RANKINGS: SINGAPORE Singapore banks: Q1 2020 net interest margins (NIMs)
Victor Lee
Source: DBS Group Research
with loan restructuring, the bank has put in place several measures such as deferment extension on both principal and interest until December 2020. Back in February, it rolled out its C-19 programme where eligible enterprises can avail of loans up to $5m, along with a favourable 2-3% interest rate over a five-year period. It has also increased its e-supply chain financing programme with a limit of up to $100m (US$71.6m) in order to grant a sufficient working capital financing support for the suppliers community on the platform of CIMB’s e-procurement service provider partner. Digitisation If there’s anything remotely positive about the current situation, it is that it has fast-tracked the adoption of digital payment methods, with the Lion City being considered as a trailblazer and a model across Asia Pacific. Singaporeans are now increasingly favouring contactless payment methods over cash, with 81% believing it is a better and cleaner way to do payments, according to a Mastercard survey. On top of that, a SingSaver study revealed that 80% of Singaporeans will stick to online banking even after the pandemic subsides. Interestingly, 69% aged 54 and older have gotten comfortable with using online banking tools, the same percentage as those aged 35 to 44 but slightly higher than those aged 44 to 55 (67%). The Monetary Authority of Singapore (MAS) is expected to hand out up to five digital banking
licences to 14 eligible applicants this year. Traditional banks don’t seem to be too fazed by the incoming competition given that the sector is a “hard ground” for digital newcomers, a UOB Kay Hian analysis report noted, but a Moody’s report believes that small foreignowned lenders may have a hard time making the adjustment. “Digital literacy is clearly on the rise, and it is heartening to see that all age groups are picking it up fast. I don’t think that it will lead to the death of cash transactions, but I believe that the adoption of cashless transactions will surge, as customers are concerned about the hygiene levels when dealing with cash payments,” Lee said. He also added that customers are also savvier when it comes to cashless payments and they trust that banks and merchants alike will implement tight security measures to ensure security on personal data.” In order to fulfill their customers’ need for digital services, CIMB has partnered with local chatbot provider Pand.AI to develop its own chatbot named Eva that will assist business owners on enquiries regarding financial schemes that will help them through the crisis. As most of their banking products and services can be accessed online, they have hired a team that will look into any gaps in their digital services that need to be improved. “What works for us is that most of our products and services can be accessed online, and with only two branches, customers can bank with us on their mobile phones from anywhere that is convenient for
them,” CIMB’s Lee commented. Maybank Singapore has also been taking advantage of the digital advent, being aligned with the Smart Nation initiative. The bank has granted initiatives to promote their online services such as cash rewards, waiving of fees for outgoing FAST and PayNow transfers. To help businesses accept PayNow payments, the bank has collaborated with Liquid Group for an all-in-one QR payment terminal for merchants to generate a dynamic QR code for each individual customer to scan and pay using PayNow. Nevertheless, both lenders recognise that not everyone may be receptive to the digital disruption. There will still be people who are sceptical about cashless payments due to security and data protection and would rather stick to using cash. Sharing this sentiment, Maybank believes that education about cashless payments is indeed vital in ensuring safe digital transactions. “Whilst we recognise the mature customer segment may prefer cash, the younger segment prefers to tap a bank card or scan their mobile phones to make a payment. Our aim is to ensure that no customer is left behind in this digital age by making our services user-friendly and educating our customers on how to transact digitally safely,” Manybank’s spokesperson added. Road to recovery As the circuit breaker period eases, banks are eager to return to some semblance of past normalcy whilst maintaining contingency measures adapted as response to the pandemic. Branches are being cleaned and disinfected and customers are reminded to observe physical distancing measures. Staff are going back to their offices, albeit slowly and limited in number. Looking forward, CIMB will embrace what it calls the “CHIDA approach”, Lee said, meaning that the bank will take on a “customerobsessed, high-performing, have integrity” attitude. Maybank will gradually scale up operations in addition to reopening some branches, as well as the resumption of select wealth and investment services, the the bank’s spokesperson stated. By Alyssa Divina ASIAN BANKING AND FINANCE | DECEMBER 2020 27