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Category: Finance

Retail News Asia is committed to providing both local and global retailers with the latest Finance news throughout the Asian market. This on a daily base.

  • Citibank sets conservative loan growth target

    Citibank sets conservative loan growth target

    Lender Citibank Indonesia expects to book single-digit loan growth next year although it believes lending will pick up speed in the second half of 2017, the company’s top management said on Wednesday.

    “For Citibank, we expect single-digit [lending growth]. It is better to be a bit conservative because we expect that lending will start to pick up in the third quarter,” Citibank’s CEO Batara Sianturi said.

    He said Citibank was confident that the economy would improve next year, partly because it expects the funds released from the tax amnesty to flow into Indonesia’s real sector.

    More liquid assets entering the country’s economy could be used to fund various projects, which would increase demand for loans, he said.

    Batara said the company would focus on pushing loan growth in all segments, which include institutional banking and retail banking.

    The lender’s financial report for the January-to-September period recorded that the bank’s loans decreased by 7.3 percent annually to Rp 39.07 trillion (US$2.9 billion) from Rp 42 trillion year-on-year.

  • KB duplicates its success in global markets

    KB duplicates its success in global markets

    KB Kookmin Bank, one of the country’s leading lenders, is striving to duplicate its notable success here in the global market through briskly tapping into lucrative businesses across the world.

    Such efforts have started to bear fruit and the most recent example is its work of jointly arranging a 750 billion won ($660 million) project financing deal for a power plant in the United States.

    Earlier this month, the Seoul-based lender said that it joined forces with global banks Mitsubishi and ING Bank to finance the 790 megawatt gas-fired power plant construction.

    They attracted investors who purchased senior debt worth $660 million and of that amount, KB Kookmin arranged $200 million that is composed of a direct investment of $50 million and $150 million from other Korean firms.

    In overseas project financing in which Korean constructors are not directly involved, domestic financial firms have played limited roles. But the recent feats showcase KB’s capacity, according to experts.

    In retail banking, KB Kookmin has also been a pioneer in making a foray into offshore markets. As of the end of last year, it had 12 subsidiaries, branches and offices outside the country.

    One of its latest initiatives in the overseas retail market took place in Cambodia where KB Kookmin opened a mobile-oriented bank, Liiv KB Cambodia, this September.

    The digital bank offers various services such as account transfers, cross-border remittances and mobile payment services as well as various non-banking features like letting people top up their handsets.

    A KB Kookmin official said that the new-concept bank has been accepted well and for further growth momentum, it plans to enable its customers to withdraw money at automatic teller machines by forming business alliances with Cambodia’s top-tier banks.

    Observers point out that many successful firms tend to forget about management principles such as putting existing customers first and respecting business ethics but KB Kookmin appears to be different.

    Its CEO Yoon Jong-kyoo has stressed globalization to secure new cash cows for the lender, but at the same time he reiterates that the bank should stick to principles.

    “In an effort to become the most respected bank in the nation and to solidify its role as the leader of the Korean financial services industry, KB Kookmin Bank is committed to paying close attention to every one of our customers while providing the best customer-oriented services,” Yoon said.

    “Upholding high moral standards and work ethics as bankers, KB Kookmin Bank’s entire staff and management will keep striving to fulfill our responsibilities to our customers and society, making it the most dependable and socially responsible bank.”

  • Apple Pay for HSBC Cardholders in Singapore

    Apple Pay for HSBC Cardholders in Singapore

    Going digital is part of HSBC’s strategy as technology and mobility are changing how customers do banking. The customers will be given a discount for every Apple Pay transaction until Januar 15.

    HSBC Singapore is treating its HSBC Visa and MasterCard credit cardholders with Apple Pay, according to a statement sent on Monday. Customers using iPhone SE, iPhone 6 to higher versions, and Apple Watch can use Apple Pay in stores with Visa payWave or MasterCard contactless payment terminals in Singapore and overseas.

