Asian Banking & Finance (October - December 2018)

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It’s the Asian Banking & Finance Awards issue and it’s packed with exclusive features to the brim. For our cover story, the biggest Asian Banking & Finance Awards so far recognised almost 155 outstanding banks from 40 countries for their extraordinary retail banking, wholesale banking, and corporate and investment banking initiatives. The event gathered over 330 banking and insurance executives, beating last year’s record. Meet all the winners on page 42.

Tim Charlton Elisha Yamzon Elizabeth Indoy

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This edition is also filled with exclusive interviews with top banking executives from Maybank Singapore, YES BANK, Bank of China Singapore, Krungsri, Union Bancaire Privée, HDFC Bank, and Simon Kucher & Partners.

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Our sector report on Islamic Banking delved into how Islamic banks found a match in blockchain technology, whilst our Forex report discussed Singapore’s Project Ubin and upcoming eFX engine. Our country report, meanwhile, looked closely into Hong Kong’s big steps toward a Smart Banking era.

We also bring you stories on several trends taking over the banking industry today such as virtual banks, robo-advisors, machine learning, and e-payments.

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In this issue, you will also find our Vendor View article tackling how banks can prevent cyber attacks as that of Singapore’s SingHealth. We also present you with Case Studies on YES BANK’s blockchain service on supply chain financing and Taishin Bank’s leading digital bank Richart.

Start flipping the pages and enjoy our year-ender edition.

Tim Charlton

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MICA (P) 249/07/2011 No. 67

ASIAN BANKING AND FINANCE | December 2018 1

CONTENTS

42

28

COUNTRY REPORT Hong Kong makes huge headway in realising smart banking ambitions

30

vendor view Next level security measures Asian banks should intensify amidst cyber attacks

Cover story ABF Awards 2018 recognises record number of winners

SECTOR REPORTS

INTERVIEWS

FIRST 08 How new law can boost

18 How is Bank of China Singapore

32 How compatible are blockchain and

applying China’s system in

09 Banks battle telcos in payments

Singapore’s cashless push?

34 Singapore leads innovation in

10 Singapore banks rev up

20 Krungsri’s Nathapol Luepromchai

Asia’s forex sector with

on making sustainable returns

distributed ledger and eFX

12 Are branches still relevant as banks

from mortgage loans

22 Union Bancaire Privée’s Eric Morin

Korea’s web-only banks

robo-advisory push migrate their services online?

INTERVIEWS 14 Maybank to deepen presence

in Singapore with new locally

incorporated subsidiary

16 Rana Kapoor reveals how

innovation became YES BANK’s

major growth engine

Published quarterly on the second week of the month by Charlton Media Group Pte Ltd 101 Cecil St. #17-09 Tong Eng Building 2 ASIAN BANKING AND FINANCE | December 2018 Singapore 069533

bares the bank’s fierce ambition to

dominate in Asia

24 How a ‘business first innovation’

model boosted HDFC Bank’s

digital transformation

Asia’s growing Islamic banking sector?

CASE STUDIES 36 How Taishin Bank’s Richart

captivated Taiwan’s youth

38 YES BANK unlocks blockchain

to champion vendor financing

SPECIAL REPORT

26 Machine learning in APAC banks:

40 Are Hong Kong lenders under threat

What are the best practices and

as virtual banks zero in

who’s doing it right?

on their market?

For the latest banking news from Asia visit the website

www.asianbankingandfinance.net

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cards & payments

retail banking

retail banking

Singapore rolls out world’s first unified payment QR code

India eyes merger of 3 state banks to create country’s third largest lender

Google ties up with Indian banks to launch digital loan solutions

Singapore has officially launched a scheme combining multiple e-payment solutions into one with the roll-out of the Singapore Quick Response Code (SGQR), according to a government release. SGQR will be adopted by 27 payment schemes including PayNow, NETS, GrabPay, Liquid Pay and Singtel DASH. The government is still working to replace existing QR codes with a single SGQR over the next six months.

India’s Finance Ministry has announced the merger of three stateran banks as part of its dedicated effort to bring the debt-ridden sector back on its feet. Vijaya Bank, Dena Bank, and Bank of Baroda (BOB) will be consolidated into an entity that will be the country’s third largest lender with a market share of around 6.8% by loans. The motivation behind the banks chosen for the merger was to put up one weak bank for consolidation.

