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Speaker 1: This is a C N. A podcast.

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Speaker 2: Could you give us your thoughts on the following physical banks?

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Speaker 2: To stay bank customer service have to step up digital banks?

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Speaker 2: Digital bank security

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Speaker 2: should be quite okay cash.

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Speaker 2: Thanks

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Speaker 2: thanks for joining us on money talks. I'm Sarah Khaldi

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Speaker 2: for as long as most of us have been alive.

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Speaker 2: A bank is a place where you can go to

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Speaker 2: with Tillerson uniform and managers who processed account openings. Now

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Speaker 2: we're on the cusp of a bank which

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Speaker 2: operates entirely on your mobile phone. They're called digital banks

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Speaker 2: and in Singapore, two of them have launched G X.

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Speaker 2: S is developed by grab and Singtel and trust bank

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Speaker 2: is a tie up with standard Chartered Bank and NtuC

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Speaker 2: Fair Price Group.

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Speaker 2: The aim is to work like a bank but be

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Speaker 2: fully powered by technology. All of it sounds exciting. But

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Speaker 2: can you trust a digital bank with your hard earned money?

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Speaker 2: What can they do that traditional banks can't, should you

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Speaker 2: sign up for one and move funds there to talk

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Speaker 2: all about this? I'm with Ho jin Chen, who leads

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Speaker 2: PWC's financial services assurance practice

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Speaker 2: pinch in. Thanks so much for joining us today. Thank

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Speaker 2: you for having me Sarah. There's so much buzz around

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Speaker 2: digital banks but there is mixed reactions are excited and

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Speaker 2: people are curious then there are those who are quite

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Speaker 2: skeptical about the whole thing. When was the

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Speaker 2: last time you actually went to a physical bank branch

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Speaker 2: for me. There must be at least six months ago.

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Speaker 2: That's not bad for me. It was like years. I

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Speaker 2: can't remember why I actually went to the bank and

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Speaker 2: so after my experience

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Speaker 2: I might not step into a physical bank branch for

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Speaker 2: a while. Do you have to queue for a long time?

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Speaker 2: Two hours? No way it is true. Two hours. And

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Speaker 2: I thought that the request I had was quite a

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Speaker 2: simple one is just to change some standing instructions for

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Speaker 2: the srs supplementary retirement scheme. Yeah so it was a mistake.

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Speaker 2: So I went in

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Speaker 2: like you for a while, there were lots of paperwork

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Speaker 2: so eventually it's only after two hours and I stepped

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Speaker 2: out of the bank and I guess that's why we

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Speaker 2: have all these digital banks now. We know that these

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Speaker 2: digital banks would not have physical branches unlike traditional banks.

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Speaker 2: But what are some of the other main differences between

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Speaker 2: the two? So digital banks are quite similar to a

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Speaker 2: tree

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Speaker 2: National Bank. They provide banking services like loans, deposits, credit cards.

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Speaker 2: The only difference is that for digital banks, they do

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Speaker 2: all their transactions online through apps, through the website, through

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Speaker 2: mobile phones. They don't have physical infrastructure. You won't see

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Speaker 2: a bank branch or a T. M's traditional bank. You

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Speaker 2: have get so it's a fiscal banking for traditional banks

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Speaker 2: at the same time system introduced now it's called digital banking.

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Speaker 2: So people tend to

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Speaker 2: confuse that and use it interchangeably with digital banks but

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Speaker 2: actually are not. Digital banks are virtual banks is a

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Speaker 2: bank where doing all their transactions online, where digital banking

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Speaker 2: is the act of banking. So, traditional banks, although they

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Speaker 2: are fiscal as well, they also have digital banking through

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Speaker 2: their apps through their website. There's a little difference on it,

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Speaker 2: but if let's say I have a bank account with

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Speaker 2: a traditional bank, but I do all my transactions online.

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Speaker 2: How different is a traditional bank with a lot of

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Speaker 2: digital services prepared to digital banks. So in the recent

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Speaker 2: PWC surveyed in Singapore, the statistics shows that seven of

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Speaker 2: 10 people have some issues with their traditional banks. Right,

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Speaker 2: Billy is online or is it physical? And because of

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Speaker 2: this there are some pinpoints. So I just showed you

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Speaker 2: earlier in terms of my

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Speaker 2: experience in the fiscal branch. So can it be done

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Speaker 2: online probably. But at the same time it is about

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Speaker 2: the education where people may not be so familiar with

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Speaker 2: this whole digital banking. So there is still a point

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Speaker 2: about people being comfortable. I could be doing all my

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Speaker 2: banking services through digital means on traditional banks.

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Speaker 2: But at this point in time, the digital banks in Singapore,

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Speaker 2: they're still very, very much restricted. So they can only

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Speaker 2: offer very simple products like the credit cards, very simple insurance.

