintechs, partnerships with financial institutions can provide the necessary credibility and infrastructure to scale effectively. Lendela facilitates this synergy through our platform, helping banks reduce acquisition costs and optimise their offerings,” he added. The power of optimism Whilst Lendela is optimistic for the future, they also acknowledged their role in the face of economic uncertainty. “One thing to note here is that lending isn’t going anywhere, especially in times of economic uncertainty. People will need additional financial support when times are hard, and every dollar saved in those situations matters even more in economic downturns,” Tay told Asian Banking & Finance. For Lendela, this meant that their platform and service is “indispensable”, said Tay, who sees immense opportunity to scale across advanced financial markets across the Asia Pacific region. ASIAN BANKING & FINANCE | Q3 2024 13

NEW CONSUMER LENDING PRODUCT OF THE YEAR - MALAYSIA FINANCIAL INCLUSION INITIATIVE OF THE YEAR - MALAYSIA (FOR ALLIANCE DIGITAL SME)

Alliance Bank and CGC Digital Offers Innovative Digital Financing for Startups and Small Businesses The Alliance Digital SME Startup Financing scheme leverages innovative AI-driven analytics to evaluate creditworthiness, marking a significant step towards financial inclusion and supporting Malaysia’s MSME sector. startups and small businesses, thereby nurturing a vibrant and sustainable entrepreneurial ecosystem in Malaysia.

Alliance Bank launched the Digital SME Startup Financing

lliance Bank Malaysia Berhad has taken a significant step forward in supporting the burgeoning startup ecosystem in Malaysia by collaborating with CGC Digital, a subsidiary of Credit Guarantee Corporation Malaysia Berhad. This partnership has culminated in the launch of the Alliance Digital SME Startup Financing scheme, a groundbreaking initiative aimed at bolstering startups and small enterprises. Recognising the challenges faced by these businesses in securing financing due to insufficient collateral and limited credit history, the scheme provides a lifeline by offering financial support ranging from RM20,000 to RM100,000. The scheme is especially tailored for businesses as young as six months, highlighting a commitment to fostering earlystage growth and enabling these enterprises to seize timely market opportunities. The streamlined online application process, which requires just a 6-month bank statement, demystifies the traditional barriers to financing, making it more accessible and less cumbersome for entrepreneurs.

This initiative is a testament to the synergistic partnership between Alliance Bank and CGC, with CGC Digital pioneering the use of alternative data to assess the creditworthiness of applicants. By embracing such innovative approaches, the scheme not only enhances financial inclusivity but also propels the development of Malaysia’s micro, small, and medium enterprises (MSME) sector. This sector is pivotal to the nation’s economic vitality, contributing significantly to GDP growth and employment. Transforming Banking with AI Furthermore, Alliance Bank is set to revolutionise the banking experience for its clients through the introduction of its Bank Statement Analyser. This AI-powered tool is designed to refine financial management practices and boost operational efficiency. It represents a key component of the bank’s strategic Proof-of-Concept project, which aims to deliver banking services that are not only faster and more efficient but also highly personalised. Through these innovative efforts, Alliance Bank Malaysia Berhad is poised to play a crucial role in empowering

This scheme will enable us to reach out to underserved segments and provide them with easy and convenient access to financing 14 ASIAN BANKING AND & FINANCE | Q3 2024 ASIAN BANKING FINANCE | DECEMBER Q3 2021 2019

Empowering SMEs with Digital Financing Mr Kellee Kam, Group Chief Executive Officer of Alliance Bank, said: “We are excited to launch the Alliance Digital SME Startup Financing scheme with CGC Digital, as it is a game-changer for the SME market. This scheme will enable us to reach out to underserved segments and provide them with easy and convenient access to financing. We believe that this will spur the growth of the SME sector and contribute to the economic growth of the country.” Mr Raymond Chui, Group Chief SME, Commercial & Transaction Banking Officer of Alliance Bank, said: “The MSME segment faces unique challenges accessing financing as they typically lack adequate collateral and credit history. This collaboration with CGC Digital helps broaden financial inclusivity and will help young MSMEs access the banking ecosystem. Our business customers will find added value in our full suite of banking and non-banking solutions which can support them throughout their lifecycle. The Bank’s refreshed strategy, Acceler8, puts businesses as our core focus and digitalisation is a key enabler in our efforts to in building fast, seamless and personalised solutions to help our customers thrive in a dynamic marketplace.” Pn. Yushida Husin, Chief Executive Officer of CGC Digital said: “CGC Digital is committed to innovating its suite of digital guarantee products via digital platforms. The game plan is to provide MSMEs with a one-stop digital marketplace with better access to financing, focusing on targeted assistance to scale up. All these is anchored to enhancing financial literacy and increasing digital adoption among MSMEs, through this strategic partnership with Alliance Bank.” The Alliance Digital SME Startup Financing scheme is now available for eligible businesses via Alliance Bank’s Digital SME platform. For more information, please visit https://www. alliancebank.com.my/digitalsme or call 03.2604 3333.

ASIAN BANKING & FINANCE | Q3 2024 15

INTERVIEW

Maybank aims to fix charity cash flow problems

Charities may avail of an interest-free grant of up to US$111,000.

SINGAPORE

aybank Singapore is enhancing support for charities with its myimpact Community Package. Launched to empower registered charities across the city, this initiative offers a blend of preferential deposit rates, free SGQR labels for effortless fundraising, and exclusive networking opportunities to boost visibility and collaboration. Helena Ooi, head of strategy at Maybank Singapore, told Asian Banking & Finance that some charities continue to face cash flow challenges stemming from pandemic recovery. Others also require more support in order to accelerate and scale their organisations, and Maybank hopes to offer charities a boost in this regard. “Recognising that charities play a vital role in uplifting the community they serve and creating positive change, and the need for greater support for these charities, we launched the myimpact Community Package,” Ooi said via exclusive correspondence. The Maybank myimpact Community Package offers eligible charities a preferential time deposit rate of up to 3.95% per annum when bundled with a business current account. This is available not just to new charities signing up for the service, but also existing current account holders. Apart from preferential deposit rates, the Maybank myimpact Community Package also provides charities with their own free SGQR labels (quick response code) for PayNow for greater convenience in raising funds. Maybank also offers networking sessions for charities, connecting them with other organisations, stakeholders, and potential partners. Interest-free grant One key benefit offered by Maybank to charities is the potential to receive up to US$111,000 (SG$150,000) in recyclable grants and networking opportunities through its Maybank Momentum Grant (MMG), administered by The Majurity Trust — a Singaporean organisation that works with donors and charities across the Lion City. The grant — which Maybank said has already benefited over 25,000 beneficiaries and 17 organisations — is interest free and also recyclable with a “pay-it-forward” model. “The goal is to provide smaller charities with flexible funding, so charities can invest in transforming their teams and operations, and ultimately become more sustainable.” Ooi said. For the pay-it-forward model, grantee-partners are encouraged to return the grant to The Majurity Trust so it can be circulated to help more charities down the road. This would multiply the impact of the fund whilst cultivating a positive and mutually empowering ecosystem, Ooi said. 16 ASIAN BANKING & FINANCE | Q3 2024