Google is forging partnerships with four Indian banks namely Federal Bank, HDFC Bank, ICICI Bank and Kotak Mahindra Bank with the goal of bringing quick and pre-approved loans to the growing userbase of its app. Google earlier launched its payment app Tez which it then rebranded as Google Pay last year as it aims to capitalise on the nation’s digital payments space which is expected to grow five-fold from $200b to $1t by 2023.

The world’s fintech superstars are gathering in Singapore

A

fter two successful back-to-back editions, the Monetary Authority of Singapore (MAS) is hosting the third run of the Singapore FinTech Festival from November 12 to 16 with the aim of providing a platform for connection, collaboration and cocreation of the most innovative technological breakthroughs reshaping the delivery of financial services in Singapore and beyond.

This year’s Festival will see the addition of ASEAN FinTech showcase which will highlight innovative digital solutions from ASEAN countries. The first ever Artificial Intelligence in Finance Summit will be held to explore emerging AI solutions in trading, investment management, customer service, and risk management.

The FinTech Investor Summit has also been enhanced to include a FinTech Deal Day which will make available customised research reports on participating fintech companies along with a matchmaking session for startups and potential investors called MATCH (Meet ASEAN’s Talents

and Champions). The Global FinTech Hackcelerator is inviting up to 20 mid to mature startups specialising in financial inclusion, insurtech, regtech, and general.

The award categories of the FinTech Awards have also been revised to allow for greater level of participation from ASEAN countries along with other exciting segments during the three-day programme.

“The Singapore FinTech Festival has grown in scale and scope over the past two editions, and has contributed to the growth of the FinTech ecosystem in Singapore and the region,” said Sopnendu Mohanty, chief fintech officer, MAS. “We look forward to welcoming FinTech players and stakeholders from all over the world to Singapore, and to work with them to create new value and promote financial inclusion through innovation, digitalisation, and connectivity.”

The Singapore FinTech Festival is organised by MAS in partnership with The Association of Banks in Singapore and in collaboration with SingEx Holdings.

Last year, the Festival gathered more than

30,000 participants from over 100 countries composed of leading FinTech players, technopreneurs, policy makers, financial industry leaders, investors including private equity players, and venture capitalists, and academics.

Asian banks leading innovation will meet at the Retail Banking Asia Summit in Singapore on 30th and 31st of October. For the first time, discover the most innovative banks in Asia at the Efma Awards Ceremony.

Efma thanks its members that are leading innovation: Alliance Bank, ASB Bank, AYA Bank, Bangkok Bank, Bank BRI, Bank Central Asia, CIMB Group, DBS Bank, GSB Bank, Kasikornbank , KTB Bank, Maybank, Mizuho Financial Group, MUFJ Bank, PNB, Robinsons Bank, Siam Commercial Bank, Standard Chartered Bank, Union Bank of Philippines, XacBank Meet them at RBAS – Shangri La Singapore and DBS Asia X. Registration: www.efma.com/rbas18

FIRST into their balance sheets.

“There are no banks in the world that have generated net income in the first year of business launch as they had to invest a chunk of money to set up IT infra and to hire staff.

At the same time, it takes time to see sizable loan asset that generate interest incomes,” said Phil Lee, general head of public relations at kakaobank.

Business banking’s key growth areas

Asian Banking & Finance caught up with experts from KPMG Singapore and EY Asia-Pacific to talk about major growth opportunities in corporate banking for Asian banks in the next 12 months.

“As the banks grow, they will look to broaden their target markets and enlarge customer segments.

One avenue of doing so is to work with a range of ecosystem partners to share know-how and expertise.

These banks are also exploring joint business opportunities by leveraging on one another’s core strengths.

China’s Belt and Road Initiative is one such opportunity that crosses geographical borders. To capture these business opportunities, Asian banks have collaborated to leverage on each other’s networks and platforms to help companies build and expand across countries and to provide clients tailored banking solutions.”

Kok Keong Leong Head of Financial Services KPMG Singapore “We see opportunities for corporate banks in Asia, particularly within the emerging markets. Trade finance and cash management growth are supported by the region’s burgeoning economies, the Belt and Road Initiative, growing maturity of intra-regional trade and increasing e-commerce flows. Commercial lending opportunities also remain sizable, as large corporates continue to seek loans and lines of credit from tier-one corporate banks.

In fact, given the complexity of execution and the large loan values involved, commercial lending— particularly complex and structured loans—is one of the corporate banking segments least at risk of disintermediation from FinTechs and other emerging lenders.”

