Speaker 1: digital retail banks have made their debut on the Singapore
Speaker 1: banking scene. What makes them different from traditional banks and
Speaker 1: should you be putting your money in one, I'm sona
Speaker 1: Ramesh from the money mine team with the five things
Speaker 1: you need to know about digital banks
Speaker 1: joining me ceo of trust bank. Now this digital bank
Speaker 1: is backed by Standard chartered and Fair price. We have
Speaker 1: Reuben Lai head of regional office at G excess bank,
Speaker 1: that's the digital bank joint venture between grab and Singtel.
Speaker 1: I'll also be hearing from partner at. So my first
Speaker 1: question is what's the difference between digital banking and a
Speaker 1: digital bank? I mean people
Speaker 1: already using digital options with traditional banks so what does
Speaker 1: a digital bank offer? That's different. There
Speaker 2: are a lot of digital banking services that we in
Speaker 2: Singapore use but what we find is many of these
Speaker 2: services are built on very analog old school brick and
Speaker 2: mortar processes. So while there is a digital wrapper around
Speaker 2: it very often the experience that you get is not
Speaker 2: as seamless, not as real time as what you've come
Speaker 2: to expect from a digital
Speaker 2: bank as a digital native bank. We are looking to
Speaker 2: build very intuitive user interfaces which clients would love to
Speaker 2: interact with and would love to banquet. But secondly also
Speaker 2: equally importantly we are deeply integrated into the NTUC fair
Speaker 2: price ecosystem and this allows us to get opportunity of
Speaker 2: interacting with one million client experiences every day.
Speaker 1: First we believe in the ecosystem approach and for us
Speaker 1: us embedding banking into the everyday life of a customer,
Speaker 1: be taking a grab right ordering, grab food or making
Speaker 1: phone calls or using intel's internet broadband. We want to
Speaker 1: make banking part of the entire experience that also allows
Speaker 1: us then to create products that are very unique. For example,
Speaker 1: if one changes address and change their telco building to
Speaker 1: a different address, we might be able to guess that
Speaker 1: the person has shifted
Speaker 1: and we might make them an offer to say that
Speaker 1: given that you've shifted address, would you like a housing
Speaker 1: loan to renovate your place? And that creates a very
Speaker 1: seamless and beautiful experience for our customers.
Speaker 1: The second digit bank may sound like a robotic bank
Speaker 1: but there's the complete reverse of what we wanted to be.
Speaker 1: In fact we want to bring back service into banking.
Speaker 1: We've got 24 7 customer service hotline that allows our
Speaker 1: customers at any point in time. If you face any issues,
Speaker 1: just call up there will be a friendly customer service
Speaker 1: representative to help our customers.
Speaker 2: If you look at the current banking products in Singapore,
Speaker 2: you have access to many products and services. But what
Speaker 2: you feel is that very often you don't have a
Speaker 2: great experience when you're using them. Take an example of rewards.
Speaker 2: Many banks. All banks are offering many rewards programs and
Speaker 2: these rewards comes with these terms and conditions. But today
Speaker 2: the banks are more or less expecting
Speaker 2: clients to keep track of the terms and conditions. Maybe
Speaker 2: you need to keep it offline. Maybe you need to
Speaker 2: keep a spreadsheet but you need to keep it yourself.
Speaker 2: So how are you innovating? We are giving the entire
Speaker 2: control of the rewards journey in your hand. So in
Speaker 2: your mobile app you can realtor and see where are
Speaker 2: you on your rewards journey. What do you need to
Speaker 2: do in order to maximize your reward?
Speaker 2: We never want you to lose out on your rewards
Speaker 2: ever again. Or for example, you take transparency. We have
Speaker 2: removed every hidden fee from our product and we have
Speaker 2: built transparency as a cornerstone of our proposition and we
Speaker 2: believe that a combination of these two would really help
Speaker 2: us differentiate and possibly create a new space for us
Speaker 2: in this banking market,
Speaker 1: almost every adult in Singapore already has a bank account.