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Speaker 2: But there's still a lot of things that we have

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Speaker 2: to do through the digital banking in the fiscal banks.

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Speaker 2: So it means we still need our traditional banks to

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Speaker 2: do many other transactions that some of these digital banks

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Speaker 2: are

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Speaker 2: still not allowed to offer. Absolutely. The current digital banks

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Speaker 2: has been launched. It is very limited. What's the point

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Speaker 2: then of having digital banks Right. The digital adoption within

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Speaker 2: Singapore is very high highest amongst the asian countries, 88%.

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Speaker 2: But if you look at it within this population okay.

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Speaker 2: We did a survey. So for the population 15 years

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Speaker 2: and above only 60% 606 out of 10

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Speaker 2: are considered properly bank. By the traditional banks, properly bank

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Speaker 2: means that they have access to bank accounts and they

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Speaker 2: are also have access to the more sophisticated products. For example,

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Speaker 2: Democratic cars, the deposit structure notes and of this population, 38%

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Speaker 2: are considered what they call under bank. That means they

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Speaker 2: have access to limited bank accounts, access to limited products

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Speaker 2: they're under bank

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Speaker 2: And the remaining 2% our call the bank means there's

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Speaker 2: absolutely no access to bank accounts in that respect. You

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Speaker 2: can see that while we are very digitally entrenched there

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Speaker 2: is still a proportion of the population that can be

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Speaker 2: bank that can be reached out through digital means we

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Speaker 2: have to defend Singapore's position as the leading financial center

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Speaker 2: in Asia.

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Speaker 2: And then with the evolution of the e commerce people

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Speaker 2: are getting more digitally savvy. There's a need for them

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Speaker 2: to introduce this right to keep up with the paces

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Speaker 2: of the U. K. The U. S. And the Hong

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Speaker 2: kong's digital banking is getting more and more important and

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Speaker 2: there's a part that digital banks can play especially if

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Speaker 2: they can focus on what we call the underserved segments.

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Speaker 2: Is that underserved segment more? The young people? What's the

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Speaker 2: demographic who are these people that

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Speaker 2: are not really completely banked? So if you look at

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Speaker 2: it these underserved segments and depending on the strategy of

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Speaker 2: digital banks, the one that I'm aware of is that

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Speaker 2: they're looking at the young families. The cost of inflation

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Speaker 2: has been going up quite rapidly. Our savings are being

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Speaker 2: eroded because of the savings rates. They are looking at

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Speaker 2: assignment of that. They're also a segment of the young

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Speaker 2: the millenniums

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Speaker 2: by those who are starting work. They may not have

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Speaker 2: the capabilities or they may not match the thresholds of

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Speaker 2: traditional banks. For example where you need to maintain a

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Speaker 2: minimum some in your deposits or for example you might

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Speaker 2: need to make certain number of transactions on a monthly basis.

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Speaker 2: There are some who will impose annual fees on your

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Speaker 2: credit cards. There are some of these and also the

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Speaker 2: economy workers right where they may not have access to

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Speaker 2: already access maybe because of the profile of their financial positions.

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Speaker 2: If you go through the credit scoring system of traditional banks,

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Speaker 2: they may not be eligible for a loan or credit card.

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Speaker 2: I rest for the digital banks because of the innovation

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Speaker 2: that they used to use a lot of artificial intelligence.

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Speaker 2: A lot of data crunching, they may be able to

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Speaker 2: accept that, okay, while you may not meet certain criteria,

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Speaker 2: but I can take the risk. I can still offer

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Speaker 2: you a certain type of credit lower level. But at

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Speaker 2: least I'm trying to bank you,

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Speaker 2: Especially the millennials, right? And we're just starting off of

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Speaker 2: work or my young daughter who is 16 years old

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Speaker 2: now have absolutely no credit cards but increasingly when she's

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Speaker 2: getting out to buy her things using all the pain now.

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Speaker 2: But is this a population that the banks may start

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Speaker 2: looking into that? I see. So it's more targeting these

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Speaker 2: people who may fall through the cracks through the cracks.

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Speaker 2: Hi, my name is steve lie and I'm Teresa tang

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Speaker 2: and we are the hosts of the new podcast CNN

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Speaker 2: correspondent from new york to Bangkok join us as we

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Speaker 2: kick back and chat with our colleagues across the globe

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Speaker 2: about the latest news developments. Look out for our weekly

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Speaker 2: episodes wherever you get your podcasts.