    As a kick off treat, HSBC customers will be given $5 off for every Apple Pay transaction with their HSBC credit cards, with a minimum spend of $10 per transaction. This promo will be on until January 15 next year.

    «Our findings show that awareness of contactless mobile payment is high amongst Singapore consumers (89 percent) and over half indicated interest to try this new payment method. We believe the security, privacy and convenience Apple Pay brings will appeal to all our customers, especially those who are also active users of our digital banking services,» Anurag Mathur, HSBC Singapore head of retail banking and wealth management said.

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  • HSBC to step up hiring in China

    HSBC to step up hiring in China

    HSBC Holdings plans to step up hiring in China for its retail and wealth business next year. The London-based lender is persisting with its expansion in China despite Britain’s economic slowdown and measures to stem capital outflows.

    The bank increased the number of retail bank employees in China’s Pearl River Delta by 57 per cent in the 12 months to September, according to Mr Kevin Martin, the firm’s Asia-Pacific head of retail banking and wealth management.

    The pace of hiring may accelerate next year as HSBC Holdings expands in areas like mortgages, credit cards, personal lending and wealth services in the Pearl River Delta, he said.

    “We’re exactly where we expected to be,” Mr Martin said in an interview in Hong Kong last Friday, referring to his unit’s growth in the region.

    “Historically, our customers in Shenzhen were Shenzhen-Hong Kong customers. Now the Shenzhen customers stay in Shenzhen because we’re building our local business as well as our cross-border business.”

    HSBC started its credit card business in China yesterday after it received regulatory approval to issue cards by itself. It had previously partnered Bank of Communications to do so. HSBC is seeking to issue more than 3 million cards in the short to medium term and add “a handful more” branches across China next year, Mr Martin said.

    HSBC is trying to capture business from China’s swelling ranks of affluent individuals even as economic growth slows and the authorities take steps to curb outflows of yuan from the country and cool the property market.

    Chief executive officer Stuart Gulliver said in February that HSBC will hire 4,000 employees mainly in the Pearl River Delta over five years instead of three, as a result of the economic downturn. Retail banking and wealth management accounted for 36 per cent of the bank’s Asian pretax profit in the third quarter.

    Mr Martin said: “Despite everything that’s happened, we’ve done everything we said we would. Retail business is a long-term business. We don’t make decisions based on changing regulations on the day. It’s the honest answer.”

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  • Thai Kasikornbank Eyes Regional Expansion, Plans 2nd Branch in Laos

    Thai Kasikornbank Eyes Regional Expansion, Plans 2nd Branch in Laos

    Thailand’s Kasikornbank said on Tuesday (29/11) it plans to open a second branch in Laos and upgrade the status of its local bank in China in 2017 as part of a regional expansion.

    With assets of $68 billion, Thailand’s fourth-largest lender by assets is looking to open branches in Vietnam, Indonesia and Myanmar by 2018, Kasikornbank president Kattiya Indaravijaya said in a news conference.

    Loans and assets from foreign operations accounted for less than 5 percent of the bank’s current total loan portfolio, and the proportion is expected to gradually increase over the next few years, she added.

    Like other major Thai banks, Kasikornbank is looking to expand its business in fast-growing economies in Southeast Asia to help offset a slowdown in the domestic market.

    Kasikornbank is aiming at a loan growth of 4-6 percent in 2017 — assuming the Thai economy would grow 3.3 percent next year — and expected its non-performing loans to make up 3.3-3.4 percent of total loans, Kattiya said.

    In the first nine months, the bank’s loans grew 5 percent, versus a target of 6-7 percent for the whole of 2016, she said.

    The bank targets loan growth from retail clients at 5-7 percent next year when the number of it retail customers is expected to rise to 14.1 million, up 5-6 percent on year, the bank’s president said.

    Loan growth for large companies and small to medium sized firms is targeted at 4-6 percent next year, she said.

    Kasikornbank aimed to spend 4 billion baht on developing information technology (IT) next year to maintain its leading position in digital banking, the bank’s president in charge of IT, Teeranun Srihong, said.