Andrew Gilder Banking and Capital Markets Leader, EY Asia-Pacific 8 ASIAN BANKING AND FINANCE | December 2018

kakaobank had to invest on IT infra and staff hiring

How new law can boost Korea’s web-only banks

A KOREA

fter an explosive debut in mid-2017 with a userbase ballooning to 300,000 in the short span of 24 hours, South Korea’s web-only lender kakaobank booked a cumulative net loss of $59.2m (KRW66.8b) by end-September. In the same thread, digital rival K-bank was hit by a similar loss when it bled $35.14m in the first half of the year after stepping up spending for IT infrastructure needs.

Given the nascent stage of the internet-only banking business in the country, the losses are expected to continue in the near term as the banks’ sales volume fail to reach break-even point, according to Jun Sung Ki, financial services leader at Deloitte Korea.

In fact, to achieve profitability this early in the business would be unheard of as any beginning corporate would still have to invest heavily in infrastructure and manpower for its operations.

Japanese web-only banks took around five years before they were able to start seeing cash flow back

Current law limiting voting stakes of nonbank corporates to just 4% has been a constraint to the capital raising and therefore the growth of digital banks in Korea.

Saving stakes As they struggle to plug losses, Korea’s digital banking upstarts may receive a boost from a revised bill submitted to the National Assembly in August allowing tech firms to increase their stake in the country’s web-only banks. The bill effectively makes it easier for the two players to raise capital for their asset and loan growth requirements after their strong launches quickly drained their supply.

“This would be positive and will support growth of digital banks.

Current law limiting voting stakes of non-bank corporates to just 4% has been a constraint to the capital raising and therefore the growth of digital banks in Korea,” said Sophia Lee, senior credit officer, financial institutions group at Moody’s.

Greenlighting the bill may entail that the two players can achieve a scale enabling them to pose a formidable threat to the country’s old-guard banks. “The proposed legislation to allow more corporate parent ownership could help internetonly banks achieve stronger business growth, supported by timely capital injections from the tech parent companies. These banks may be able to focus on introducing more innovative banking services and targeting new customer segments,” S&P global ratings banking analyst Hong Taik Chung commented.

kakaobank’s performance

Source: kakaobank

FIRST Telco operator Globe is poised to be the market leader in the Philippines’ payment space, whilst Indonesia’s Telkomsel capitalises on the sluggish response of Indonesian banks.

The winners and losers in Asia’s payments scene

Banks battle telcos in payments asia

T

elcos and independent platforms are steadily posing a major challenge to banks in Asia as they barge their way into the payments space. According to a shocking report from Morgan Stanley, banks across Asia could easily lose around $13.1b to $15.5b in value to these upstarts by 2022.

Morgan Stanley warns that payments is a trojan horse, allowing rival upstarts to get into deposits and steal away more value. Telcos could gain up to $2.9b and independents

$9.3b at the expense of laggard lenders by 2022. Although banks may be able to offset some of the bleeding with digitisation initiatives, not all of them could be winners.

Singapore banks are coming out on top as they reap the rewards of their proactive investments in digital payment technologies with the banks best poised being DBS and OCBC. They are joined by lenders in Thailand and Malaysia where there is less risk of disruption from non-bank players. “Our view is that

MAS, Bank of Thailand, and Bank Negara Malaysia have quickly moved to create a level playing field for payments,” the report noted.

The same cannot be said for Indonesia’s Bank Mandiri and Bank Rakyat Indonesia, and the Philippines’ BDO as they rank amongst the biggest losers from the growing role of non-bank payment players for they still have to make significant headway with their digitisation efforts.

Battling the banks in the Philippines is telco operator Globe who is widely poised to be the market leader in the payment space as it takes advantage of the country’s less developed financial infrastructure and large distribution network to cement its dominance.

Meanwhile, Indonesia’s Telkomsel and independents like ride hailing platform Go-Jek’s Go-Pay are another key beneficiary to this scenario capitalising on the sluggish response of Indonesian banks.

After including cost efficiencies, banks are likely to create value in Singapore and Malaysia

Source: Morgan Stanley research estimates

The Chartist: Indian banks to come out stronger as NPL recognition improves After the Reserve Bank of India withdrew its forbearance on restructured loans in February, it led to a sharp rise in reported non-performing loans. S&P Global Ratings estimated that Indian banks’ recognised NPLs now cover a substantial portion of weak loans of the system, and expects the weakened banking system to become stronger over the next couple of years.

S&P noted NPLs surged to 11.6% as of the end of March, and believes that the central bank’s strengthening norms and more stringent timelines will force banks to become more transparent about the level of weak assets.