Helena Ooi, head of strategy at Maybank Singapore

The goal is to provide smaller charities with flexible funding, so they can invest in transforming their teams and operations

For its part, Maybank has pledged US$1.48m (SG$2m) for MMG for the years of 2023 and 2024. This follows an earlier US$1.48m grant that was given out in donations across 2021 and 2022. “Our first cohort of grantee partners have also started paying their grant forward and contributing to the support of the next cohort of grantee partners,” Ooi said. The grant is available for charities and non-profit organisations in Singapore in the social and welfare sector with city state-based operations, with a maximum of SG$3m (US$2.2m) in annual Total Operating Expenditure (TOE), less than one year of cash reserves, and a plan to transform their organisation to scale their impact on the community. “Maybank continues our commitment to uplifting the community, by learning how we can provide better support to underserved segments through the Maybank myimpact Community Package and promote financial inclusivity,” Ooi said. Apart from charities, Maybank Singapore had been rolling out exclusive services to non-traditional customers over the past year. For investors who do not fall under the super wealthy categories, Maybank Singapore has launched Goal-Based Investment (GBI), an online investment service available for as low as SG$200 or approximately US$150 — reportedly one of the lowest minimum investment amounts in unit trusts offered by banks in Singapore. Until 30 June 2024, the sales charge on the first US$1,480 (SG$2,000) invested was waived. In late 2023, Maybank opened its Islamic wealth management hub in Singapore, reportedly making it the first bank in the city to offer end-to-end Islamic wealth solutions.

ABF awards_Final_1121_Outline copy.pdf 1 2023/11/21 16:00:33

ASIAN BANKING & FINANCE | Q3 2024 17

RANKINGS: APAC six South Korean banks also suffered declines. Overall, the combined assets of Japanese lenders fell 2.5% in 2023 to just $10.532t, and South Korean banks had a 0.9% decline to $2.67t. Whilst the Bank of Japan’s decision to end its negative rate policy in March could improve the lending margins of Japanese banks, this could put a dent on the economy and decrease loan demand, noted Takahide Kiuchi, executive economist at Nomura Research Institute. The International Monetary Fund (IMF) expects growth in the Japanese economy to slow to 0.9% in 2024 from 1.9% last year.

The Industrial And Commercial Bank Of China (ICBC) topped this year’s list of biggest banks in APAC

Chinese banks dominate as Japanese, S. Korean assets fall Australian and Singaporean banks’ assets remained steady, S&P’s study showed.

anks from mainland China continued to dominate the list of biggest lenders by assets in the Asia Pacific region, according to data from S&P Global Market Intelligence from its annual “Asia Pacific’s 50 largest banks by assets” report. The number of mainland Chinaheadquartered banks in the list fell to 22 in the 2024 list– from 23 in the previous year– their total aggregate assets rose 7.4% to $38.22t by end-2023. China’s four biggest banks continued to be the big four of APAC. The Industrial and Commercial Bank of China (ICBC) remained the biggest bank in the region and in the world. The Agricultural Bank of China edged past China Construction Bank, whilst Bank of China rounded out the top four. These “big four” Chinese banks expanded their assets 10.2% to $21.91t by end-2023, with Agricultural Bank showing the biggest growth at 14.3%. Faster credit growth propelled banks in mainland China to grow their assets, noted Angus Lam, senior economist for global intelligence and analytics, S&P

18 ASIAN BANKING & FINANCE | Q3 2024

Market Intelligence. New bank lending in mainland China rose 6.1% in end-2023 to hit a record CNY22.75t (almost $3.15t), according to official data. “Considering 60% of [mainland China] banking sector assets are based on lending, the fast credit growth has helped propel the expansion in assets,” Lam said. “The largest banks in mainland China typically had strong asset quality, loose liquidity positions and high capital buffers, which improved their ability to lend.” Meanwhile, China Bohai Bank, which took the 49th spot in the 2023 list, dropped out of the ranking. It was replaced by India’s ICICI Bank, which climbed to 48th place, and is the only India-based bank to appear the year before, the data shows.

The largest banks in China typically had strong asset quality, loose liquidity positions, and high capital buffers

Japan, South Korea decline Whilst banks in mainland China were on an upswing, the same could not be said for lenders based in Japan and South Korea. Banks in these two countries suffered the biggest declines in annual ranking, according to S&P. Three of the eight Japanese banks in the list fell in rank, with just one registering an increase, whilst five of

Indian banks fly high In contrast to their East Asian peers, Indian banks have been amongst the best-performing lenders amongst peers in Asia. Improvement in financial metrics, coupled with high credit growth in a robust economic environment, has boosted banks’ assets in recent years, according to S&P. The aggregate assets of the lenders rose sharply by 50.5% to $1.51t in end-2023. A large part of the increase was due to the merger of HDFC Bank with its parent Housing Development Finance Corp in July 2022. Notably, HDFC Bank’s assets jumped 51.3% to $466.35b after the merger, propelling it up 13 places to the 33rd spot in the list. Credit growth in India–currently the world’s fastest-growing major economy– stood at 15.6% as of Dec. 29, 2023, versus 14.9% a year ago, according to the Reserve Bank of India. Australia, Singapore steady The assets of Singapore’s big three banks– DBS, OCBC, and UOB– rose by 3.7% to $1.4t. Individually, DBS and UOB moved up the list, whilst OCBC fell by three spots. The 5 Australian banks in the list also saw their combined assets inch up by 2.8% to $3.24t. Ranking movements are a mixed bag: notably, Macquarie Group dropped 5 spots to claim 50th place, with assets falling 18.8% to $254.63b by end-2023.

RANKINGS: APAC Current rank^

Previous rank^^

Current vs. previous

Company (ticker-exchange)

Headquarters

Accounting principle

Industrial and Commercial Bank of China Ltd. (1398-SEHK)

Mainland China

IFRS

6,303.44

Agricultural Bank of China Ltd. (1288-SEHK)

Mainland China

IFRS

5,623.12

NC NC

Total assets (US$B)

China Construction Bank Corp. (939-SEHK)

Mainland China

IFRS

5,400.28

Bank of China Ltd, (3988-SEHK)

Mainland China

IFRS

4,578.28

Mitsubishi UFJ Financial Group Inc. (8306-TSE)

Japan

Japanese GAAP

2,816.77

Postal Savings Bank of China Co. Ltd, (1658-SEHK)

Mainland China

IFRS

2,217.86

Sumitomo Mitsui Financial Group Inc. (8316-TSE)

Japan

JapaneseGAAP

2,027.34

Bank of Communications Co, Ltd, (3328-SEHK)

Mainland China

IFRS

1,982.89

Mizuho Financial Group Inc. (8411-TSE)

Japan

Japanese GAAP

1,923.56

JAPAN POST BANK Co. Ltd, (7182-TSE)

Japan

Japanese GAAP

1,625.60 1,555.30

China Merchants Bank Co. Ltd, (600036-SHSE)

Mainland China

IFRS

Industrial Bank Co, Ltd, (601166-SHSE)

Mainland China

PRC GAAP

1,432.59

Hongkong and Shanghai Banking Corp. Ltd,

Hong Kong

Hong Kong FRS

1,344.16 1,276.63

China Citic Bank Corp. Ltd, (988-SEHK)

