A brand new breed of digital-only banks is making inroads into Southeast Asia. They are following the success of European digital banking giants like BNP Paribas in France and Virgin Money within the UK, which have invested heavily in technology to compete with traditional retail banks.
In this a part of the world, CIMB Group Holdings Bhd marks a key milestone by launching its first fully digital bank this yr. It will launch in Vietnam in the primary half of the yr, followed by the Philippines by the tip of the yr.
CIMB intends to supply consumer banking services on a digital platform through its digital bank.
Digital banking transfers all traditional banking activities that customers can only perform in bank branches to a web-based platform, including money deposits, transfers, financial product applications and bill payments.
Another notable step towards digitalization taken by a bank in Southeast Asia is DBS Group in Singaporewhich has reportedly attracted over two million customers since launching India’s first online-only bank in 2016.
DBS also recently launched a digital bank in Indonesia and currently has about 70,000 customers, in keeping with reports.
DBS within the report in “Financial Times”reported that its digital customers are 42% more profitable than “traditional” customers, and highlighted the much higher margins banks achieve with online services.
In the primary half of 2017, DBS achieved a return on equity (ROE) of 27% for digital clients in Singapore and Hong Kong, in comparison with 19% for non-digital clients in the identical period.
For CIMB, the creation of its first digital bank is an element of a bigger plan to digitise its entire banking business.
“We already have a strong presence in Malaysia. We believe it is easier to do it (build a digital bank) in other countries and learn from that and eventually bring it here,” says CIMB group chief executive officer Tengku Datuk Seri Zafrul Aziz.
He emphasizes that digital transformation will not be nearly increasing operational efficiency and responding to a changing business environment. It can be about improving the shopper experience, he says.
Tengku Zafrul doesn’t wish to reveal any figures regarding investments within the digital space, but says that while investing in technology is becoming cheaper, it’s a very different story than opening bank branches.
“In technology investments, you need scale and getting the right people. Therefore, investment can take the form of investing in fintech companies or joint venture partnerships,” he says.
Tengku Zafrul says that greater than 95% of CIMB customer transactions at the moment are conducted through digital and self-service platforms.
Digital transformation is changing the landscape of many industries, especially banking, which is essentially the most proof against technological change.
While the banking sector still has a stronghold on lending and deposit-taking, it’s ripe for change. The ubiquity of cell phone usage and the emergence of fintech corporations which are in contact with consumer needs and are in a position to provide progressive financial services to the masses are slowly disrupting this space.
The rise of fintech corporations in areas equivalent to payments is forcing banks to rethink their offerings and customer experiences.
Services provided by latest players within the industry reflect the advantages of the digital banking revolution. Timo, a digital banking platform and subsidiary of the National Bank of Vietnamoffers a spread of services on one platform – from bill management to cell phone top-ups and financial organisation.
Timo CEO Cameron Warden declined to supply an actual variety of the bank’s users, but expressed satisfaction with the 60 percent lively user rate.
Due to lower overheads Timo can offer competitive rates of interest. They currently offer 6.8% interest on a 12 month deposit, increasing to 7.4% on a 36 month deposit. In contrast, HSBC in Vietnam offers just 3%.
Seeing this trend, Indonesian PT Bank Tabungan Pensiunan Nasional Tbk. (BTPN) launched its own digital transformation strategy, including improving the way it targets and engages with the growing mass-affluent consumer base in Indonesia Jenius Digital/Mobile Banking App Solution.
According to BTPN, Jenius is a hybrid implementation that’s digital at its core but leverages the bank’s physical branches in a targeted way. Jenius has already seen strong take-up, exceeding BTPN’s initial targets for app downloads. It also has significant growth potential given the region’s smartphone penetration and enormous underbanked population.
Peterjan van Nieuwenhuizen, Head of Digital Banking at BTPN said: “BTPN is committed to pioneering banking that is aligned with our customers’ lifestyles. We have built a system [Jenius] enabling our customers to complete basic banking processes without having to go to a branch. With the growing middle class and the increasing use of mobile internet, we saw a significant opportunity for financial services. Our philosophy is “do good, do well” and we would like to embody this in all elements of the bank. Our customers expect us to innovate and supply fast, efficient services.”
Source : https://www.thestar.com.my/business/business-news/2018/03/03/digital-banking-hits-sutheast-asia/#is1zV2bgbxP3lCVm.99, ASEANtoday.com and the official website of Jenius