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  • In Singapore, Credit Cards Set to Collapse by Nearly a Quarter

    In Singapore, Credit Cards Set to Collapse by Nearly a Quarter

    Credit card use in Singapore is set to fall 24% in less than five years, according to new research from Worldpay, the leader in global payments.

    For its Global Payments Report 2016, Worldpay analysed 30 eCommerce markets around the world, including Singapore, China, India, Hong Kong, Taiwan, South Korea, Malaysia and Australia in Asia. In Singapore, Worldpay found that although credit cards are the most popular payment method at the moment, taking a 60% share of the payments market, credit cards are set to collapse by 24 percentage points in 2020.

    Phil Pomford, General Manager Asia Pacific, Global eCom at Worldpay, said: “Our projections show that by 2020, credit cards will account for just 36% of the payment market in Singapore, which represents a significant drop in usage. This growing credit-wariness could be symptomatic of a wider political push to help consumers avoid debt. The government’s Total Debt Servicing Ratio (TDSR) rules, implemented in 2013, were designed to ensure that monthly debt payments don’t exceed 60% of the debtor’s monthly income. This public focus on the issue of debt helps explain why credit card use is predicted to fall nearly a quarter in less than five years, while debit card use is expected to rise.”

    At the moment, debit cards, cash on delivery and bank transfers each account for 9% of the total payments market in Singapore. However, according to Worldpay’s research, all of these non-credit payment options will double or nearly double by 2020. Debit card use is expected to rise by 9 percentage points to cover 18% of the total payments market by 2020, while cash on delivery and bank transfers will represent 18% and 17% of the market, respectively. E-wallet growth is likely to remain relatively flat, growing from 9% market share in 2016 to 10% share by 2020.

    Consumer debt has been a growing topic in Singapore over the past few years, leading the government to create new regulations in order to help borrowers pay down their debts and to prevent further debt from accumulating[1]. Three years ago, the government introduced the TDSR rules to prevent any Singaporean from taking out a loan if the resulting monthly payments would equate to 60% or more of his or her salary. Although those regulations were recently loosened to help people with long-standing loans refinance more flexibly, Worldpay’s recent research still indicates that the government’s programme to increase credit awareness and discourage too much borrowing is resonating with consumers. They are aware of and concerned about rising household debt[2] and now want easier access to non-credit payment options.

    Pomford added: “Our research strongly suggests that Singaporeans will start using a wider range of payment methods in the next five years, possibly influenced by the government’s work to reduce consumer debt and encourage Singaporeans to think more carefully before they shop on credit. Therefore, online merchants that want to win the hearts and wallets of shoppers in Singapore must offer a range of traditional and alternative payment methods – from debit cards, to cash on delivery and bank transfers – because credit cards alone just aren’t enough. Companies that sell online can also partner with a knowledgeable payment provider in order to ensure that they continue to offer the right payment experience and keep gaining customers in Singapore’s thriving eCommerce market, which is set to grow by 11% to US$5.8 billion by 2020.”

  • Myanmar opens talks with Thailand on reciprocal banking access

    Myanmar opens talks with Thailand on reciprocal banking access

    The central banks of Thailand and Myanmar agreed Sunday to start talks on granting access to designated banks in each other’s markets, marking a small step forward in the financial integration of the Association of Southeast Asian Nations.

    For Thailand, Myanmar is the third country to enter bilateral discussions on bank access, following Malaysia and Indonesia; for Myanmar it is a first.

    Under the ASEAN Banking Integration Framework, countries can enter into bilateral deals allowing banks that meet certain criteria to become “Qualified ASEAN Banks” that operate in each other’s markets on the same terms as local banks.

    “The expansion of a banking presence through QAB will enable greater efficiency and reduce costs for bankers and customers alike,” Bank of Thailand Gov. Veerathai Santiprabhob told bankers who were in Bangkok for the 21st ASEAN Banking Conference on Monday.