Mainland China

IFRS

Shanghai Pudong Development Bank Co, Ltd. (600000-SHSE)"*

Mainland China

IFRS

1,207.18

China Minsheng Banking Corp. Ltd. (600016-SHSE)

Mainland China

IFRS

1,082.37 955.14

China Everbright Bank Co. Ltd, (601818-SHSE)

Mainland China

IFRS

Commonwealth Bank of Australia (CBA-ASX)2

Australia

Australian IFRS

868.74

Ping An Bank Co, Ltd, (000001-SZSE)

Mainland China

PRC GAAP

787.93

State Bank of India (SBIN-NSEI)

India

Indian GAAP

780.05

ANZ Group Holdings Ltd, (ANZ-ASK)*3

Australia

Australian IFRS

769.59

Norinchukin Bank

Japan

Japanese GAAP

702.03

National Australia Bank Ltd. (NAB-ASX)*

Australia

Australian IFRS

683.41

Westpac Banking Corp. (WBC-ASX)*

Australia

Australian IFRS

664.50

Hua Xia Bank Co. Ltd. (600015-SHSE)*

Mainland China

PRC GAAP

562.58

DBS Group Holdings Ltd, (D05-SGX)

Singapore

Singapore FRS

560.10

KB Financial Group Inc. (A105560-KOSE)

South Korea

Korean IFRS

551.94

Shinhan Financial GroupCo. Ltd, (A055550-KOSE)

South Korea

Korean IFRS

533.48

Resona Holdings Inc. (8308-TSE)4

Japan

Japanese GAAP

527.53

Sumitomo Mitsui Trust Holdings Inc. (8309-TSE)

Japan

Japanese GAAP

520.34

Bank of Beijing Co. Ltd. (601169-SHSE)*

Mainland China

PRC GAAP

503.31

China Guanfa Bank Co. Ltd.**

Mainland China

PRC GAAP

495.55

HDFC Bank Ltd. (HDFCBANK-NSEI)5

India

Indian GAAP

464.34

Bank of Jiangsu Co. Ltd. (600919-SHSE)*

Mainland China

PRC GAAP

457.25

Hana Financial Group Inc. (A086790-KOSE)

South Korea

Korean IFRS

456.47

China Zheshang Bank Co. Ltd. (2016-SEHK)

Mainland China

IFRS

443.37 441.53

Oversea-Chinese Banking Corp. Ltd. (O39-SGX)2

Singapore

Singapore FRS

Bank of Shanghai Co. Ltd. (601229-SHSE)

Mainland China

PRC GAAP

435.14

United Overseas Bank Ltd. (U11-SGX)

Singapore

Singapore FRS

396.62

NongHyup Financial Group Inc.*

South Korea

Korean IFRS

394.46

Nomura Holdings Inc. (8604-TSE)

Japan

U.S. GAAP

388.42

Woori Financial Group Inc. (A316140-KOSE)

South Korea

Korean IFRS

384.04

Bank of Ningbo Co. Ltd, (002142-SZSE)*

Mainland China

PRC GAAP

365.96

Industrial Bank of Korea (A024110-KOSE)

South Korea

Korean IFRS

345.81

Standard Chartered Bank (Hong Kong) Ltd.

Hong Kong

Hong Kong FRS

324.47

Bank of Nanjing Co. Ltd. (601009-SHSE)*

Mainland China

PRC GAAP

307.09

CTBC Financial Holding Co. Ltd. (2891-TWSE)

Taiwan

Taiwanese FRS

271.04

ICICI Bank Ltd. (ICICIBANK-NSEI)

India

Indian GAAP

265.26

Huishang Bank Corp. Ltd. (3698-SEHK)

Mainland China

IFRS

254.71

Macquarie Group Ltd. (MQG-ASX)*

Australia

Autralian IFRS

254.63

Data compiled April 3, 2024 NC = no change; NR = not ranked among the top 50 in the previous ranking. Banks and institutions with significant lending practices are ranked by total assets for the most recent period available. Only one institution per corporate structure is included in the rankings. Rankings account for completed and pending S&P Global Market Intelligence covered bank deals on a best-effort basis. Deals, where assets sold are in excess of $1 billion, have been adjusted using available assets of the target company or the deal announcement/completion assets where available. The rankings have been created on a best-effort basis and exclude development banks and entities that act as central banks/banking associations/supervisors for banking groups. Companies classified by S&P Global Market Intelligence as “banks” or “savings banks/thrifts/mutuals,” companies regulated in the U.S. as bank holding companies, or any financial holding companies with significant banking subsidiaries are included in these rankings. Export-Import Bank of China an Shinkin Central Bank and Korea Development Bank were excluded from the rankings due to the nature of their business models. Total assets are as of Dec. 31, 2023, unless stated otherwise. Data is reported in native currencies and converted to U.S. dollars using end-of-period exchance rates. ^ Pro forma for mergers as of March 31, 2024. ^^ Previous ranking published on April 20, 2023. * Data is as of Sept. 30, 2023.

** Data is as of Dec. 31, 2022. 1 China Construction Bank Corp.’s assets were reduced by %4.51 billion to account for its pending sale of a 59.3% stake in China Construction Bank (Brasil) Banco Múltiplo SA to Bank of China Ltd. Bank of China Ltd.’s assets were increased by the same amount. 2 Commonwealth Bank of Australia’s assets have been adjusted lower by $1.04 billion to account for the pending sale of PT Bank Commonwealth to Oversea-Chinese Banking Corp. Ltd. Oversea-Chinese Banking Corp.’s assets have been adjusted higher by the same amount. 3 ANZ Group Holdings Ltd.’s assets were adjusted higher by $56.15 billion to account for its pending acquisition of Suncorp Group Ltd.’s banking arm. Total assets were sourced from Suncorp-Metway Ltd. at Dec. 31, 2023. 4 Resona Holding Inc.’s assets were adjusted higher by $1.15 billion and $466.9 million to account for its acquisitions of Resona Leasing Co. Ltd. and Daiwa Factor & Leasing Co. Ltd., respectively, from Mitsubishi HC Capital. Both asset figures are from March 31, 2023. 5 HDFC Bank Ltd.’s assets were reduced by $2.00 billion to account for its sale of HDFC Credila Financial Services Ltd. HDFC Credila’s total assets were as of March 31, 2023. Source: S&P Global Market Intelligence. © 2024 S&P Global.

ASIAN BANKING & FINANCE | Q3 2024 19

BANK RANKINGS: SINGAPORE

SG banks turn to upskilling as hiring sentiment turn ‘cautious’ Roles related to wealth advisory and anti-ML and fraud are most in demand.

looking to hire roles related to wealth management and tech-related roles. “In 2024, we will continue our strategic hiring for growth areas such as technology, wealth management and sustainability,” Ernest Phang, managing director, group human resources, OCBC, told Asian Banking & Finance via exclusive correspondence. UOB, meanwhile, continues to hire for sales and service roles. “We’re also expanding roles relating to anti money laundering/ fraud detection/financial crimes and blockchain technology and AI/data analytics, as we continue growing in areas such as our anti-scam capabilities,” a UOB representative told the magazine.

