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DBS introduces a mobile-only bank in India
Singapore’s DBS Bank has launched what it says is India’s first mobile-only bank. Dubbed digibank, the mobile app functions as an entirely paperless, signatureless and branchless bank for India’s residents.

The initiative aims to break away from conventional banking norms such as form filling and other cumbersome processes.

Account-opening can be done easily and effortlessly at an extensive network of outlets run by DBS’ partners, including over 500 cafes across India. No paperwork will be involved and instead, customer authentication is done purely using the Aadhaar card, a biometrics-enabled ID which has been issued to over 1 billion Indians.

Other digibank features include 24/7 customer service provided by a real-time, AI-driven virtual assistant, which understands natural language and is incorporated with the ability to anticipate and answer some 10,000 customer questions.

This AI feature was made possible due to DBS’s partnership with US-based fintech Kasisto. The latter is a spin-off from SRI International which created the technology behind Apple’s Siri.

In-built into digibank is a budget optimizer that helps customers do their budgeting, track expenses and analyze purchasing trends. The function is equipped to understand customer behavior and preferences, synthesize data, and provide recommendations.

The budget optimizer also studies customers’ spending patterns and prompts them if they are overspending. Conversely, if a customer’s savings regularly exceed his or her expenditure, digibank will provide suggestions on how to make one’s money work harder.

Dynamic inbuilt security, which is safer than OTP, is employed in digibank. Most bank customers are used to receiving One-Time Passwords (OTPs) via SMS, and then typing codes into pages to authorize their mobile banking transactions. digibank has an embedded soft token security, avoiding the need to wait for SMSs to arrive and providing even stronger security for transaction authorization.

The new offering also gives account-holders earn 7% interest from the first rupee, one of the highest in the market with no minimum balance requirements. Customers receive a physical debit card which can be used across all Visa-enabled online and POS transactions, as well as overseas. Free cash withdrawals will be available at more than 200,000 ATMs nationwide.

Said DBS CEO Piyush Gupta, “India’s banking system is at the cusp of massive change, and as a bank committed to shaping the future of banking, we are excited to roll out a revolutionary, mobile-only bank. With digital, we are able to create a completely different customer experience. What’s more, digibank’s efficiencies and lower costs enable us to pass on significant benefits to customers in the form of greater customer value.”
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April 28, 2016
How DBS Is Fronting And Doubling Down On The Push For Entrepreneurship In Singapore

We’ve all heard of DBS — after all, it’s the largest bank in Singapore and Southeast Asia. And, it has 280 branches all over the rest of Asia, including China, Hong Kong, Taiwan, India and Indonesia. Other than its extensive coverage, the bank recently launched a set of new initiatives to support entrepreneurs and the startup community here in Singapore.

DBS Bay Area Series

Venture Capitalist and DBS Advisor Ernestine Fu. Photo Credit: DBS.

DBS kicked off their initiatives in late 2014 with a visit from Ernestine Fu, a venture capitalist and partner at Alsop Louie Partners in Silicon Valley. She has advised DBS on venture debt and their entrepreneurship programs. With her presence, DBS launched its inaugural entrepreneurship event and kicked off its prestigious “Bay Area Series” event.

For those unfamiliar with Ernestine, she has been heralded as Silicon Valley’s youngest venture capitalist. She joined VC firm Alsop Louie Partners as a 20-year-old associate in March 2011 and has been making waves as a young VC in the bay area since.

Third-Generation Venture Capitalist Tim Draper. Photo Credit: DBS.

Tim Draper, founder and managing director at Draper Fisher Jurvetson (DFJ), joined the Bay Area Series in January of 2015. Tim Draper is a third-generation venture capitalist, and is well known for being one of the early investors in Skype, Baidu, Tesla, Theranos, Hotmail, Twitch.tv hundred of others. His grandfather co-founded one of the first venture capital firms in Silicon Valley. He shared with local entrepreneurs his visions and insights on venture investing when he was in Singapore too.

The Bay Area Series provide an excellent opportunity for local investors and entrepreneurs to hear and learn from successful individuals from Silicon Valley.

Disrupt @ The Bay Series

Food & Beverage Event for Disrupt @ The Bay. Photo Credit: DBS.