“This more realistic recognition, coupled with rebounding corporate profits, and quicker resolution of non-performing assets under the new bankruptcy law, will help banks gradually recover from a protracted bad-debt cycle.”

NPLs recognition is improving for Indian banks

Sources: Reserve Bank of India, Standard & Poor’s Financial Services

Stressed assets are highest at India’s public sector banks

Sources: Banks’ financial reports, Standard & Poor’s Financial Services

ASIAN BANKING AND FINANCE | December 2018 9

FIRST Singapore’s PayNow to go cross-border

Singapore banks rev up roboadvisory push

W

Which area will develop the fastest through technology innovations in the next 12 months?

singapore

PayNow

Ong-Ang Ai Boon, director of the Association of Banks in Singapore (ABS), tells Asian Banking & Finance about PayNow Corporate, Singapore’s funds transfer service for businesses and corporates, and what the future holds for the service.

How does PayNow Corporate ensure convenience and security?

The end-to-end process of a PayNow transaction is secure and adopts the same security standards established by Singapore’s banking industry for funds transfer. The proxies (UEN, Mobile Number, and NRIC) that can be used in PayNow are information collected from the banks when the account is being set up. This means that if a delinquent attempts to use someone else’s UEN as a proxy for his/her own bank account, it will be rejected.

The verification page also helps to create a second layer check and provide assurance to customers that the funds are being sent to the right party. Notifications are also sent from the bank to both the sender and receiver that the funds have been successfully transferred and received.

What’s next for PayNow? PayNow is an alternative to cash and cheques. Customers can pay conveniently and businesses become more efficient with the reduction of cash and cheque handling. Our focus is to continuously drive adoption and enhance customers’ experience, in line with Singapore’s goal of being a cheque-free society by 2025.

With PayNow as the underlying infrastructure, we can look into digitising the Direct Debit Authorisation (DDA) process. This will further reduce time taken associated with the application of DDA. Looking further ahead, we will continue to explore the possibility of making PayNow cross-border.

We look towards providing a safer, cheaper, and more convenient way of transferring and receiving funds from overseas counterparts.

10 ASIAN BANKING AND FINANCE | December 2018

hen OCBC Bank launched its robo-investment service called OCBC RoboInvest in August, it sought to target younger investors by offering a relatively accessible initial investment of $3,500 and presenting a variety of investment “themes” that makes selecting an investment portfolio much simpler.

“Customers can choose from 28 diverse portfolios of equities and exchange traded funds across six markets, constructed based on themes like technology, real estate investment trusts, fast-moving-consumer-goods companies, property, healthcare and food & beverage,” OCBC said.

The bank’s foray into the roboinvestment arena adds to the momentum already driven by existing players like StashAway, a Singaporeheadquartered online investment management company and the first robo-advisor to receive a full capital markets services license from Monetary Authority of Singapore (MAS).

CGS-CIMB Securities also launched a robo-advisory platform called CGS-CIMB eWealth in late August.

Like other robo-advisory platforms, CGS-CIMB eWealth uses algorithms to

Source: EY

The availability of digital advisory services will widen investor choice to low-cost investment service.

help the regular rebalancing of clients’ investment portfolios. It also requires an initial minimum investment of $3,500, and offers thematic investing options such as “US Refining” for investors that want to invest in companies that will likely benefit from rising oil prices and “S-REITs” for investors that want to own a variety of individually listed REITs. In a sign that more providers are looking to enter the space, MAS earlier said that it has received “indications of interest” from new entities seeking to offer digital advisory services. “The availability of digital advisory services will widen investor choice to low-cost investment advice,” MAS declared.

Still, concerns around reliance in technology and lack of human element pose a major risk to banks adopting this technology. “Humans have the emotional response and can adjust to major Black Swan events, whereas algorithmic programmed systems will only work within the parameters of the criteria/instructions provided,” noted Oriano Lizza, sales trader, Premium Client Management (SG).

Japan’s megabanks embrace the robot trend to cut costs japan

Mizuho Bank’s humanoid bot

Japan’s megabanks are stepping up the implementation of robotic process automation (RPA) systems in an effort to streamline banking operations and slash operational costs against the crippling ultra-low interest rate environment squeezing profitability from lending.

Launched in 2017, Sumitomo Mitsui Financial Group’s RPA automatically collects client investment and asset data in the morning and send that information to the banker in charge of the client’s file. SMFG is aiming to slash workloads equivalent

to the work of 4,000 employees over the next three years using its RPA system.