DBS now employs over 36,000 people globally

he number of bankers and staff underemployed by Singapore banks mostly remained at the same level as in 2022, although most lenders chose to incrementally hire a few more people in their headcounts. Data gathered by Asian Banking & Finance found that the number of employees working across 14 banks in Singapore fell marginally by 0.19% to 54,872 as of end-2023. Including Standard Chartered’s workforce, there are a total of 63,872 employees across 15 banks in the country. Of the “Big 3” banks, UOB recorded the highest proportion of new hires, with its headcount expanding 9.69%. UOB now employs about 11,057 people as of end-December 2023. OCBC, including its subsidiary Bank of Singapore, trimmed its headcount to a total of 10,939 people. DBS shared data that it now employs over 36,000 people globally as of 2023, from just 34,000 as of December 2022. A big driver to this jump is the integration of Citi 20 ASIAN BANKING & FINANCE | Q3 2024

Ernest Phang

Wong Keng Fye

Taiwan’s 3,000 employees into DBS. As for Singapore-only numbers, DBS had around 12,000 employees in the Lion City in 2022. It did not disclose its Singapore headcount for 2023. All other banks expanded their headcounts. RHB had 656 employees in the city, whilst HSBC had 3,942 people under its employ in 2023. The State Bank of India is larger by nine people by the end of the year, with 126 employees in Singapore. ICICI Bank, meanwhile, ended the year with 20 more employees compared to 2022. Apart from OCBC, the only other bank to see its headcount fall is BNP Paribas. The bank employs over 2,000 employees in 2023, technically lower than the approximate of 2,200 people it reportedly employed as of end-2022. Credit Agricole and Citigroup recorded virtually little to no changes in their employee numbers. In-demand talent When asked, most hiring heads of Singapore’s banks said that they are

Bank priorities Maybank Singapore’s head of human capital, Wong Keng Fye, said that the bank is looking to strengthen both its consumer and corporate business engines. “We see a demand in frontline roles for our Consumer and Corporate businesses, as well as skills in the data family as we strive to be a data-driven organisation where our decision-making and activities are centred on our areas of focus, guided by our principles of ethical banking (inclusiveness, integrity and sustainability),” Wong said. HSBC Singapore’s head of HR, Mukul Anand, told Asian Banking & Finance that expanding its wealth business is also the bank’s priority in 2024. “HSBC Singapore’s focus for 2024 continues to be on clientfacing, relationship management, and customer service positions to support the demands of our growing wealth business. We also anticipate new priorities in innovation, digital products and sustainable finance across all our business lines,” Anand said, and shared that the bank recently attained an Enabling Mark accreditation from SG Enable,

BANK RANKINGS: SINGAPORE which recognises organisations for their best practices in disabilityinclusive employment. Slowdown in hiring All hiring managers noted a slowdown in hiring activity in the banking industry. UOB said that they were “more cautious with hiring,” citing uncertainties in the economy as well as the economic slowdown. Both UOB and Maybank said that they pace their hiring activity to match growth expectations. Representatives from HSBC and OCBC did not comment on queries on slowdowns in hiring activity. Maybank’s Wong noted that the slowdown in hiring activity was unsurprising given that most banks and fintechs had significantly ramped up hiring during the pandemic. “It is not surprising that there is a slowdown in hiring activity following the significant and accelerated hiring in the preceding period that was fuelled in part by post-COVID catch-up and the proliferation of various digital [and] fintech activities, that saw organisations across many industries building up their teams,” Wong noted. “Hence, when business [and] revenue eventually did not meet expectations, such organisations had to slow down their hiring activity, with many even having to rationalise their built up resources,” he added, noting that Maybank “takes great care to hire right and ensure that our hiring activity matches the pace of our growth expectations.” Turning to upskilling More than hiring, banks in Singapore, including UOB and Maybank, are increasingly focusing on upskilling their current workforce as a growth strategy. UOB’s development initiative Better U reskilling initiative offers specialised learning tracks on project management, data analytics, and even artificial intelligence. “Originally focusing on 5 core competencies identified to be essential for our employees — growth mindset, problem-solving, digital awareness, human-centred design and data storytelling, this has

now extended to, amongst others, effective communication, building executive presence, owning their careers, sustainability and others,” the representative said. Maybank also has its own upskilling initiative, the FutureReady programme, aimed at helping prepare its employees for an increasingly digitised professional sphere. Wong noted how the global pandemic’s impact has also presented an unprecedented set of circumstances, accelerating the bank’s adoption of digital tools and platforms. “Whilst the digital transition has been greatly accelerated out of necessity, Maybank’s FutureReady push will continue to be a key focus across Maybank Group as reflected by its inclusion in the group-wide KPI and country scorecard,” Wong said. Student support Some banks have looked into solving the talent gap by investing in students even before they join the workforce and even in mid-career switchers looking to explore a career in finance. HSBC’s Anand shared that the bank has programmes such as the Accelerating Wealth Programme and Polytechnic Apprenticeship Programme. “HSBC has also signed the Employers’ Pledge for Skills Based Hiring, supported by the Infocomm Media Development

Mukul Anand

Benjamin Teo

When business [and] revenue eventually did not meet expectations, such organisations had to slow down their hiring activity

Authority (IMDA), reinforcing our commitment to building a more competitive and inclusive workforce in Singapore,” Anand said. Benjamin Teo, vice president, regional sales, global payments solutions at HSBC, was one who took part in a similar programme. Teo was a summer analyst at HSBC when he first joined the Institute of Banking & Finance’s (IBF) Finance Associate Management Scheme. The scheme is dubbed as a “talent development initiative” by IBF and is aimed at increasing opportunities for Singaporeans and preparing them for specialist and leadership roles in the financial industry. Under this programme, Teo joined a rotational programme spanning six departments in over two years, which then culminated in a fulltime role at HSBC. UOB, meanwhile, is the first bank in Singapore to offer a gig employment model for retired employees under the Gig+U Retiree programme, and later, the Mums@Work programme. The latter offered 200 jobs in Singapore for women who require a more flexible work schedule due to family responsibilities. Employees hired under Gig+U receive equal pay and enjoy the same benefits as their peers with similar roles in the Bank, subject to their employment status, according to UOB.

UOB recorded the highest proportion of new hires

ASIAN BANKING & FINANCE | Q3 2024 21

BANK RANKINGS: SINGAPORE 2024 Ranking

Bank

Number of employees (End-2023)

Number of employees (End-2022)

Percentage change

2023 CEO or Country Head

DBS BANK

12,000

0% (7)

Piyush Gupta

UNITED OVERSEAS BANK

11,057

10,056

9.95% (2)

Wee Ee Cheong

OVERSEA-CHINESE BANKING CORP

10,939**

12,000

-8.84% (8)

Helen Wong

STANDARD CHARTERED BANK***

9,000+

NO DATA

Patrick Lee

CITI SINGAPORE

8,500

0% (7)

Tibor Pandi

HONG KONG AND SHANGHAI BANKING CORPORATION

3,942

3,890

1.34% (6)

Wong Kee Joo

MAYBANK SINGAPORE

2,164

2,101

2.99% (4)