Speaker 1: Do we really need a new type of bank? Singapore
Speaker 1: is well banked, you're right, but well banked does not
Speaker 1: mean well served. I spent a lot of time with
Speaker 1: our customers to grab drivers to grab micro merchants. The retailers,
Speaker 1: small retailers that are trying to build their business and
Speaker 1: looking for access to funds to expand their businesses. Many
Speaker 1: of these folks tell us that
Speaker 1: that the current banking system does not serve them well.
Speaker 1: It doesn't accommodate to their businesses and their needs. Let
Speaker 1: me give you an example. Many bank accounts in Singapore
Speaker 1: may give multipliers or higher interest rates if they hit
Speaker 1: certain criteria, including banking in their salaries into their account. Actually,
Speaker 1: many of our customers may not have a salary. So
Speaker 1: how do we even meet that criteria
Speaker 1: for us? We said, let's just do away with all
Speaker 1: this unnecessary requirements. Why don't we just give people a
Speaker 1: savings account that allows them to save better by having
Speaker 1: interest rate debited into account every single day, not at
Speaker 1: the end of the month, once a month. And that
Speaker 1: gives money into people's pockets right away. It could be
Speaker 1: a few cents, but money is still money and that's
Speaker 1: important to our customers at this point in time when
Speaker 1: inflation is increasing.
Speaker 1: If everything is online, people want to know our digital
Speaker 1: banks safe. Let's bring in long combing. He's a corporate
Speaker 1: lawyer at. I don't think piggy banks necessarily pose a
Speaker 1: greater risk as compared to the ones that are faced
Speaker 1: by traditional banks. MeS has imposed quite stringent controls and requirements,
Speaker 1: such as capital requirements on digital banks. For digital banks
Speaker 1: at two types, there's a digital full bank and the
Speaker 1: digital wholesale
Speaker 1: bank. Under the regime that MES has introduced the digital
Speaker 1: full bank is the one that is supposed to function
Speaker 1: as same as a traditional full bank and in order
Speaker 1: for it to reach that full bank status, it will
Speaker 1: be in a phased approach whereby at the start there
Speaker 1: will be limited type of activities that they are able
Speaker 1: to conduct and then subject to meeting certain milestones, then
Speaker 1: mes will slowly allow them to take on more business
Speaker 1: activities take on a large
Speaker 1: the amount of deficits there also be a cap as
Speaker 1: to how much an individual customer can deficit with the bank.
Speaker 1: So until all these milestones have been met to M. E. S.
Speaker 1: S satisfaction, then only they will be allowed to fully
Speaker 1: operate by then their capital requirements. We have been increased
Speaker 1: to $1.5 billion. So there are steps that MeS has
Speaker 1: put in to take a more cautious and observatory type
Speaker 1: of approach towards these digital banks.
Speaker 1: And there are also extensive guidelines relating to A. M. L.
Speaker 1: And K. Y. C. Technology risk outsourcing risks which both
Speaker 1: traditional and D. G. Banks are subject. The digital banks
Speaker 1: are also subject to the banking act like traditional banks.
Speaker 1: So to me the absence of a physical presence, it
Speaker 1: doesn't really change the business
Speaker 1: model in terms of how banks operate and how banks
Speaker 1: make money. So I don't think it necessarily poses a
Speaker 1: higher risk as compared to traditional banks. Besides if you
Speaker 1: look at the candidates that mes have chosen to grant
Speaker 1: the D. G. Bank licenses to these are big and
Speaker 1: reputable companies and they are quite well chosen.