MUFG Bank hopped in on the RPA trend earlier than its peers after introducing the tech to its banking system in 2014. The bank aims to apply RPA to around 2,000 tasks in the six years beginning from fiscal 2018.

Similarly, Mizuho Financial Group is eyeing the use of RPA over 100 tasks with the goal of saving 300,000 work hours annually. Mizuho Bank is already using RPA to open investment trusts along with other tasks that used to take human employees four to five minutes to a few seconds.

The ultra-low interest rate environment has been hammering Japanese banks hard as they double down on structural overhauls by trimming their branch and ATM networks in a bid to save costs. Moody’s estimates that the reforms from the three megabanks alone will result in a 32,000 headcount reduction over the next few years.

co-published article

Optimising workflows with SmartStream’s next generation artificial intelligence

It introduces a powerful new feature as digitisation and corporate actions gain more prominence in Asia.

Taylor also noted that TLM View is one of many new tools that are becoming popular amongst clients determined to pursue an effective digitisation strategy.

“By looking at that historic information and then applying maybe machine learning, deep learning, and what some people call artificial intelligence, they can streamline that process going forward to give them better insights,” he said.

Mark Taylor, regional director for Asia Pacific, SmartStream Technologies

W

hen Hong Kong announced its plan to issue virtual bank licences, applications ranging from global banks to financial technology firms and telecommunications giants illustrated the growing competition incumbents are facing.

This has put on more pressure on incumbent banks to accelerate their digitisation efforts or risk falling by the wayside, noted Mark Taylor, regional director for Asia Pacific at SmartStream Technologies.

Taylor said that amidst rising competition and greater regulatory requirements, digitisation is playing a much larger role on how banks operate in Asia, and has convinced most financial institutions to move away from a very structured, waterfall approach to pushing out new products and services. Instead, many are embracing an agile approach.

In Australia, where there is an increasingly tighter regulatory environment, digitisation has gained more traction due to the cost benefits it presents. “Therefore digitising, reducing costs on manual effort and various processing, has forced banks to actually revisit to see how much they can automate moving forward,” he said.

A seamless feature To help clients with their digitisation push, SmartStream introduced the next phase of its Innovation Lab that specialises in optimising workflows with the use

of Artificial Intelligence (AI), Machine Learning (ML), and blockchain technologies in reconciliations, cash management, and fees and expense management. It also rolled out a new feature called TLM View which enables its clients to do the agile process themselves. Through TLM View, a financial institution obtains a single view on analytical information, deeper insights on their transactional data, and on issues that are still occurring and how to rectify those going forward.

Users get access to flexible dashboards and fully customisable settings in one single interface, and no longer have to heavily rely on IT support to access a full range of realtime and historical data in the reconciliation repository. This assists users to identify trends and exception patterns to further reduce manual intervention.

“TLM View enables business users to become truly independent. A full range of analytical features are available at both design and run-time, allowing the user to ‘play’ with data to better understand trends and metrics,” said Taylor. “We have customers that have been using our solutions, some with a variety of solutions for 30 years. There is a lot of transactional data that they already have.”

Corporate actions Aside from the emerging digital banking trend, the upswing in corporate actions in Asia has also driven the shift towards a digitisation-slash-automation approach amongst financial institutions since expanding staff numbers has become far from viable. “Because they need to do things quicker, faster, rather than the traditional deployments, they are actually utilising SmartStream, where we work with our cloud partners to actually deliver these types of solutions in weeks and not months,” Taylor said.

SmartStream’s TLM® Corporate Actions service offers a systematic process that offsets operational risk and automates corporate action processes without the need to add staff and without compromising critical risk events. Taylor added that more of SmartStream’s existing clients are reporting higher requirements and volumes of corporate actions, which he reckoned was underpinned by market consolidation and greater interest in the region by buy-side firms such as hedge funds.

The heated competition in the wealth management space in Asia Pacific has also likely driven up some of these requirements. “I think people are looking to differentiate, therefore they need to provide a better service to their customers and do this quickly, but make it standardised and commoditised that they do not have to deploy tens or hundreds of people to facilitate their clients’ requests,” Taylor noted.

“A full range of analytical features are available at both design and run-time, allowing the user to ‘play’ with data.”

ASIAN BANKING AND FINANCE | December 2018 11

FIRST

Are branches still relevant as banks migrate their services online?

