More competition


OCBC Bank (M) Bhd Datuk Ong Eng Bin for one expects new digital banks to gain traction in terms of market share due to the current market dynamics, even if these are not necessarily OCBC Bank’s target segments.

PETALING JAYA: With fresh digital banking licences dished out in Malaysia recently, there will surely be disruption within the industry, leading to a fight for market share.

Most bankers are aware of this although much has been said about digital banks not being an immediate threat to incumbent local banks.

In the same vein, foreign banks will also have to face increased competition.

OCBC Bank (M) Bhd Datuk Ong Eng Bin for one expects new digital banks to gain traction in terms of market share due to the current market dynamics, even if these are not necessarily OCBC Bank’s target segments.

“The new digital bank players are strong consortiums formed by large corporates with prior experience in financial services in the form of micro lending, e-wallet, micro deposits, micro insurance products or payment services with a large customer base that overlaps into the banking industry, “ Ong told StarBiz.

These players, he said, will bring with them new technologies such as blockchain, artificial intelligence and superior digital banking capabilities, powered by analytics, to facilitate their new offerings, including collaborating with new industry players to ensure the services they offer are seamless end-to-end.

“We will see new ways of accessing credit, banking services and products, which could well mean faster, cheaper and hassle-free solutions that will really challenge incumbent banks,” Ong said.

HSBC Bank Malaysia CEO Omar Siddiq said the bank welcomes the additional competition and choice in the market as it is good for consumers.HSBC Bank Malaysia CEO Omar Siddiq said the bank welcomes the additional competition and choice in the market as it is good for consumers.

He said in order to reduce credit losses and improve profitability, digital banks are likely to also venture into other segments, products and services traditionally associated with incumbent banks including servicing the youth and micro, small and medium enterprises (MSME) segments.

“This may even trigger the introduction of affordable solutions that could force the industry to react and thus innovate.

“The most obvious disruption would be to the cross-border payment space where new entrants have brought along cheaper cost of transfer once dominated by SWIFT,” Ong added.

That said, Ong said OCBC will continue to pour money into the digital sphere.

“As a foreign bank, we will continue to invest in our own digital banking capabilities to give us that extended reach to the market without the presence of a large branch network, which we have never had in the first place,” he said.

“Together with our physical branch network and our digital capabilities, we are able to present a compelling and complementary banking proposition to our customers as they can choose the best channel for them to interact with our bank.”

HSBC Bank Malaysia CEO Omar Siddiq said the bank welcomes the additional competition and choice in the market as it is good for consumers.

“Our main digital platforms, products and services stand up against the competition, with more and more customers switching to use them.

“We are investing billions of dollars every year in digitising the bank, so we can keep innovating for customers to make banking simpler and smarter,” he told StarBiz.

Omar, who was appointed to the top job at the bank in March this year, said HSBC “is already a digital bank”.

In 2021, more than 90% of HSBC’s corporate transactions in Malaysia were executed via digital channels and the bank is expecting more than 90% of its retail transactions in the country to be done through digital channels by the end of 2022, he noted.

“We have all the benefits of a digital banking licence plus the capability to deliver against the entire spectrum of our customers’ needs across the channels of their choice.”

UOB Malaysia CEO Ng Wei Wei said digital banks are set up to focus on segments that do not compete directly with commercial banks.

“Hence, we do not foresee much overlap in terms of target markets.

UOB Malaysia CEO Ng Wei Wei said digital banks are set up to focus on segments that do not compete directly with commercial banks.UOB Malaysia CEO Ng Wei Wei said digital banks are set up to focus on segments that do not compete directly with commercial banks.

“In our view, the presence of digital banks will complement the role of conventional banks by helping to address market gaps, namely the underserved and the unserved customer market segments, mostly individuals and SMEs to improve financial inclusion in the country,” she told StarBiz.

Ng said that in the past few years, UOB Malaysia has been investing in technology and digitalisation to diversify its service delivery channels and to improve customers’ experience.

“In the next two years, we will continue to intensify our digital transformation to enhance our ability to serve our customers digitally.”

Ng said the lender will continue to upgrade its digital banking services to bring more “on-the-go convenience” to its customers, while its branches are progressively being transformed to focus on wealth advisory and to provide full services to its SME customers.

Standard Chartered Malaysia managing director and head of consumer, private and business banking Sammeer said the new digital banks will promote financial inclusion and unlock previously untapped underserved and unserved segments.

“Now that the announcement of new digital banking licence holders has been made official, we anticipate that most activities in the next 12 to 18 months will be happening in the background as the new licence holders start laying and building on the groundwork,” he told StarBiz.

He said on its part, the lender is doubling down on digital “while retaining the human touch, so that our clients can receive personalised advice and manage their wealth how and when they want it.

“Technology is a key enabler of our strategy. Our medium-term ambition is to have 50% of our income from digital initiatives, innovation and transformation of core banking platforms.

“To that end, we have globally invested over US$1bil (RM4.38bil) in our infrastructure and technology – driving efficiencies, increasing automation, introducing digital platforms, and strengthening how we combat financial crime.

“The goal is to become a digital bank with a strong human touch serving the mass affluent and to be the go-to bank for SMEs and corporates,” he added.

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