Alvin Lee

BNP PARIBAS*

2,000+

2,200

NO DATA

JJoris Dierckx

CREDIT AGRICOLE CORPORATE AND INVESTMENT BANK*

1,686

NO DATA

Antoine Sirgi

BANK OF CHINA*

955

NO DATA

Cheng Jun

MIZUHO BANK*

>700

NO DATA

Josephine Lok

RHB SINGAPORE

656

646

1.52% (5)

Danny Quah Boon Leng

STATE BANK OF INDIA

126

117

7.69% (3)

M P Siva

ICICI BANK

110

22.22% (1)

Kadayam Rajaram

UCO BANK*

NO DATA

Gourab Chatterjee

Total (excluding Standard Chartered)

54,872

54,978

-0.19%

Total (including Standard Chartered)

63,872

Legend: *Information retained from last year’s rankings table **Includes headcount from Bank of Singapore (1,903). Separately, OCBC has 9,036 employees. ***No end-2022 data for Standard Chartered in Singapore. Notes: (1) For this year’s survey, CIMB Singapore has opted not to participate. (2) 2024 data as of 31 December 2023; 2023 data as of 31 December 2022. 22 ASIAN BANKING & FINANCE | Q3 2024

ASIAN BANKING & FINANCE | Q3 2024 23

BANK RANKINGS: HONG KONG

HK banks ramped up hiring but investment bankers laid off Trade and private bankers are most in demand, although banks are cautious.

he recovery of staff numbers in HSBC and other banks in Hong Kong propelled the number of total bankers employed across select banks in the city to an increase in 2023– but investment bankers are likely not enjoying the hiring boom. About 82,705 bankers and staff are employed by 16 banks in Hong Kong, according to data from the 2024 edition of the Hong Kong Bank Rankings by Asian Banking & Finance. This is 8% higher than the estimated 76,576 staff employed by the same 16 banks in 2023. Key to this rise is HSBC, reporting about 26,000 employees in Hong Kong by the end of 2023– a 30% increase from its total staff numbers of just around 20,000 in 2022. At its peak, and before it announced a restructuring and planned job cuts in early-2020, HSBC had employed 29,000 staff in the city. Shanghai Commercial Bank added 241 employees in 2023, totaling 1,913 in Hong Kong by the end of 2023– a 14.41% increase from the 1,672 people it employed in 2022. Chong Hing Bank, CMB Wing

Various bulge bracket banks have let go of candidates from analyst to managing director level, given the lack of IPOs and M&A activity

HSBC’s Hong Kong staff rises 30% to 26,000 by end of 2023

24 ASIAN BANKING & FINANCE | Q3 2024

Lung Bank, Public Bank, and the Industrial and Commercial Bank of China (Asia) also saw a net increase in their Hong Kong staff numbers in 2023. Dah Sing Bank maintained the same level of employees between the two years, the bank stated in its annual report. In contrast, many of the biggest employers in the city reported lower staff. Notably, Bank of China (Hong Kong) (BOCHK), Hang Seng Bank, and Citi Hong Kong– reported marginal declines in their total workforce between 2023 and 2024. BOCHK lost over a hundred staff in the 12-month period. Overall, BOCHK’s staff numbers remained at over 12,000 in 2023, hovering at the same levels as the previous year. Hang Seng Bank reported a net loss of around 23 people over the same period. Tai Sang Bank, with 35 employees by the end of 2023, said goodbye at least three times over the 12 month period. Investment bankers laid off Banks in Hong Kong have ramped up layoffs of investment bankers

in the city as they contend with a double whammy of slowing initial public offerings (IPOs) and mergers & acquisitions (M&A), analysts told Asian Banking & Finance. “Various bulge bracket banks have indeed let go of candidates from analyst to [managing director] level, given the lack of IPOs in the Hong Kong market and M&A activity in Hong Kong and China,” Sue Wei, managing director of Hays Greater China, said in an interview. Chris Corcoran, associate director of Financial Services for Robert Walters, echoed the sentiment. “The sell side is very quiet,” Corcoran said, when asked about the current hiring situation for investment bankers in the city. “There are much more layoffs than there are hiring. To be frank, it’s pretty much across the board. A lot of the traditional volume is down in the Investment Banking Division.” Wei, meanwhile, cited the merger of UBS and Credit Suisse, as well as the “global financial situation” as factors for the slowdown in investment banking activity. Investment banking activity in Hong Kong remained sluggish throughout 2023. There were only 70 IPOs recorded, 21% lower than in 2022; whilst deal value fell by 56% to just US$5.93b (HK$46.3b), according to a report by KPMG. In Q4 2023, active HK IPO applications dropped to 59, down from 89 in Q4 2022. High salaries a factor? Wei observed that many international banks are implementing layoffs and redundancy measures primarily at higher salary levels, whilst simultaneously hiring more junior or worker-level staff. Pre-pandemic, investment bank analysts in Hong Kong reportedly took home US$86,493 (HK$675,000) on average, according to an analysis by eFinancialCareers, based on data from recruiters. Corcoran cautioned on making a direct correlation between the salary levels as the reason for layoffs– although he did note that, with global banks’ investment banking

BANK RANKINGS: HONG KONG We do see various banks engage in overseas talent, in particular relationship managers with strong PRC connections

Bank of China (Hong Kong) lost over a hundred staff in the 12-month period

activities becoming more regional in scope, banks may possibly opt to hire bankers in places where the salaries are not as high. Trade, private banking stable It has been a different hiring trend for other sectors. Corcoran noted demand for trade finance roles. “The actual traders, the sales traders, the trade support people that are booking trades and doing middle and back-office work; the trading arms of banks [are] where we’re seeing more activity,” he enumerated. Wei noted demand for private bankers, although she did note that interview processes have “taken longer than traditionally” as their clients turn more cautious amidst the global outlook. “Several local banks, Chinese banks, and Singaporean banks are strategically expanding their private banking services to align with Hong Kong’s growing family office sector,” she said. Relationship managers and private bankers with connections to China’s wealthiest are in demand, Wei added. “We do see various banks engage in overseas talent, in particular relationship managers with strong PRC connections and sustainable finance roles, given ESG (environmental, social and governance analysis) is quite new in the HK market,” Wei said. Brain drain One major challenge beyond investment banking which lenders in Hong Kong face is the limited talent

pool, which has shrunk even more during the pandemic. “A lot of young expats and people who were not permanent residents in Hong Kong did leave. Banks and people across the whole FSC industry are looking to replace that talent, but, because there hasn’t been as much hiring, it’s going to be hard to replace that until we have another higher volume recruitment cycle across the whole market to try to bring in that talent and significant numbers,” Corcoran noted. Bankers from mainland China may help fill in this talent gap. Wei noted that getting a work visa in Hong Kong has become more accessible for mainland Chinese professionals in recent years. “Under [the Top Talent

Chris Corcoran

Sue Wei

Pass] scheme, individuals from mainland China can secure a visa without needing immediate employment upon arrival. As a result, we’ve witnessed a notable increase in Chinese talent coming to Hong Kong in search of job opportunities,” Wei said. Lion City’s attractiveness wanes As for the future prospects of investment bankers, one thing is certain: they are probably not as keen to explore Singapore as they were a couple of years back. There are still people looking to move from Hong Kong to Singapore, but not in the same numbers that they did kind of two years or 18 months ago, Corcoran said. “During the lockdown there was a massive market of people looking to leave Hong Kong to go to Singapore. Now, not as much anymore. There’s a lot of constraints in the Singapore market: it’s tougher to get visas for nonSingapore nationals,” Corcoran pointed out. Cost of living is another factor that has reduced Singapore’s attractiveness. “Rent has gone up significantly; school places for expats are harder to come by as well. So, the attractiveness of Singapore during lockdown and COVID is somewhat waning, I think because of the reality on the ground,” Corcoran added.