    With Myanmar opening up its economy after nearly 50 years of isolation and the ASEAN Economic Community kicking off last year, banks in  Thailand and Myanmar have been growing more active in each other’s markets.

    Myanmar’s largest lender, Kanbawza Bank, opened a representative office in Bangkok in August, becoming the first Myanmar bank to venture abroad.

    Last year, Thailand’s Bangkok Bank was among the first of nine banks to be granted a foreign banking license in Myanmar. Other big Thai banks were not granted licenses in the first round, but have opened representative offices in Myanmar in anticipation of the next opportunity.

    “It’s good that the Bank of Thailand signed the QAB agreement with Myanmar,” said Predee Daochai, president of Kasikornbank, which now has a representative office in Myanmar. “We would like to open a bank there,” he said.

    The time frame for the negotiations and details such as the number of banks to be designated QABs have yet to be decided.

    While trade and investment have been increasing in the region in the wake of deregulation and elimination of tariffs, “much work remains with regards to financial connectivity” in the region, Veerathai said.

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  • HSBC enables Apple Pay for Singapore cardholders

    HSBC enables Apple Pay for Singapore cardholders

    Customers can enjoy $5 off every transaction as a kick off promo. HSBC Singapore is treating its HSBC Visa and MasterCard credit cardholders with Apple Pay.

    Customers using iPhone SE, iPhone 6 to higher versions, and Apple Watch can use Apple Pay in stores with Visa payWave or MasterCard contactless payment terminals in Singapore and overseas.

    As a kick off treat, HSBC customers will be given $5 off for every Apple Pay transaction with their HSBC credit cards, with a minimum spend of $10 per transaction. This promo will be on until January 15 next year.

    Commenting on the launch, HSBC Singapore head of retail banking and wealth management Anurag Mathur said going digital is part of the banks strategy as technology and mobility are changing how our customers do banking.

    “Our findings show that awareness of contactless mobile payment is high amongst Singapore consumers (about 89%) and over half indicated interest to try this new payment method. We believe the security, privacy and convenience Apple Pay brings will appeal to all our customers, especially those who are also active users of our digital banking services,” he said.

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  • 2C2P to Work with Diners Club International to Increase Acceptance

    2C2P to Work with Diners Club International to Increase Acceptance

    2C2P, the leading Southeast Asian (SEA) payments services company, and Diners Club International, a subsidiary of Discover Financial Services and part of the Discover Global Network, announced that 2C2P is a global acquirer for all cards running on the Discover Global Network. 2C2P’s SEA merchants can now tap Diners Club International, Discover and other Discover Global Network cards as an additional payment method. 2C2P will increase acceptance in the SEA region allowing Discover Global Network cardholders to use their cards at an increased number of merchants in the region. 

    2C2P will provide its merchants with single-source electronic payment services for the acceptance of Discover Global Network, which includes Discover cards from the United States, Diners Club International as well as its affiliate cards such as BC Global Card from South Korea, Elo Card from Brazil and RuPay from India.

    Aung Kyaw Moe, founder and Group CEO of 2C2P, said: “With the rise in global online retail and tourism, this agreement opens up key international travel and entertainment markets such as Asia, Europe and the U.S. to our Southeast Asian merchants. Cardholders from Discover Global Network can now enjoy payments access to the region’s travel, transport, tourism, retail and e-commerce brands.”

    “Discover Global Network continues to increase our merchant acceptance footprint in Southeast Asia through working with companies such as 2C2P because this region has an increasing number of Discover Global Network cardholders as a result of our Diners Club and RuPay networks,” said Ricardo Leite, vice president, Discover Global Network. “2C2P specializes in e-commerce travel merchants, an important sector to our cardholders.”

    McKinsey estimates the annual revenue of the global payments market is expected to increase by six percent from 2015 to 2020, exceeding US$2 trillion by 2020. The Asia Pacific region, including China, accounts for approximately 55 percent of the industry’s revenue growth worldwide. 