DBS also launched a series of events called “Disrupt @ The Bay” in 2015. The goal of these events is to foster relationships and synergies among local entrepreneurs and investors. We need to re-think how we “disrupt” current industry norms, and create exponential growth through new technologies and business ideas. Some of the events organized last year include the F&B Disrupt @ The Bay, Future of Retail Disrupt @ The Bay, as well as Future of Automotive Disrupt @ The Bay.

Future of Retail Event for Disrupt @ The Bay. Photo Credit: DBS.

Future of Automotive Event for Disrupt @ The Bay. Photo Credit: DBS.

The Disrupt @ The Bay events have attracted multiple large corporations, small businesses and startups, and venture capital firms. These organizations include: StarHub, StoreHub, Golden Gate Ventures, iChef, The French Cellar, Reimagine Food, The Oddle Company, Mobikon Technologies Pte Ltd, and Robofusion Asia Pte Ltd.

The Disrupt @ The Bay Series is a good platform for like-minded business owners, investors, and entrepreneurs to connect. They can share information, exchange ideas, and form new partnerships.

DBS Venture Debt

DBS and Venture Debt. Image Credit: DBS.

As part of these initiatives, DBS also introduced venture debt financing and is the first bank is Southeast Asia to do so. Venture debt is a way for the bank to financial support tech startups in the growth stage.

Currently, venture debt applicants need to be Singapore-based, with primary operations in Singapore. The startup should have also raised at minimum of $1 million SGD in Series A funding.

Image credit: Kauffman Fellows

This initiative provides a unique later stage funding option to encourage the growth of technology startups in Singapore.

DBS Mobile App

Image Credit: DBS.

DBS also launched a mobile app called “DBS BusinessClass” to provide a networking platform for local entrepreneurs, investors, and advisors in Asia. Available on both iOS and Android, members can post questions, gain advice on their businesses, and join online discussions on startups topics.

Since launching a year ago, the app grew to over 15,000 members and over 300 discussion topics.

Overall, these new initiatives by DBS show great promise. The bank received the Asian Banker’s Best Social Media Engagement Project Award, along with multiple other awards. DBS has taken a comprehensive approach to positively impacting the local entrepreneurship ecosystem in Singapore.

We are optimistic that DBS has a strong platform to expand and connect entrepreneurs and investors across the rest of Asia.

February 16, 2016
HSBC to locally incorporate its Singapore retail operations in May
In order to follow new MAS regulations.

HSBC will transfer its local retail banking and wealth management business, which is currently under the HSBC Singapore Branch, to a locally incorporated subsidiary, HSBC Bank (Singapore) Limited.

The transfer of HSBC’s retail banking and wealth management business is expected to take effect on 9 May 2016, subject to the receipt of regulatory and court approvals.

The move comes after Monetary Authority of Singapore tagged HSBC as one of seven domestic systemically important banks (D-SIBS). Under a new regulatory framework announced in April 2015, all D-SIBS should locally incorporate their retail operations to allow the MAS to set targeted and appropriate policy measures specifically for the systemically important banks.

The other D-SIBS are DBS, OCBC, UOB, Citibank, Malayan Banking and Standard Chartered.
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February 13, 2016
S-Reits are safe havens amid uncertainty
Amid the economic uncertainty caused by falling oil prices and slowing growth in China, Singapore-listed real estate investment trusts (S-Reits) are safe havens, DBS Group Research said yesterday.

S-Reits have outperformed the local benchmark Straits Times Index and real estate developers so far this year, DBS analysts Derek Tan and Mervin Song wrote in a report.

Like many sectors, S-Reits have fallen in value, but not as sharply as most others. S-Reit unit prices are down by about 3 per cent overall since the start of the year, while the STI has plunged by a much more dramatic 11 per cent.

These trusts are likely to continue putting in a “firm” performance in the near term, the analysts wrote, especially as increasing expectations of a delay in further interest rate hikes by the United States Federal Reserve will have a positive impact on share prices in general.

The Fed lifted interest rates in December for the first time since 2006, and the DBS forecasters expect the central bank to raise rates four times throughout this year.