Impact of smart branches

singapore

W

ith the use of mobile banking in Singapore easily overtaking physical branch interactions by 15% in the past year, there is some question whether doing financial transaction at branches still remains relevant for a population that has gotten used to living their life on the screen. Nearly eight in 10 Singaporeans are considering opening an account with branchless banks, according to a survey by McKinsey & Company. Of this number, more than a third (35%) are willing to transfer their assets into a digital wallet.

Singapore’s strong preference for doing much of their retail banking services via mobile can be largely attributed to the banks’ efforts to digitise their services through technologies like big data, biometric, and AI. In recent months, DBS unveiled the POSB digibank Virtual Assistant chatbot, OCBC rolled out an algorithm-based robo-advisory service for its wealth management arm, whilst UOB launched contactless ATMs. “Local Singapore banks have done well to implement tremendous improvements in terms of digital channels over the last few years. They have taken advantage of a disruptive environment composed of fintechs, non-traditional competitors,

and have excelled to deliver innovative functionalities,” said Kok Yong Ho, Financial Services Industry Leader at Deloitte SEA. It helps that regulation in the lion city remains more than progressive in terms of risk management, Ho noted. “In Singapore, the role played by and the support given by our government as well as bodies such as the Monetary Authority of Singapore and the Association of Banks in Singapore to the banks is a clear strength. Strategies and blue prints have been laid out years in advance and the banking industry is provided with clear direction in the digital banking space.”

Evolution or extinction?

However, the ongoing migration of financial services to mobile begs the question whether branch banking still remains relevant in Singapore as lenders could easily save up on rent and manpower costs by trimming down on their bloated branch network.

“Why even have branches and pay rent and staff costs to service the branches when banking can be carried out online or on mobile devices?,” according to Choon Fah Ong, CEO of Edmund Tie & Company.

“With the convenience of mobile banking anytime, anywhere, customers are moving

Source: McKinsey & Company

towards mobile banking. So banks adapt to the trend and save costs at the same time, making them more nimble and cost efficient.”

According to Huttons Asia, banks could save around $10,000 to $70,000 monthly, the going rent for a typical bank branch. Ong, however, is of the belief that the trend will be much more felt in the property market in the long term. “The reduction in banking space is part of the global trend affecting the way we live, work, and play—enabled by technology.

Overall, there will be lower demand for office space as technology enables us to work anywhere, anytime, and not just from offices.”

Deloitte’s Ho suggested that the migration of banking services to online is more an evolution than an extinction of banking as we know it. “Whilst telephone and online banking have caused customers to migrate from the bank branch to new channels, the traditional banking business model arguably remains broadly unchanged. Retail banking has faced a number of disruptive threats in the past, but each time the traditional banks have adapted and grown stronger,” he said.

PRODUCT WATCH

Instant digital loan approval with RHB Easy Malaysian lender RHB Banking Group considered the next big convenience it would be offering its clients, and it zeroed in on the hassle that comes with physically going to the bank in order to finalise a loan. This prompted the bank to partner with financial comparison website iMoney to develop RHB Easy, which enables clients to access digital loan applications through the latter’s platform.

“This digital platform enables consumers to apply for their personal loan at any time of the day and on any device, and obtain the results for eligibility the next day via short messaging system, or SMS,” said Nazri Othman, acting head for group retail banking at RHB. “Before this, customers were required to make a visit to the bank branch to complete the application and obtain the results of eligibility.”

Othman added that the digital collaboration, which also involves credit reporting agency RAMCI, has helped lower the application turnaround time and made the process “simple, fast, and seamless.” Currently, only personal loan applications are processed, but 12 ASIAN BANKING AND FINANCE | December 2018

Othman said the bank will be monitoring and reviewing the channel’s performance, and was open to extending this feature to other banking products and services in the future.

As a complementary service to the digital loan application, RHB’s partnership with iMoney also opens up the fintech’s CreditScore for the bank’s clients, enabling them to receive a summary of their financial standing as RHB & iMoney executives during the launch well as personalised advice on how to boost their credit scores. Nearly 10,000 users have already requested for and received their free CreditScore assessments, according to reports.

This latest move is part of a broader digital push at RHB, as it also launches a new mobile application called RHB REFLEX that provides cash flow management services, from payments to payroll management, to its 80,000 business clients. The mobile app lets clients access their account information “anywhere, anytime” with a 25% yoy increase of new clients for the RHB REFLEX platform amidst a high demand for a more secure and RHB Easy is a personal loan with low repayments user-friendly cash management system.

thought leadership article

NSD leads blockchain implementation in Russia With the perfect regulations in place, NSD will soon usher a new asset class for the country’s investors. called digital transformation: we analyse new technology emerging in the market, assess its potential impact on us in terms of both opportunities and threats, and decide on our further steps,” Duvanov said.