    Discover Global Network is the third largest payments network in the world1. With over 39 million merchant acceptance locations and 1.9 million ATM and cash access locations across 185 countries and territories, Discover Global Network includes Discover, Diners Club International, PULSE and affiliated networks.

    “2C2P continues to look for market-leading partners around the world, to deploy its best-in-class online payments processing solutions and make it easier for consumers to transact with the payment instrument of their choice,” added Aung.

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  • Mastercard launches credit card in Myanmar

    Mastercard launches credit card in Myanmar

    MasterCard and CB Bank have announced their first payment product in the country – a prepaid travel card for locals called the CB Bank EASI Travel Prepaid MasterCard card.

    The reloadable prepaid card will be made available to Myanmar residents for when they travel outside of the country. It is the first such card product to be launched in Myanmar and is yet another stage in the evolution of the electronic payments ecosystem.

    MasterCard has been working very closely to enable CB Bank (which it licensed in September last year) to roll out its very first prepaid MasterCard card. CB Bank is already certified and has undergone full system testing as part of its efforts to be connected to the global payments network.

    Mr. Kyaw Lynn, Executive Vice Chairman and CEO of CB Bank said, “CB Bank continues to be first in the electronic payments sector in Myanmar and we are pleased to be able to collaborate with MasterCard to launch this travel prepaid card. Just as our country is opening up to the world, at the same time, the world is opening up to our countrymen and we’re seeing more and more locals travel abroad. We are so glad to introduce this travel prepaid MasterCard card to help make their travels safe and hassle-free without the worries of carrying large amounts of cash.”

    According to Matthew Driver, president, Southeast Asia, MasterCard, “Part of the allure of operating in such a frontier market is in seeing the vital steps of financial inclusion play out: a vast majority of people in Myanmar remain unbanked and don’t have access to financial services. But the payments infrastructure is rapidly developing – from the rollout of ATMs, point-of-sale terminals, and now the introduction of prepaid cards.”

    “This presents an alternative option for the growing number of locals who’ve had to carry wads of cash when they leave the country for business or leisure travel. It offers them a safe and secure payment method while abroad.”

    Overall consumer optimism is at an extreme high in Myanmar (96.0 Index points according to the latest MasterCard IndexTM of Consumer Confidence). According to the MasterCard survey of Consumer Purchasing Priorities, nearly two-thirds of people who have traveled abroad intend to do so again within the next 12 months, making the introduction of a prepaid travel card timely for the market.

    “Part of our financial inclusion strategy in Myanmar is to educate the local population about the value of electronic payments – we would like to help them understand the benefits of doing away with cash,” Driver added.

    The launch of a new prepaid card marks another vital step forward in the country’s reform of its banking and financial system. MasterCard was the first international payments network to issue a license to a Myanmar bank in September last year, paving the way international payment cards to be accepted in the country for the first time. In November, MasterCard and Co-operative Bank Ltd (CB Bank) teamed up to launch the first ATM transaction at one of the bank’s Yangon ATMs.

    It is expected that more than 500 restaurants, retail outlets and hotels in Myanmar will be accepting payment cards by the end of the year, following the rollout of Point-of-Sale (POS) terminals in March this year with CB Bank.

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  • Money transfer firm WorldRemit eyes new markets, growth

    Money transfer firm WorldRemit eyes new markets, growth

    WorldRemit, an online service for overseas money transfers, is looking to expand into new markets and add services like direct payments for bills and school fees, its president said on Friday.

    The UK-based financial technology start-up, which has raised $192.7 million since its founding in 2010, also wants to grow in Canada and is open to taking the company public, Andrew Lee said in an interview.
    “We think about it, we think about other options as well,” he said. “It’s not on the radar at the moment. We’ve got plenty to do before we worry about that.”