Speaker 1: Tech risk cybersecurity risks are very very important to us
Speaker 1: as a pure digital bank. That is the number one
Speaker 1: thing that we are focused on thankfully we've got a
Speaker 1: board as well that is very very focused on this
Speaker 1: and they constantly tell us that we need to make
Speaker 1: sure that we uphold the highest standards. So right from
Speaker 1: the store,
Speaker 1: we build our teams and invested into tech and tech risk,
Speaker 1: cybersecurity risks and data protection. We've worked very closely as
Speaker 1: well with mes to create the frameworks that would ensure
Speaker 1: that our customers and the data, their money's, our systems
Speaker 1: are just kept safe. We are the first digital
Speaker 1: bank to get the data protection trust Mark. It was
Speaker 1: a tall order. It took us a lot of effort
Speaker 1: to get it done but we felt was very important
Speaker 1: to establish trust with our customers. We
Speaker 2: had a digital data bank and we have built our
Speaker 2: digital interfaces at our digital infrastructure on the very latest
Speaker 2: of technologies and we have built very strong security and
Speaker 2: controls throughout our bank,
Speaker 2: but not just building security and controls ourselves. We have
Speaker 2: also given control of security in the client's hand. So
Speaker 2: for example using your app will be able to lock
Speaker 2: or unlock your card or enable or disable specific types
Speaker 2: of transactions. And in general have a real safe and
Speaker 2: secure banking experience with us.
Speaker 1: Here's what we've been discussing so far. Digital banks may
Speaker 1: be a new option for retail customers, but the basics
Speaker 1: of how they operate are still like traditional banks, like
Speaker 1: all banks, there are cyber security risks but digital banks
Speaker 1: are subject to regulatory requirements, just like brick and mortar
Speaker 1: ones they're targeting. Underserved customers. So they'll be tapping on
Speaker 1: their ecosystems to build new biz
Speaker 1: as well as expand choice for customers. So looking at
Speaker 1: these business plans, what are some challenges you see ahead
Speaker 1: for now? The main challenges that these big banks will
Speaker 1: face probably will be adoption rate because much as a
Speaker 1: lot of things have started to go digital, it will
Speaker 1: take the general public a little bit of time to
Speaker 1: wrap their heads around not having any physical
Speaker 1: presence at all for piggy banks because we're not just
Speaker 1: talking about whether they have a brunch for you to
Speaker 1: conduct your banking affairs, you won't even have a t
Speaker 1: m won't have cash machines and everything is online. You
Speaker 1: won't have cash basically. I think the adoption rate is
Speaker 1: going to be probably one of the biggest challenges. You
Speaker 1: will only be able to use your D. G. Banks
Speaker 1: payments
Speaker 1: at merchants who support digital payments. I think it's quite
Speaker 1: expensive these days. We even see them in hawker centers
Speaker 1: accepting pay now and taylor and things like that. Right?
Speaker 1: But the adoption rate can only be fully realized when
Speaker 1: the whole infrastructure has allowed it. Basically everyone has a
Speaker 1: electronic payment options. All the merchants have electronic payment option.
Speaker 1: We have a report by BCG consulting which says only 5%
Speaker 1: of the digital banks in the world are profitable. Okay.
Speaker 1: I know it's early days yet, but do you see
Speaker 1: a pathway to profitability for these digital banks in Singapore
Speaker 1: wanted to make sure that we build a sustainable business?
Speaker 1: Less about the speed
Speaker 1: to break even more about the sustainability of it. And
Speaker 1: the other thing that they are very concerned about is
Speaker 1: stability of the financial system is our nation's money, our
Speaker 1: customers money. We've had that in mind right from day
Speaker 1: one to make sure that we build a sustainable business
Speaker 1: that would enable us to thrive and to serve our
Speaker 1: customers well.
Speaker 2: At this stage, our real focus is on creating real
Speaker 2: value for the clients, making it very easy for the
Speaker 2: clients to sign up with us and giving them a
Speaker 2: very rewarding experience. We believe that our strong proposition combined
Speaker 2: with our transparency and our really into IT
Speaker 2: interface which allow a lot of clients to join us
Speaker 2: in a relatively short period of time. We also believe
Speaker 2: that we have a very sustainable business model and as
Speaker 2: clients join us and as they build loyal deep relationships
Speaker 2: over time will be able to grow together.