But the Fed has indicated that it has grown cautious after its December move, as the slump in oil prices has made it harder for it to meet its inflation targets, implying that the next rate hike could be delayed.

The longer the Fed takes to raise rates, the better for Reits as it will keep their borrowing costs low.

“While higher interest rates are a potential risk in the medium term, we remain comforted by S-Reits’ conservative capital strategies… which will mitigate the impact of higher refinancing costs when it occurs,” the DBS analysts said.

On average, locally listed Reits have a gearing of 34 per cent, which is “manageable”, they noted.

S-Reits are trading at attractive valuations, which make it a good time for investors to jump in and lock in some yields, they added, saying that S-Reits are trading at 0.9 time price to book and offer investors a yield of 7.1 per cent.

“We believe current valuations are attractive re-entry levels and believe that large caps are likely to benefit as investors turn yield-hungry in a tepid growth environment,” they said.

Their favourite S-Reits are “those with the opportunity to surprise on the upside through acquisitions or portfolio-specific catalysts”, the DBS analysts added.

Their top picks are Ascendas Reit, Mapletree Greater China Commercial Trust, Mapletree Commercial Trust, Frasers Centrepoint Trust and CapitaLand Retail China Trust.
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February 9, 2016
DBS Indonesia upbeat, eyes higher loan growth in 2016

Private lender Bank DBS Indonesia, part of Singapore’s DBS Group Holdings, expects higher loan growth this year compared to 2015 as it predicts an improvement in the country’s economy.

DBS Indonesia president director Paulus Sutisna said the bank projected that its loans would grow by 12 percent in 2016, higher than the 10 percent booked as of last year.

According to its financial report, the bank booked loans of Rp 43.4 trillion (US$3.11 billion) as of September, an increase of 9.87 percent year-on-year (yoy) from Rp 39.5 trillion in the same period of 2015.

“We are more optimistic about this year because the government is holding early auctions and procurements for its spending on infrastructure projects. Such acceleration will help the country’s economic growth,” Paulus said after an event on Wednesday.

Paulus said acceleration in government spending would boost the real sector, which in turn would increase demand for bank loans, adding that “our growth will depend on the performance of our clients”.

Given Indonesia’s large population the bank will focus on sectors related to the mass segment such as retail and consumer goods and some types of manufacturing and infrastructure-supporting industries.

“We’ll still focus on some commodities, such as palm oil, as well as automotive, chemical and pharmaceutical industries,” he said.

Paulus said the bank was also planning to enlarge its consumer and retail banking as well as small and medium enterprise (SME) portfolios as it still depended mainly on the corporate segment.

“Corporate banking is dominant now as our retail business is still under 20 percent of our total lending. We hope to divide evenly our consumer and retail banking, SME and corporate portfolios by one-third each, perhaps in the next five to seven years,” he said.

The government has forecast that Indonesia’s economic growth will reach 5.3 percent in 2016. The country’s GDP growth stood at 4.73 percent for July to September, a slight increase from the 4.67 percent growth posted in the second quarter and 4.72 percent in the first three months of the year.

Despite the optimism, Paulus said the bank would remain cautious about various challenges in the global economy that still lingered, such as falls in commodity prices and currency volatility, as they would have an impact on Indonesia.

Challenges in the global and domestic economy also affected DBS Indonesia’s income as it saw losses of Rp 178.9 billion as of September 2015, compared to net profits of Rp 366 billion in the same period last year. However, the bank’s unaudited financial report in November shows that it already started to post net profits of Rp 23.79 billion.

Paulus said the bank would also invest in internet banking, which was essential to support a bigger consumer portfolio in the future, especially in fee-based income.

As part of its efforts to grow fee-based income, the bank has enhanced its existing partnership with life insurer Asuransi Jiwa Manulife Indonesia, part of Canada’s Manulife Financial, through the launch of a new single-premium, unit-linked product MiWealth Protection.

The new product is designed for DBS customers who wish to grow their wealth in order to be financially secure and enjoy their life in retirement. DBS Indonesia consumer banking group director Wawan Salum said the bank expected 20 percent growth in the number of wealth-management customers this year.

January 8, 2016
Identifying Asia’s regional bank champions

Bank of China is seen as the strongest challenger for Asian leadership

A swelling population, exponential economic growth and broad financial development are transforming Asia ex-Japan into a global finance hub.