“The financial sector today is a cyberspace, with processes transitioning online, and there is no doubt that the trend will continue. Some companies would be able to adapt and add value to clients, whilst others will have to leave,” he added.

Artem Duvanov, director of innovations, National Settlement Depository

T

he first in the world to roll out an e-voting system prototype for bondholders, Russia’s National Settlement Depository (NSD) continues to lead the sector as it embarks on new projects to implement blockchain technology. NSD’s e-voting system prototype involves data interchange through the chain of nominee holders between the issuer and the owner of securities, back and forth. NSD has the task to maintain that voting ledger and ensure the delivery of voting instructions and vote counting.

Artem Duvanov, director of innovations, NSD, said that they recognise how fintech will inevitably change the business model of many companies, whether that would be retail, banking, or infrastructure.

Across the globe, trends include regulator initiatives in market data collection and analysis, the use of artificial intelligence and blockchain, and bringing together various platforms to come up with a single data stream for market analysis and launch of new products for clients.

“We at NSD are actively involved in so-

Breakthrough technology Nonetheless, despite the growth and emergence of new technologies such as big data and artificial intelligence, the narrow nature of NSD’s business has not given it much freedom to employ these technologies.

Duvanov said that they simply do not have any tasks where those technologies could be efficiently leveraged. However, with the rise of blockchain, NSD was able to find the right technology for them, one that can break new grounds in Russia’s financial sector.

According to the director of innovations, blockchain’s use in the disruption of technology within centralised systems makes it apt for NSD, which is highly-based on such a system. As blockchain continues to evolve, the financial sector sees how many opportunities can be created and tapped to the maximum extent possible.

Duvanov said that at present, they have two business cases for NSD and blockchain: shareholder voting and commercial papers. “In 2017, NSD presented a settlement platform for the issuance of commercial papers by a major mobile network operator. As part of the project, the challenges of ensuring confidentiality of data regarding securities balances and ensuring compliance with specific requirements of Russian laws were successfully solved,” Duvanov noted.

Going into 2018, NSD partnered with Sberbank CIB, the corporate investment banking arm of Sberbank and announced their intention to jointly test the initial

coin offering (ICO) blockchain-based technology through the Bank of Russia’s regulatory sandbox.

According to Duvanov, testing the pilot project through the regulatory sandbox will allow them to assess the specifics of such transactions, minimise risks, and gain insight from the Bank of Russia in the improvement of transaction mechanisms.

Development process To further develop and implement the technology, Duvanov said that it is important to have the right regulatory environment in place. He said that NSD believes it is crucial to have a common regulatory framework for distributed ledger technology across sectors.

As a start, NSD established the CSD Working Group on distributed ledger technology (DLT) to work on requirements and standards as well as shape best practices within the network.

“We are moving step by step, building expertise and demonstrating to the market the long-term benefits of the new technology,” said Duvanov.

“Our goal is to scale up the technology for various financial transactions and processes. One of the priorities is to reduce the cost of transactions for all players through greater volumes of transactions and involvement of a wide range of issuers and investors.”

Going forward, NSD will continue to actively collaborate with market leaders, especially in building a settlement infrastructure for digital assets, an essential prerequisite for institutional investors to enter the market and ensure its dynamic development and capitalisation growth.

Duvanov said that ultimately, their goal is to lay down a foundation for the development of Russia’s digital economy and ensure the emergence of a new asset class for investors, as well as ecosystems for ICOs and digital assets trading in the secondary market.

“NSD was able to find the right technology for them, one that can break new grounds in Russia’s financial sector.”

ASIAN BANKING AND FINANCE | DECEMBER 2018 13

We are focussed on creating value through maintaining sound risk management practices, building a diversified portfolio, improving business efficiency, and enhancing digital capabilities to better serve our customers.

Dr John Lee Country CEO & Chief Executive Officer Maybank Singapore 14 ASIAN BANKING AND FINANCE | December 2018

INTERVIEW

Maybank to deepen presence in Singapore with new locally incorporated subsidiary Maybank Singapore Limited will house its private wealth, retail SME, retail banking, and commercial banking units.

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r John Lee, the country CEO and chief executive officer of Maybank Singapore, is responsible for the overall operations and growth of the bank in Singapore, which is one of Maybank Group’s three home markets. In this exclusive interview with Asian Banking & Finance, Dr Lee talks about the bank’s achievements in 2018, the significant transformation it will undergo, and its plans to strengthen its position in Singapore.

