DBS Group Holdings Ltd Chief Executive Talks About Disruption and Opportunities in e-Payments

Singapore’s Prime Minister, Lee Hsien Loong, highlighted an unusual topic during the National Day Rally, that is, e-payments.

In his speech, PM Lee said that efforts were underway to simplify and integrate electronic payment systems. In line with this, Singapore’s three biggest banks, DBS Group Holdings Ltd (SGX: D05), Oversea-Chinese Banking Corporation Limited (SGX: O39) and United Overseas Bank Ltd (SGX: U11), have partnered with another four banks to launch a digital based peer-to-peer money transfer service.

The service, called “PayNow”, was termed as a war on cash.

Pain points

The PayNow service seeks to alleviate a few customer pain points.

For one, the service provides a wider reach compared to an individual bank’s peer-to-peer transfer service. Previously, when using a mobile device, consumers were only able to transfer funds to others using the other person’s bank account number.

With PayNow, users can link their mobile phone number and transfer funds using phone numbers, instead of bank account numbers. Furthermore, there are also plans to make QR codes available at hawker centres to enable e-payments.

Blurring lines

In a recent earnings briefing, DBS Group chief Piyush Gupta shared his thoughts around the e-payments space where lines are getting blurred:

“You’re also seeing other existing fintech players, [such as] Grab and Garena that want to make their wallet the wallet of choice to make payments.”

However, he remained confident that DBS Group is in a good position:

“So I think it’ll be competitive, but if you have a situation where you have incumbent banks and incumbent financial services players with credible offerings, it’s not easy to overcome the inertia.

For somebody to switch altogether to a new payment form, it’s possible only if the DBSs of the world doesn’t offer them a convenient payment form.”

Gupta also gave some insight into DBS Group’s efforts:

“In Singapore, why I’ve been so focused on making sure we have the most convenient payment type – I’ve been doing it for three years – is just to pre-empt the possibility of somebody coming in and offering a more convenient payment type, which would then create a competitive challenge for us.

We’re the biggest [here in e-payments] – we have 600,000 PayLah customers today and 45% of all PayNow registrants are DBS registrants. We’ve got FastCash where you can go and place your order and pay your FastCash ahead of time. We’re just launching the tie-up of QR codes into taxis. As long as the most convenient way to pay is from your DBS/POSB account, I don’t see why anybody is likely to change.”

The seven banks process around 90% of Singapore’s retail transaction volume. The FAST (fast and secure transfers) money transfer service, which operates via internet banking, had 27 million transactions worth $54 billion in 2016.

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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 United Overseas Bank. Motley Fool Singapore writer Chin Hui Leong does not own shares in any company mentioned.