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Speaker 2: One bank that is out right now is g excess

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Speaker 2: which is between grab and Singtel but it's only available

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Speaker 2: to a select group right? The one that you mentioned,

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Speaker 2: the bank only eligible to open an account on invitation

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Speaker 2: and they're opening up within the ecosystems. It means the

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Speaker 2: grab drivers and delivery riders and if you have an

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Speaker 2: account with the telephone and also the employees within that corporations,

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Speaker 2: I tried to download the app to open the account

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Speaker 2: but it's only by invitation when they allow me to

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Speaker 2: open the account definitely the other bank that has launched

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Speaker 2: is Trust Bank. Well it's showing 1.4% per annum. But

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Speaker 2: really the draw seems to be, you know grocery savings

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Speaker 2: link points with Ntuc loyalty program.

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Speaker 2: But there are other credit cards that could give you

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Speaker 2: grocery cash back as well. So what do you think

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Speaker 2: about their strategy and how they're trying to attract customers?

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Speaker 2: It is very common for any new entrance to markets

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Speaker 2: to offer very enticing sign up rewards. It's ready to

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Speaker 2: gain the very strong foothold into the markets.

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Speaker 2: The question is whether or not these are sustainable. Right?

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Speaker 2: So if I can just reflect back to our right

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Speaker 2: healing experience five years ago with all the vouchers and

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Speaker 2: all the vouchers. Our rights are heavily subsidized. You don't

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Speaker 2: pay more than a couple of dollars to go to

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Speaker 2: point to point B. It's a matter of them who

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Speaker 2: has more money to burn for us. The consumers is

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Speaker 2: honeymoon period and we

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Speaker 2: enjoy it. We loved it. But you look at the

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Speaker 2: current status now, where are we on that? The question

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Speaker 2: therefore for them is that how are they going to

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Speaker 2: use the advantage? So for digital banks, they have no

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Speaker 2: physical infrastructure so they are fixed cost is much lower.

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Speaker 2: Are they therefore able to translate these savings into better

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Speaker 2: perks for the consumers

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Speaker 2: Higher rebates, high interest rates. And how long can you

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Speaker 2: do that? The bank that you mentioned? I also downloaded that. Yes,

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Speaker 2: it's giving you high interest rates but it's only for

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Speaker 2: a period of time. But it sounds like if you

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Speaker 2: can access many services from the traditional banks then there's

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Speaker 2: no real need to go to a digital bank. Is

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Speaker 2: that right? As I mentioned, the survey showed that seven

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Speaker 2: out of 10 people,

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Speaker 2: They are not happy. Seven out of 10. They have

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Speaker 2: some issues with the traditional banks. Is the customer experience?

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Speaker 2: That may not be that good yet. Is that the

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Speaker 2: battle then customer experience? Yes, definitely. The customer experience is

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Speaker 2: going to be the battle.

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Speaker 2: How long do you need to open an account? Just

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Speaker 2: a couple of days ago, me and my wife were

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Speaker 2: having coffee in our coffee shops.

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Speaker 2: So then she received a text from a friend. Is

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Speaker 2: a referral court. Yeah, I received. Yeah, she was pretty

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Speaker 2: excited about it. Yeah. And then she on the spot

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Speaker 2: for having a coffee. She applied for the cut within minutes.

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Speaker 2: She got the cut. Really? Yes. The way of applying

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Speaker 2: cuts

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Speaker 2: has evolved. But there's still some legacies in there. Do

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Speaker 2: you still need to submit your monthly salary statements?

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Speaker 2: Can you do it through the centralized mind force system?

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Speaker 2: So the customer experience is the very critical ones are

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Speaker 2: deposits in these digital banks protected and insured because right now,

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Speaker 2: deposits in your traditional bank are insured up to $75,000.

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Speaker 2: Is that right?

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Speaker 2: That means if the bank goes under, for whatever reason,

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Speaker 2: you still get $75,000 of your deposit. Yeah, but with

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Speaker 2: these digital banks, is that the same? Yes, it is.

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Speaker 2: So all these banks are under the regime of the S. D. I. C.

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Speaker 2: Singapore deposit insurance scheme

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Speaker 2: for all banks issued license by the M. A. S.

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Speaker 2: You're on the scheme. So you're right, even your digital

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Speaker 2: banks are insured up to 75,000. If it goes belly up,

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Speaker 2: your deposits are protected up to 25,000. But there are

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Speaker 2: obviously some limitations to that if you are losing your

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Speaker 2: money because you have been scammed for example,

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Speaker 2: so, those are not being protected. That's another issue though

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Speaker 2: with digital banks because these are new entities and they're

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Speaker 2: fully online. How safe is it from security breaches and

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Speaker 2: these online scams? I think there are two dimensions to that.

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Speaker 2: The first one is my money safe.

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Speaker 2: The other one is my data safe. Right? So, in

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Speaker 2: terms of the money safe, as we discussed earlier, up

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Speaker 2: to $75,000 of the deposits are being insured at this

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Speaker 2: point in time, the digital banks, they are not at

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Speaker 2: that level yet. So that should be quite all right.

