4 Disruptive Trends Singapore’s Banks Are Keeping An Eye On

Digital technologies have been getting more attention amongst incumbents in the financial industry.

Early this month, leaders from Singapore’s three major banks, namely DBS Group Holdings Limited (SGX: D05) Oversea-Chinese Banking Corp Limited (SGX: O39), and United Overseas Bank Ltd (SGX: U11), gathered for a roundtable session organized by The Business Times to discuss digital trends that may have a large impact on the banking sector.

A high level executive from Swiss bank Credit Suisse executive also weighed in. Here are four trends that were discussed.

Traditional banking through new channels

OCBC’s chief executive Samuel Tsien got the ball rolling, talking about the proliferation of smartphones and how it could be a new channel to engage with customers:

“In the banking sector, technology and the widespread use of the Internet and smartphones as a result of data digitalisation have enabled a re-invention of old forms of financing, delivered through new channels.”

Singapore has a mobile penetration rate of 150% and this has enabled the delivery of financial services through new channels such as mobile apps.

Big, big data

Another trend which was brought up was the use of large-scale data analysis to aid banks in credit decisions. DBS’s chief executive Piyush Gupta said:

“I believe that lending and underwriting models that use large-scale data analysis to make more accurate credit decisions will have a significant impact on the banking sector.

I find that this new approach enables lenders to grow their customer base and capture business from competitors, while better servicing their existing borrowers, and has the potential to be a big threat to traditional banking at a fundamental level.”

The success of a bank partly relies on its ability to manage risk. As we have seen in the case of Swiber Holdings Limited (SGX: BGK) and DBS Group, when a customer defaults on its loans, the situation can get messy.

The use of big data analysis might be able to help banks minimise risk.

Can blockchain replace banks?

Tsien also talked about a number of other trends, including the blockchain technology:

“Cutting-edge fintech [financial technology] trends such as the growth in automated investment advisory, the expansion of marketplaces into new verticals and services, advances in wearables and blockchains are just some of the developments which I believe many financial institutions are watching closely.”

The primary concern here is whether blockchain is able to replace financial intermediaries such as banks. I have written more about the blockchain and OCBC’s view on the technology in here.

Robots taking over

As Tsien mentioned above, the emergence of robo-advisors is another trend to watch. Lito Camacho, Singapore country chief for Credit Suisse, added the following comments:

“Relevant for our private banking business, there has certainly been much focus on the rise of what is referred to as “robo-advisors” or other technology players moving into the online wealth management space.”

Camacho believes that the human touch is still important in private banking and digital channels is just one of multiple ways to engage customers.

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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 doesn’t own shares in any companies mentioned.