Speaker 1: Looking further a field with Singapore being a crowded market
Speaker 1: as it is. You must be eyeing the opportunities in
Speaker 1: the region,
Speaker 1: Let me zoom out a bit and outline the opportunities
Speaker 1: in this region, 70% of people across Southeast Asia underbanked
Speaker 1: 90% that do not have access to credit cards. The
Speaker 1: opportunity is huge and if you look around the world,
Speaker 1: this is another region where that emerging middle class, we
Speaker 1: know that story so well that when they come online,
Speaker 1: they're going to be looking at what can I buy
Speaker 1: to upgrade my lifestyle, what kind of banking products allows
Speaker 1: me to achieve these goals. And we want to be
Speaker 1: there when the customers are coming online to start to
Speaker 1: use these products.
Speaker 1: by allowing Singapore to stay competitive and relevant because Singapore
Speaker 1: is a small island nation and having a technological edge
Speaker 1: over its competitors, it's key.
Speaker 1: The world will eventually move towards digitalization of the banking
Speaker 1: sector in this region. I think Singapore is probably one
Speaker 1: of the first movers for this initiative to have banks
Speaker 1: that are fully digital. That's important. That's what Singapore has
Speaker 1: always been doing, right to have this first mover advantage
Speaker 1: for many of these industries, banking being one of them
Speaker 1: other countries in the region
Speaker 1: and will eventually move towards that direction too. But by
Speaker 1: then Singapore probably would have had quite a fair bit
Speaker 1: of experience in having a fully digital banks these countries,
Speaker 1: when they try to implement that kind of initiative, they
Speaker 1: will of course come to look to Singapore for guidance.
Speaker 1: This trend has always helped Singapore cement its reputation as
Speaker 1: a financial center.
Speaker 1: The reputation is very important to be a frontrunner to
Speaker 1: be a first mover and that's how Singapore continues to
Speaker 1: attract the best talent in the world for the sector.
Speaker 1: I suppose we can say that the future of banking
Speaker 1: will be digital, but our digital banks the future,
Speaker 1: the fact that is going fully digital definitely we are
Speaker 1: going to get used to a world where we don't
Speaker 1: have physical presence for banks which is probably going to
Speaker 1: be the same for many other things. We don't have
Speaker 1: a physical presence for a lot of merchants and the
Speaker 1: banking industry. I think
Speaker 1: it's going to be the same and then and it
Speaker 1: actually has been moving towards that direction for quite a
Speaker 1: while now. You know, even the traditional banks, they are
Speaker 1: very much a part of the entire digital banking ecosystem
Speaker 1: because they have been modernizing and digitizing over the last
Speaker 1: decade or so.
Speaker 1: I think the business model will work. The brick and
Speaker 1: mortar model of banking will eventually become a thing of
Speaker 1: the past. The introduction of D. G. Banks is probably
Speaker 1: the start that we need to move towards that direction. Yes,
Speaker 1: if you ask me whether this business model will work,
Speaker 1: I believe it will, that
Speaker 1: has to be the case. I think going forward in
Speaker 1: the future, we've been discussing the five things you need
Speaker 1: to know about digital banks. These new options for retail
Speaker 1: customers in Singapore are offering a digital first choice now,
Speaker 1: just like traditional banks, they're subject to strict rules on
Speaker 1: how they operate, including how they keep your data safe.
Speaker 1: Digital banks are targeting underserved customers in the Singapore market.
Speaker 1: But with the majority of the population in the region
Speaker 1: still underbanked, the more lucrative opportunities could lie further a field.
Speaker 1: It's still early days though. And around the world, most
Speaker 1: digital banks haven't yet turned a profit. Looking further ahead.
Speaker 1: The banking sector is only going to get more and
Speaker 1: more digital and we could even see a time where
Speaker 1: all banks are only digital.
Speaker 1: You've been listening to the Many Mind podcast. My thanks
Speaker 1: to my guest partner with Ceo of Trust Bank and
Speaker 1: Reuben Lai, head of regional office at GsX Bank. Money
Speaker 1: Mind as every saturday at 10 30 PM on Mediacorp
Speaker 1: C N A. You can also catch us online at
Speaker 1: CNN dot asia on Youtube.