Hang Seng reported marginal declines in its employee rates this year

ASIAN BANKING & FINANCE | Q3 2024 25

BANK RANKINGS: HONG KONG 2024 Ranking

Bank

Number of employees (End-2023)

Number of employees (End-2022)

Percentage change

2023 CEO or Country Head

HSBC

26,000

20,000*

30% (1)

Luanne Lim

BANK OF CHINA (HONG KONG)

12,024

12,190

-1.36% (9)

Sun Yu

HANG SENG BANK LTD.

6,997

7,020

-0.32% (8)

Diana Cesar

STANDARD CHARTERED BANK***

6,000

NO DATA

Mary Huen

THE BANK OF EAST ASIA, LTD.**

4,883

NO DATA

Adrian David LI Man-kiu and Brian David LI Man-bun

CITI HONG KONG

4,500+

4,600

-2.17% (10)

Aveline San

DBS BANK (HK) LTD.**

4,500

NO DATA

Sebastian Paredes

INDUSTRIAL AND COMMERCIAL BANK OF CHINA (ASIA)

3,078

3,000

2.6% (5)

Wu Long

OCBC BANK (HONG KONG)**

2,575

NO DATA

Wang Ke

DAH SING BANK^

3,047

0% (7)

Harold Wong

CHINA CONSTRUCTION BANK (ASIA) CORPORATION***

2,500

NO DATA

Jun Zhang

SHANGHAI COMMERCIAL BANK

1,913

1,672

14.41% (2)

David Sek-chi Kwok

CHONG HING BANK

1,753

1,700

3.12% (3)

Li Feng and Zong Jianxin

CMB Wing Lung Bank

1,698

1,651

2.85% (4)

Jun Liu

PUBLIC BANK

1,202

1,200

0.17% (6)

Chong Yam Kiang

TAI SANG BANK

-7.89% (11)

Ma Qingkeng

82,705

76,576

*as of end-2022 **figures retained from 2023 rankings table ***figures retained from 2022 rankings table ^In its 2023 Annual Report, DSB stated that it was “was able to maintain a similar headcount level as that of 2022.” We have opted to keep the same number stated in its 2022 Annual Report. 26 ASIAN BANKING & FINANCE | Q3 2024

Own Your Dream House with Lower Monthly Instalment for the First 5 Years

This product revolutionized traditional mortgages with its step-up repayment for ultimate flexibility and financial freedom. Applicable to both completed & under-construction residential properties

Margin of Finance up to 90% + 5%

Loan/Financing tenure up to 30 years or age 70

No lock-in period. No early settlement fee

Enjoy savings from lower monthly payments

03-8230 2222

AffinMy

AffinAlways.com ASIAN BANKING & FINANCE | Q3 2024 27

Affin Bank Berhad 197501003274 (25046-T)

•

Affin Islamic Bank Berhad 200501027372 (709506-V)

CASE STUDY: CREDIT SCORING

Credit Data Smart ushers in new era of credit scoring in Hong Kong It’s expected to promote healthy competition and improve credit knowledge of locals.

Credit Data Smart provides a free credit report to consumers every 12 months

ong Kong banks and credit firms will now have a clearer view of clients’ ability to repay their loans thanks to Credit Data Smart. The new operating model uses past and present consumer data to give a better view of their credit health to all credit providers. Developed in collaboration with financial institutions and local authorities, the move is expected to help potential new credit providers better assess customers’ creditworthiness and enhance the service quality of CRAs in the city. “The presence of multiple CRAs will promote healthy competition in the credit reference industry. This competition will have a direct positive impact on service quality, driving agencies to improve their offerings and provide enhanced services to consumers in the market,” a representative from the Hong Kong Association of Banks (HKAB), one of the industry groups involved in the creation of CDS said via exclusive correspondence. Regulatory collaborations The Hong Kong Monetary Authority (HKMA) worked closely with other industry associations and local regulators in the creation of CDS. “The HKMA has been working 28 ASIAN BANKING & FINANCE | Q3 2024

It offers credit providers a broader array of choices when selecting the sources of consumers’ credit data.

Wingo Wong

SCAN FOR FULL STORY

closely with the Industry Associations, including Hong Kong Association of Banks, the Hong Kong Association of Restricted Licence Banks and Deposittaking Companies, and the Hong Kong S.A.R. Licensed Money Lenders Association Limited, to introduce more than one consumer credit reference agency (CRA) in Hong Kong through Credit Data Smart (CDS), with a view to enhancing the service quality of consumer CRAs and reducing the operational risk of having only one commercially run service provider in the market, particularly the risk of single point of failure,” a representative from the HKMA told Asian Banking & Finance. HKAB clarified that Credit Data Smart does not directly impact the outcomes of loan approvals. “Instead, it offers credit providers a broader array of choices when selecting the sources of consumers’ credit data. This flexibility allows credit providers to make informed decisions based on their preferred credit scoring models and data sources, catering to their specific requirements and preferences,” the association stated. An ecosystem of sharing Three CRAs were chosen to participate in the pilot of Credit Data Smart: Nova Credit Limited,

PingAn OneConnect Credit Reference Services Agency (HK), and TransUnion Credit Information Services. Wingo Wong, managing director of TransUnion, said that they shared insights and data on data management and consolidation to help build Credit Data Smart. One of these are their proprietary data formats. “These formats help all credit providers (CPs) easily download and upload data from the centralized platform. We also provided useful advice on the consolidation of different collateral data of CRAs and conducted the consolidation for all participants,” Wong shared with the publication. Wong and TransUnion believe that CDS will open a new era not just for the credit industry but for up to 5.5 million customers in Hong Kong. “The advent of CDS opens the door for all participants to bring wider data access, new and enhanced products and more choices to businesses and consumers alike,” he said. Greater consumer knowledge CDS is not just expected to enhance the operations of credit companies, it’s also primed to improve credit data and financial knowledge of Hong Kongers. One tenet of CDS is that CRAs will provide a free credit report to consumers once every 12 months. This will give consumers a starting point to make regular credit monitoring a habit, says Wong. “By staying vigilant through regular monitoring, consumers can make more informed financial decisions and take proactive steps to improve their creditworthiness,” he said. Wong added that CDS and the yearly reports will also enhance personal data security and serves as a preventive measure against identity theft and fraudulent credit applications. For example, should consumers see information in their credit reports that are inaccurate, they can request to correct and change the inaccurate information.