    WorldRemit, which caters to migrants and people with no bank accounts, allows money transfers to over 100 countries. Growth is fastest in mobile transfers, though bank deposit and cash pick-up options are also available.
    Online payment service providers are shaking up the remittance industry and retail-based operations like Western Union Co by offering fast, secure service with lower fees, saving recipients travel time to pick up deposits.

    Over 2 billion people in the world do not use banks or are unlikely to have access to retail banking, said Lee, but the vast majority have mobile phones, allowing them to receive and store money, or pay bills.
    WorldRemit, which has partnerships with 34 mobile companies in 26 countries, also lets senders add air time to the prepaid phones of family members, for example.

    WorldRemit is seeking to add domestic transfers and primary banking, Lee said, and is applying for licenses in areas like Singapore, where foreign workers send a lot of money to their home countries.
    WorldRemit expects in the coming months to secure licenses for a few U.S. states that it does not already serve, Lee said. The United States is WorldRemit’s fastest growing market, and is soon expected to account for at least 10 percent of its revenue, he added.

    Canada, with 20 percent of its population born overseas, is WorldRemit’s third-largest market after Australia and Britain. That proportion is the highest among the Group of Eight industrialized countries, according to Statistics Canada.
    Canada has great growth potential, Richard Meseko, the company’s Canadian director, said in the joint interview. About 60,000 WorldRemit overseas transfers are made from Canada each month, but the 55,000 users over the last 12 months is a small number for the size of the immigrant population, he noted.

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  • Gold down in Asia after China industrial output

    Gold down in Asia after China industrial output

    Gold prices fell in Asia on Monday after China data mildly disappointed and investors infrastructure spending plans by president-elect Donald Trump with the Republican part in control of both house of the U.S. Congress.

    China said fixed asset investment for October rose 8.3%, beating the 8.2% rise seen year-on-year and industrial production gained 6.1%, below the expected 6.2% rise seen and retail sales increased 10.0%, below the 10.7% increase seen.

    Earlier, Japan reported third quarter GDP jumped 0.5% quarter-on-quarter and at a 2.2% pace year-on-year, handily beating expected gains of 0.2% and 0.9% respectively. Separately, comments from Bank of Japan Governor Haruhiko Kuroda on inflation were noted.

    Gold for December delivery on the Comex division of the New York Mercantile Exchange fell 0.55% to $1,217.55 a troy ounce. Also on the Comex, silver futures for December delivery dropped 1.03% to $17.203 a troy ounce, while copper futures jumped 2.31% increase to $2.565 pound.

    Copper was boosted last week after Trump raised the prospect of increased infrastructure spending, while recent signs of strengthening demand in China have also underpinned prices.

    Later this week, investors will be looking to congressional testimony by Fed Chair Janet Yellen on Thursday for fresh indications on whether interest rates will rise next month.
    Last week, gold prices fell to five month lows on Friday as risk appetite recovered following Trump’s victory in the U.S. presidential election, sapping investor demand for safe haven assets.

    Market sentiment was boosted by optimism that increased fiscal spending and tax cuts under a Trump administration will spur economic growth and inflation.

    Gold prices were also pressured lower by the stronger U.S. dollar and ongoing expectations for a Federal Reserve interest rate increase in December.

    Expectations for higher U.S. interest rates remained intact amid optimism that a pick-up in growth will allow the Fed to tighten borrowing costs.

    Investors currently price an 81.1% chance of a rate hike at the Fed’s December meeting; according to federal funds futures tracked Investing.com’s Fed Rate Monitor Tool.

    Gold is sensitive to moves in U.S. rates, which lift the opportunity cost of holding non-yielding assets such as bullion, while boosting the dollar in which it is priced.

  • South Korea’s Cashless Push Will See Coins Removed From Circulation By 2020

    South Korea’s Cashless Push Will See Coins Removed From Circulation By 2020

    South Korea is the next country looking to go cashless. That in itself may not surprise most people, but the way the government is going about things will raise a lot of questions. It appears the current plan is to force people to hand over all of their physical currency to the central bank. This will not happen overnight, but physical coins are expected to be out of circulation by 2020.

