Can Singapore Banks Avoid Being Eaten by Software?

Software is eating the world. Famed venture capitalist Marc Andreessen elaborates on this:

“More and more major businesses and industries are being run on software and delivered as online services—from movies to agriculture to national defense. Many of the winners are Silicon Valley-style entrepreneurial technology companies that are invading and overturning established industry structures.”

Thing is, Singapore’s banks may be next on software’s menu.

Avoiding the dinner table

It’s not a foregone conclusion that the banks in Singapore, like DBS Group Holdings Ltd (SGX: D05) or Oversea-Chinese Banking Corp Limited (SGX: O39), will roll over easily.

The incumbents can still learn a few new tricks.

DBS Group, for instance, has 1 million customers using its mBanking mobile app for tasks like transferring money and bill payments. A quick check on Apple Inc’s App Store reveals 13 different apps being offered by Singapore’s largest bank. The mobile apps range from DBS Lifestyle (a rewards redemption app) to DBS Paylah! (a mobile wallet app).

DBS Group’s chief executive Piyush Gupta is also looking beyond just bringing banking services online and is looking at the possibilities of big data:

“(The system) goes through reams of unstructured data … to figure out intelligently what kind of advice to give customers … There is a customised set of suggestions for each customer,”

These efforts may prove to be a competitive advantage in the future and pay off down the road.

Meanwhile, OCBC has five mobile apps listed on the same App store. Aditya Gupta, the bank’s e-business head, said that transactions on mobile banking have increased by four times in two years prior to 2015.

OCBC has also been using a bank account opening app to attract new customers. In the seven months between April and October last year, 15% of sign-ups for the bank’s new 360 Account had originated from its mobile app.

It’s not all a bed of roses, though.

Piyush Gupta is wary of the cybersecurity threat in the horizon:

“We want to digitise everything, but in this business, we are guardians of people’s money. We need to be very careful about cybersecurity as hackers are a big, big issue”

With the rise of online banking, Piyush Gupta recognises that cybersecurity is a threat that should not be taken lightly. Customer trust is key for banks, and DBS Group – or any other bank for the matter – can ill-afford to falter here.

Foolish summary

Piyush Gupta has also previously shared his thoughts about managing technology change:

“If we don’t get this right, we can be completely irrelevant to our clients in the next five to seven years”

The stakes are high here for Singapore’s banks and the onus is on them to address what Piyush Gupta thinks is a “clear and present” danger before it sinks its teeth in.

In the meantime, if you'd like more investing tips and tricks and to keep up to date on the latest financial and stock market news, sign up now for a FREE subscription to The Motley Fool's weekly investing newsletter, Take Stock SingaporeIt will teach you how you can grow your wealth in the years ahead.

Also, like us on Facebook to follow our latest hot articles. The Motley Fool's purpose is to help the world invest, better.

The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Chin Hui Leong owns shares in Apple Inc.