EVENT: ASIAN BANKING & FINANCE FORUM - HO CHI MINH

Why tech is not the focal point of banks’ digital transformations About 70% of digital transformations fail, an industry expert warned.

ne trillion dollars are expected to have been invested by financial institutions in digital transformation by the end of 2024. However, most of this money might fail to bring any value to the organisation, a managing consulting firm director told Asian Banking & Finance. “Seventy percent [70%] of digital transformations fail, often because of organizational silos, and the insular thinking within an organization, that makes it difficult to collaborate across the organisation,” Douglas Jackson, managing director and head of Vietnam for the management consulting firm Alvarez and Marsal, told attendees of the 2024 iteration of the Asian Banking & Finance Forum held in Ho Chi Minh City, Vietnam. Jackson joined as the moderator of a panel discussion on unlocking growth through digital innovation strategies. Tech not the core point One major takeaway is that the core part of a digital transformation is not the technology. “I would say the tech part is not the core point,” noted Fabien Sanchez, chief sales officer, Home Credit Vietnam. Sanchez noted that whilst organisations in Vietnam are worrying about back system integration and other technical points that they may be neglecting an important part of supporting customers through their transformation. He noted that three years ago during the pandemic, their online finance business in Vietnam lagged behind other neighboring countries. Home Credit Vietnam found that the solution was not in the tech aspect, but in the customer side. “We decided to work on education, transparency, and trust. Because what is lacking for this digital transformation and to speed [it] up, is the trust of the customers,” Sanchez said.

(L to R) Alvarez and Marsal’s Douglas Jackson, DNSE’s Nguyen Duc Binh, Home Credit Vietnam’s Fabien Sanchez, HSBC Vietnam’s Phil Wright, and nam A Bank’s Nguyen Vinh Tuyen

Because what is lacking for this digital transformation and to speed [it] up, is the trust of the customers

SCAN FOR FULL STORY

Eliminating inconveniences For the tech part, the challenge is keeping it seamless by limiting customer inconveniences. Nguyen Duc Binh, chief technology officer for DNSE, said that their first order of business when they first acquired the company mid-2020 was to streamline the customer onboarding process. “One of the first things that we wanted to address when we established our brokerage firm was to eliminate that inconvenience for the customer,” Nguyen told attendees. “This was not as simple as it sounded, as it included ensuring the security of the customers’ identity. We basically [made] sure that the person in front of the phone is a real person and not some deepfake or pictures and videos and other things, and then matching that person with the photos on their identity card,” he said. This, along with implementing digital signatures, allowed DNSE eliminated the need for customers to go to a physical branch. The move made DNSE one of the first brokerage firms in Vietnam to have a fully online registration process.

Partnerships For banks with legacy and systematic importance, HSBC Vietnam’s chief operating officer Phil Wright highlighted the importance of partnerships in order to successfully deliver technology innovations at scale safely. “Partnerships between the financial institution with the regulator and with technology vendors and partners. I think that’s the key and most safe way to deliver a lot of these technology innovations at scale,” Wright said. Wright admitted that these partnerships are also a cause of concern for banks’ risk management controls. “Banks are becoming ever increasingly reliant on third-party vendors,” he noted. “I can control what’s right in front of me. I can put frameworks to manage the risk of those third parties. But ultimately, I’m not there. I’m not able to see exactly what goes on,” Wright said, adding that the threat of data leakages and malware attacks from third party vendors has driven HSBC to put a lot of time in addressing third-party risk management concerns. ASIAN BANKING & FINANCE | Q3 2024 29

EVENT: ASIAN BANKING & FINANCE FORUM - BANGKOK

How SCB adapted to crisis with strategic investments Early tech investment grew the bank’s digital customer base to 17 million.

hen COVID-19 hit the shores of Thailand, local banks had to face a new kind of problem that cannot be solved by throwing money at it. “Liquidity was not a problem at the time if everyone recalled; actually, deposits flowed into banks because I think relative to other investments, investors felt more confident with the stability of the Thai banking sector. The issue is in terms of the health of the economy and the health of our clients,” Dr. Yunyong Thaicharoen, SEVP and chief wealth banking officer of Siam Commercial Bank (SCB), told attendees of the 2024 edition of the Bangkok leg of the Asian Banking & Finance Forum. Economic stopgaps Speaking in a fireside chat, Thaicharoen — who was chief of corporate banking for SCB at the height of the pandemic — recalled the suddenness of the impact. “Both [the fall of] demand and supply shocked the economy. All the face-toface activity came to a halt,” he said. Local authorities immediately enacted measures to ease the burden for the stricken citizens, such as stopping payment collections for pending loans of their clients. Banks, meanwhile, had to face the impending disaster that the end to

It’s also very important we emphasise on being lean in our operation by being strict on cost control

SCAN FOR FULL STORY

Dr. Yunyong Thaicharoen (right) shared how SCB’s tech investment 5-7 years before the pandemic kept them afloat

30 ASIAN BANKING & FINANCE | Q3 2024

this temporary debt relief may bring. “We knew that the temporary debt relief that the Bank of Thailand required us to do at the beginning– to stop payment for our client for three months– that would not be enough,” Thaicharoen admitted. He simplified the plan to one sentence: “The idea is for the regulator to help the banks to help the clients. Because even with the strong position financially, any single bank cannot go alone to help the client because the problem is so enormous.” Three-pronged strategy In his fireside chat, Thaicharoen listed three strategies that banks should adopt not just during the pandemic, but in preparation of possible crises in the future: building immunity, leveraging partnerships, and investing in both infrastructure and human capability aspects of technology. During the pandemic, revenue and cost optimisation became vital for the bank. This meant that SCB had to be selective and cautious on who to loan out to. Quality was paramount — the returns may be lower, but so are the risks. “We put more emphasis on feebased income, whether it’s wealth or insurance. On the cost side, it’s

also very important we emphasise on being lean in our operation by being strict on cost control,” Thaicharoen said. Technology became a boon for SCB during the pandemic. Strict pandemic controls meant that more people had to shift into accessing financial services remotely, via online or through mobile devices. SCB’s decision to invest in digital transformation five to seven years before the pandemic began meant that they were prepared to accommodate the shift. This helped the bank grow its digital customer base to 17 million people. Partnerships also became paramount. For example, SCB turned to their digital partners both to reach new customers and enhance their current offerings. “On the wealth side, we partnered with FWD for insurance and also for private wealth management,” Thaicharoen said. “We want to leverage, both in terms of digital technology and the digital channel that we have developed over time, the fact that we have relationship managers that can serve our clients more optimally.” Hospitality concerns One sector that was of much concern to Thaicharoen and SCB during the pandemic was the hospitality industry. With lockdowns in place globally, the airline industry and the tourism industry came at a standstill. SCB, being the biggest bank in Thailand, had a lot of outstanding loans to the industry– “up to a hundred billion baht,” according to Thaicharoen. “We helped our hotel clients by giving them a payment holiday for two years. No principal, no interest. And we actually reduced the expected interest payments. So basically, we reduced the NPV of the interest payment,” he said. Another measure they did to support the embattled hotels and resorts was offering loan advice. “We also included what we call a sweeping mechanism. If [the hotel’s] cash flow turned out to be better than what we planned or what we forecasted, then we encouraged them to pay even more than the scheduled payment,” he said.

EVENT: ASIAN BANKING & FINANCE FORUM - BANGKOK

Thai central bank’s digital payments on ‘top of the world’ The Bank of Thailand is eyeing to expand connectivity with more countries.