    South Korea Will Use An Aggressive Cashless Strategy

    Various countries around the world are looking at different ways to go cashless in the coming years. Using physical cash can be a burden for both consumers and retailers, while only adding more security risks as well.0. But in most cases, the real reason for going cashless is to make people even more dependent on banks for all of their daily expenses.

    The central bank of South Korea is no different in that regard, as the institution unveiled its plan to enforce a cashless society over the next decade. First of all, they will eliminate all coins from circulation, which they intend to achieve by 2020. Quite an optimistic view, but then again, South Korea is a very different culture compared to most other countries in the world.

    One thing to keep in mind is how the removal of coins from circulation will affect retail prices for goods and services. It is doubtful prices will be rounded down anytime soon, and more expensive goods and services are a far more likely scenario. Whether or not the South Korean population will like that change, remains to be seen.

    To facilitate these changes, the Central Bank of Korea wants consumers to deposit loose changes onto the national T-Money cards. These electronic travel passes can be used for all forms of transportation, including taxi rides. Additionally, several thousand convenience stores in the country accept T-Money as a payment option.

    It has to be said; South Korea may be one of the regions where going cashless will not be a significant change. In fact, there are more credit cards in circulation than citizens. Furthermore, only one in five payments made nationwide occurs through paper money and coins. Phasing out coins should not be a big challenge, but the goal of 2020 may be a bit too optimistic.

    But it appears there is another reason to get rid of physical coins. Credit Finance Institute’s Lee Hyo-Chan told CNBC how it costs more than 10 won to create a 10 won coin. All of the costs associated with the mass minting of coins adds up to over US$40m per year. Additionally, collecting, managing, and circulation of coins incurs, even more, costs.

    Getting rid of cash is a cost-cutting effort, which is understandable. At the same time, banks should not be given even more power of the financial ecosystem than they have right now, as they already have a firm grip on people’s money. Centralization of financial power is never the answer, and going cashless will not necessarily be beneficial to the average consumer from a financial perspective.

  • Singapore banks lose up to 40 per cent of new product sales to competitors

    Singapore banks lose up to 40 per cent of new product sales to competitors

    The latest survey by management consulting firm Bain & Company found that Singapore retail banks lose up to 40 per cent of new product sales to competitors that are better at digital marketing, sales and service.

    In its seventh annual report on consumer banking behaviours, the consultancy said such “hidden defection” of consumers – purchasing a new banking product from a competing bank or financial technology firm – could get worse.

    “There are a lot of customers who frankly consider themselves prisoners in their own banks. They don’t switch their primary bank because it’s too much hassle to do so. But they’re going to go elsewhere for any new needs,” said Ms Chew Seow-Chien, partner and head of Bain’s Financial Services practice in Southeast Asia.

    The survey polled more than 137,000 consumers in 21 countries, including Singapore.

    The Singaporean customers polled indicated that they would buy new banking products from a competitor rather than their primary bank up to 40 percent of the time.

    About 30 per cent of them said they would switch their primary bank if it were easy to do so, the research showed.

    Bain noted that fintechs and technology companies are siphoning off customers seeking high-value products and services, such as credit cards, loans, insurance and investments.

    In its research, the consultancy found that deposits made up about 50 per cent of purchases from primary banks in Singapore over the last 12 months, versus just 22 per cent at competing banks.

    Meanwhile, insurance were the most purchased product at competing banks – 31 per cent of purchases – followed closely by credit cards.

    As younger, more plugged-in generations learn how to bank, their purchases of banking products through digital channels, especially online, will rise – making it important for banks to improve their digital offerings, simplify products lines and streamline user experiences.

    “By now, the digital disruption in banking should come as no surprise, and most banks clearly understand the importance of digital migration,” said Ms Chew.

    “The bigger challenge lies in how to organise the transition and instill the necessary changes, both at the frontline and in the back office, to improve how consumers do their banking.”

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