1 Key Chart that Shows How Singapore’s Banks Are Being Disrupted

Singapore’s banks are facing the threat of digital disruption.

If there is one chart that summarises what and how this disruption is happening, this could be it:

The chart above shows the website of Wells Fargo, a US-based bank. Like any other traditional bank, Wells Fargo provides a range of services like loans, credit cards, insurance, investment products and wealth management. These gamut of services extends to individuals and businesses both small and large.

Unfortunately, as the chart shows, the bundle of services provided is being slowly unbundled. New digital alternatives are emerging for each element.

As an example, Braintree enables businesses to make or receive payments. Braintree’s customers include popular mobile services such as Uber, Airbnb, Dropbox and so on. For each business Braintree provides its services, this is one less service that a traditional bank can provide.

The threat is real, but it is also not lost to Singapore’s banks.

Death or irrelevance?

In an interview by SGX (under its kopi-C series), DBS Group Holdings Ltd (SGX: D05) chief Piyush Gupta made some telling remarks:

“If we don’t respond suitably by digitising our own offerings, by re-imagining the customer’s journey, and leveraging new technology to give them a differentiated experience, we are going to die.”

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

To its credit, DBS Group is taking steps to digitise itself. In April last year, DBS Group launched a “mobile-only” digibank in India. The service aims to make banking services completely paperless, signatureless and branchless. In its fourth-quarter earnings, Gupta said that India’s digibank service has attracted over 800,000 customers in the first nine months after its launch.

Elsewhere, Oversea-Chinese Banking Corporation Limited (SGX: O39) or OCBC for short is also making its own moves. According to a report from The Edge, OCBC said that a staggering 98% of all financial transactions are done through the bank’s digital channels, rather than through one of its bank branches.

It looks like banking as we know it will change dramatically over the next five to ten years. As we move into the future, it is worth observing what changes and how it changes.  

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. The Motley Fool Singapore has recommended shares of Singapore Exchange. Motley Fool Singapore writer Ching Hui Leong doesn't own shares in any companies mentioned.