Pariwat Kanithasen, deputy director of the Bank of Thailand (BOT), takes pride in the country’s connections to eight payment systems

hailand’s central bank has laid the groundwork not just to address pain points in its payment system but also to construct a borderless digital mechanism. “We’re quite proud to have linked Thailand with Singapore, the two fast payment systems back in 2021,” Pariwat Kanithasen, deputy director of the Bank of Thailand (BOT), told attendees of the 2024 Asian Banking & Finance Forum held at Shangri-La Bangkok on 23 April. Key to this initiative is Thailand’s national payment infrastructure PromptPay, Kanithasen said, which is now connected to eight payment systems in other countries and jurisdictions — one of the biggest number of connections for any country in the world. PromptPay is also a participant to Project Nexus, where the BOT is working together with the central banks of Singapore, Malaysia, Indonesia, and the Philippines, along with the Bank of International Settlements to create a “multilateral rail” for payments and bank transfers. “Right now we have eight [partners]. This is top in the world. No country has reached the number eight like Thailand has,” Kanithasen

said, adding that Thai citizens using PromptPay “don’t have to care where the merchant is banking at.” In Thailand alone, there are over 9 million acceptance points for PromptPay.

Thai citizens using PromptPay don’t have to care where the merchant is banking at

Standardised, simplified Kanithasen highlighted the BOT’s efforts to simplify the system, particularly peer-to-peer (P2P) and peer-to-merchant (P2M) transfers. For example, for P2P transfers, BOT uses only proxies such as mobile phones or ID numbers. For merchants, BOT is standardising the QR code. Adoption has risen: BOT now records an average of 538 transactions per person and per year, and $1.47m (THB54m) in transactions per day. For 2023, BOT recorded TH47t worth of transactions — equal to 2.6% of the country’s GDP. “We have over 74 million registered IDs. So we are a country of 70 million people. This is like more than Thailand’s population,” he added. Outages Kanithasen also named challenges faced by Thailand’s payments network, highlighting capacity outages as a key concern.

BOT has noted how there were outages in the system during paydays — during the beginning and end of the month — and recognised that these are the days when economic activities through payments are at their peak. “What has happened recently is that sometimes you get outages, not just from banks, but the operators as well. So, as a regulator, we have to take care that such system upgrades have to be taken constantly,” he said. For operators who suffer frequent outages, BOT has opted to “name and shame” them. This has helped them improve performance in avoiding the IT outages, according to Kanithasen. “The second worrisome challenge is of course fraud, and this does not only affect Thailand but it’s a global issue. Our reports from the police indicate over a quarter of a million reported frauds a year,” he said. Most of these reports were due to identity theft and phishing. Noting these, the BOT is now championing use cases for biometrics and machine learning to detect fraud. The most important, however, does not involve hacking the system but involves the consumers themselves, according to Kanithasen. “It’s identity theft, financial education, and raising consumer awareness. [The] most important thing that we as a regulator would need to do, along with the industry, is educating the general public on fraud and raising awareness,” he said. For the future, apart from linking with more jurisdictions, Thailand has set their eyes on its citizens who are still not in the system. Kanithasen connected the standardised Thai QR code as a means to drive up financial inclusion. “These would be microworkers, for instance, who are able to pay and who are able to transfer money from Singapore to Thailand cheaply. THese are tourists who don’t have credit cards when they go abroad. They rely on cash for instance, but now they can use the QR codes [to pay] merchants,” he said. ASIAN BANKING & FINANCE | Q3 2024 31

OPINION

VIVEK LUTHRA AND ALEXANDER TROTT GENERATIVE AI’S ROLE IN THE EVOLUTION OF BANKING

anking has changed a lot, especially how we, as consumers, interact with banks. Digital banking, for instance, has brought a layer of convenience where we can easily check balances and move money across accounts or banks. Yet, despite the rapid digitalisation, no single digital-only bank has truly hit scale as traditional banks continue to dominate. Then came generative AI, which took the world by storm. The rates of adoption and enhancement are more rapid than any major technology innovation in the history of human development. Due to the importance of language throughout the value chain, the banking industry has a greater potential to benefit from the technology than any other. Accenture’s research found that globally, 67% of all working hours in banking will be impacted by generative AI. Perhaps generative AI will not fundamentally change the basics of banking – collecting and safeguarding deposits and lending money – but it could be the most disruptive technology the banking industry has seen in decades and will change how banking is delivered.

VIVEK LUTHRA Data & AI Lead, Growth Markets Accenture ALEXANDER TROTT Banking Lead, Growth Markets Accenture

The revenue opportunity for banks Generative AI presents a significant revenue opportunity for banks, contrary to the common perception of it being primarily a cost-saving tool. According to a new Accenture study, generative AI could boost bank revenues by 600 basis points in the next three years, increase return on equity by 300 basis points and grow operating income by around 20%. These are figures and upsides that no bank can afford to ignore. There are hundreds of potential use cases and applications across various banking functions, from risk management to customer service. For instance, generative AI is already transforming anti-money laundering and know-your-customer practices. Its coding applications are some of the most exciting and range from the ability to reverse engineer decades of spaghetti COBOL code to developing new digital customer experiences at unprecedented speeds. Moreover, generative AI has the potential to raise the bar for personalisation while helping reps solve customer inquiries faster. Its real power will be in augmenting workers. For example, imagine a relationship manager who, during a client conversation, can look at a navigation map-like guide. If the conversation is “red,” with the

32 ASIAN BANKING & FINANCE | Q3 2024

customer showing signs of disinterest, the system could provide them with a detour and prevent them from heading down dead ends and detours in the conversation. It’s instructive to compare the immediate impact of generative AI with other recent technologies. When blockchain and the metaverse emerged, there was much discussion about how the technologies could change banking. With gen AI, we’ve already seen banks come up with thousands of opportunities. The challenge isn’t what you do, it’s what you decide not to do, reinforcing the belief that this is a true paradigm shift. It’s like going from the slide rule to the calculator. In fact, a majority of banking leaders (71%), according to a recent Accenture study, point to generative AI as a key lever in their continuous reinvention strategy and two-thirds (66%) see the technology as more of an opportunity than a threat. What’s next after adoption? The last year has seen staggering adoption and advancements in maturity, with banks moving beyond proof of concepts to use cases. Not surprisingly, banks that have already invested in AI and analytics and that have strong digital cores are leading the way in generative AI. Thanks to cloud-based services, much of the technology around generative AI can be purchased on a credit card. It just requires the right time and focus. The next step in generative AI’s evolution at banks will be establishing the necessary infrastructure to support the adoption and implementation within the organisation, ensuring security, risk management and responsible AI practices are integrated into systems and processes. Singapore’s central bank and financial regulatory authority, Monetary Authority of Singapore (MAS), for instance, established the consortium Veritas, a collaborative initiative to enable financial institutions to evaluate their AI-driven solutions on principles of fairness, ethics, accountability, and transparency (FEAT) to strengthen internal governance around the application of AI and the management and use of data. The consortium’s work is highly regarded globally, often used as a benchmark by other regulators. Model risk management will be critical as banks navigate the proliferation of large language models and customise existing or build their own models.

ASIAN BANKING & FINANCE | Q3 2024 3

4 ASIAN BANKING & FINANCE | Q3 2024