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Speaker 2: The other one is when mes issued the licenses to

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Speaker 2: digital banks as part of the assessment, they will make

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Speaker 2: sure that the licenses have got very strong financial backing

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Speaker 2: that they have a very good

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Speaker 2: business proposal, value proposition and they've got a very good

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Speaker 2: track record And more importantly as part of the issuance

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Speaker 2: of license M. S. Of impose a minimum capital requirement.

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Speaker 2: The question then is is my data safe? You have

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Speaker 2: to adhere to a lot of banking regulations as part

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Speaker 2: of this things like the technology risk management,

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Speaker 2: your cyber resilience, outsourcing, data protection recoveries. All these are

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Speaker 2: all encompassed within the regulations. So for a bank to

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Speaker 2: be launched, you must make sure that you comply with regulations.

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Speaker 2: You mentioned earlier about how customer service is the main

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Speaker 2: draw of these digital banks but how seamless do you

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Speaker 2: think these transactions will be if there's no physical bank

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Speaker 2: branch and there's no physical tellers. Especially those transact.

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Speaker 2: They're a bit more complicated and complex like insurance and

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Speaker 2: credit cards. Let's face it by and large humans are

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Speaker 2: still social beings. We like familiar things so face to

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Speaker 2: face interaction is still very important. Another joke, my daughter

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Speaker 2: was having a gathering with your friends. They have not

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Speaker 2: met for one or two years when they are sitting

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Speaker 2: at the cafeteria

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Speaker 2: across each other on the table. They were all not talking,

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Speaker 2: they're all looking at their phones. Right? So so you're

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Speaker 2: quite curious and say you are together, Why aren't you

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Speaker 2: interacting

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Speaker 2: then she looked at me, we're talking about, we're interacting,

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Speaker 2: we're doing the WhatsApp. They're chatting among themselves in the

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Speaker 2: WhatsApp group? Although they are facing one another.

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Speaker 2: To your point. A lot of us are familiar. We

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Speaker 2: want the social interactions but we never know the evolution

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Speaker 2: of time whether or not you become a bit different.

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Speaker 2: So for those who wants a face to face interaction,

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Speaker 2: the traditional bank still allows that through your fiscal ones.

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Speaker 2: And it's very important during times of stress where it's

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Speaker 2: very complicated products you need to talk to somebody. The

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Speaker 2: challenge then for the digital banks is whether or not

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Speaker 2: you can simplify

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Speaker 2: your products right? And making it very easy for people

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Speaker 2: to assess it to understand it. So if I were

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Speaker 2: to receive different referral codes, what would you tell me

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Speaker 2: about whether I should sign up for a digital bank.

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Speaker 2: If I already have a traditional bank that I go to,

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Speaker 2: nothing is stopping us from signing up for digital bank.

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Speaker 2: It's not just the digital banks.

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Speaker 2: There are so many apps at the health apps, the

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Speaker 2: payment payment apps, e commerce app. We have received a

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Speaker 2: lot of referral codes and we have signed up a

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Speaker 2: lot of it and after we use the voucher, let's

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Speaker 2: be honest, how many times have you gone back to

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Speaker 2: the app?

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Speaker 2: So it's going to be an overwhelming loss of SmS

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Speaker 2: or WhatsApp referrals that you get. Yeah, go ahead utilize it.

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Speaker 2: It helps but eventually goes back to whether or not

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Speaker 2: you felt that this digital bank or the service that

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Speaker 2: they're offering you. Does it cater to you? So you

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Speaker 2: put yourself as the category of the under surf.

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Speaker 2: So if I want to really squeeze the returns of

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Speaker 2: my deposits, if I really want to get the best

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Speaker 2: rebates out of my purchases, my spending, does this offering

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Speaker 2: cater to your needs? If it does eventually, you go

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Speaker 2: back to those apps to the digital banks. If the

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Speaker 2: traditional banks are able to offer this as well, we

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Speaker 2: have as consumers, no complaints.

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Speaker 2: You have more choices. Thank you so much. Thank you.

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Speaker 2: Thank you for having me. Thanks to my guest ken

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Speaker 2: chan and we hope you enjoyed this episode of money,

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Speaker 2: talks the team behind this podcast. This Jacqueline chan, Joanne, chan,

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Speaker 2: daniel lee and Christina robert. We've gotta refresh slate of

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Speaker 2: audio material you can listen to on your commute or

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Speaker 2: your work out, go to the C. N. A. Website

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Speaker 2: or app. Look for the listen button and subscribe to

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Speaker 2: the podcast you like If you have thoughts, ideas or

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Speaker 2: even stories you'd like to share. Please write to us.

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Speaker 2: The details are in our episode notes. Until next time.

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Speaker 2: This is Sarah called