It is the opportunity to service retail and wealthy clients in Asia that has fired banks’ ambitions to extend their regional networks and boost their distribution power.

But the odds are stacked against them. They have nowhere near the scale of the international players Citi, HSBC and Standard Chartered. This trio has resources, customer networks and relationships acquired from a century of operations in Asia.

Asian banks, on the other hand, face constraints in their ability to expand cross-border, including fierce domestic competition and national protectionism.

Nevertheless, they have become increasingly vocal about their regional ambitions, centred around expanding their wealth management businesses.

Our leading contenders come from China, Malaysia and Singapore. Hong Kong banks appear content to focus on Greater China, where they will seek to be facilitators of trade flows rather than competitors in regional distribution.

“From a geographical standpoint, the footprint of the Singaporean banks is wider,” said Michael Wu, senior equity analyst at Morningstar. “They might be in a better position to access Asia.”

Bank of China is seen as the strongest challenger for Asian leadership. It has the balance sheet and is willing to suffer in the short term to expand, notes CLSA.

BOC has a network of 11,514 offices, although 10,693 are onshore. Overseas, it has 628 offices in Hong Kong, Macau, Taiwan and in 37 other countries.

It was first to offer private banking onshore in 2007 and now manages Rmb720 billion ($116 billion) for 74,000 private banking customers, with more than 7,000 wealth management centres and 34 private banking hubs. It has private banking operations in Singapore and Hong Kong and has ambitions to grow in Asia, including Australia, where it opened a branch in 2010.

Singapore’s largest lender, DBS, has 280 branches across 15 markets in Asia. But Singapore and Hong Kong remain its major markets, despite its attempts for regional leadership. As CLSA points out, its operations in the growth markets of China, India and Indonesia have remained sub-scale.

DBS is building wealth management/private banking operations. Its private banking business was bolstered by its $220 billion acquisition of Société Générale’s private banking business in Asia last October, boosting its AUM 22% to S$133 billion ($97.4 billion) as of December 2014. DBS’s total wealth management AUM stood at S$141 billion and its private bank AUM at S$95 billion.

Maybank was a late-comer to private banking, but has been building a solid Asean network. Its regional operation only started 18 months ago, with Singapore as its hub. But it has been hiring aggressively and expanding its proposition, including launching a discretionary portfolio management service.

Steven Seow, Asia head of wealth management at Mercer, pointed out that Maybank has succeeded in converting long-time Asian corporate banking entrepreneurs to its wealth management business. In terms of private banking assets, Maybank has S$6 billion in overall AUM, having added S$2 billion in new assets over the past year.

Historically OCBC has focused on Southeast Asia. It has a strong position in Singapore and is one of the largest foreign banks in Malaysia, providing conventional and Islamic finance. Last year it acquired Wing Hang Bank in Hong Kong for $5 billion.

That increased OCBC’s branches in Greater China from 25 to 120 and deepened its operations in the Pearl River Delta, although it paid a high premium given Wing Hang’s operations in Hong Kong and China were marginal.

In private banking and wealth management, OCBC’s 2009 acquisition of ING Private Banking (renamed Bank of Singapore) for $1.46 billion has given it the scale to compete with DBS and global banks. The acquisition trebled its private banking AUM to $23 billion.

As of March this year that AUM had since doubled to $51 billion. It enjoyed 15% year-on-year growth in wealth management income in 2014.

Among Singaporean banks, UOB’s focus is on Southeast Asia, with universal banking operations in Malaysia, Thailand and Indonesia. But outside of Singapore its strength in Malaysia – it has the largest foreign bank network in the country with 45 branches – is not replicated in Thailand and Indonesia.

Without the help of an international acquisition, UOB has invested in building its wealth management and private banking capabilities out of Singapore.

It saw the combined AUM of wealth management and private banking grow 67% to S$80 billion in the four years to 2014, during which time the profit contribution of wealth management doubled to 47%.

But while it has plans to offer private banking outside of Singapore, its current proposition is acknowledged as behind city-state peers DBS and OCBC.

The full article appears in the July 2015 edition of AsianInvestor magazine

July 30, 2015