What were the bank’s wins in 2018?

For 2018, we wanted to focus on innovation, effective risk management, and greater sense of purpose.

In the wealth management space, our Maybank Private is celebrating its fifth year of establishment. Innovation was our key differentiator in these five years. In this regard, Maybank Singapore clinched a number of recognitions for its initiative of providing convenient cross-border financing solutions to Maybank Private and Maybank Premier clients across the region.

To capture a larger market share of emerging affluent clients, Maybank Singapore launched the Privilege Wealth segment this year to serve clients who hold between S$50,000 and S$300,000 worth of assets with the bank.

Maybank Privilege customers enjoy dedicated services tailored to their needs, including priority banking services, access to comprehensive financial solutions, and invitations to exclusive lifestyle events.

As part of our initiative to appeal to the younger crowd as well as attract new wealth customers, we will be opening a new concept store named MSpace@Maybank at Orchard Road, which we intend to use to experiment with new ideas to engage our customers.

In 2018, we made risk management one of our competitive advantages. Through deepening our data analytics, we obtained better insights into the risks we were taking, the portfolio we had, and our customers’ risks. We are also facilitating the increasing internationalisation of Chinese companies, who are expanding their business in Asean. Maybank is the only bank with a 10-Asean country banking network that can facilitate cross-border financing across the entire Asean market. We are using these risk insights to achieve a more optimal balance sheet.

As part of being a better corporate citizen and having a greater sense of purpose for our organisation, we embed CSR into our day-to-day business. Our mission of “Humanising Financial Services” is about maximising the return to the community and society.

Maybank’s commitment to making a positive impact in the community through philanthropic efforts and staff volunteerism has also been recognised on a national level.

The end of 2018 will be a significant period for us. We are going to transfer our retail banking, private wealth, retail SME, and commercial banking business in Singapore to a

new locally incorporated subsidiary, Maybank Singapore Limited. This move is not only a fulfilment of regulatory requirement to locally incorporate our retail operations because we are one of the Domestic Systemically Important Banks (D-SIBs) in Singapore, but is also an important part of our strategy to deepen our presence and commitment to the local community.

How do you see the bank as an effective digitalised bank?

Maybank Singapore’s digital roadmap planned is aligned with Maybank Group’s digital roadmap. Besides the usual digitalisation of transaction activities, our digital plan is also focussed on our people and customer relationships.

It is important for us to find new ways of engaging our customers effectively in this digital era. To this end, we are exploring and experimenting with new engagement models and approaches. In other words, we want to be more than just a banking services provider—we also cater to our customers’ lifestyle and life journeys.

We intend to evolve our workforce to be better prepared for digitalisation, not just technically, but more importantly, instil a mindset change. Aligned with the Singapore government’s aim to reskill the entire financial services workforce, Maybank Singapore is joining initiatives under the Institute of Banking and Finance Singapore to train up a future-ready workforce, so that our staff’s skill sets remain relevant and the bank retains our competitive edge.

In addition to our business, our digital roadmap also focusses on our community. We have introduced a crowdfunding platform, Maybank Heart (www. maybankheart.com), to our staff and general public to support various CSR initiatives. As it is, we see digitalisation not just from a business perspective, but also from a broader responsible corporate perspective.

We wanted to focus on innovation, effective risk management, and greater sense of purpose.

What are your goals in the next 3 to 5 years?

Maybank Singapore is focussed on creating value through maintaining sound risk management practices, building a diversified portfolio, improving business efficiency, and enhancing digital capabilities to better serve our customers.

To further strengthen our position as a major financial services provider in Singapore, we will be focussing on the following: continuing to strengthen our domestic franchise business in Singapore; spearheading the Group’s regional aspiration by growing our regional business in Singapore; establishing and strengthening the centre of excellence for wealth management and infrastructure financing; championing our mission of “Humanising Financial Services” by creating a superior customer value proposition as well as sustaining strong relationships with all customers and stakeholders; and focussing on evolving employees’ skill sets and leveraging digital innovations so that the bank can be a more digitally-orientated organisation.

ASIAN BANKING AND FINANCE | December 2018 15

We had realised early on that the future of banking lies in thriving in a disruptively innovative world and as such, we leveraged technology and innovation as mission-critical pillars much ahead of our peers.

Rana Kapoor Managing Director & CEO YES BANK 16 ASIAN BANKING AND FINANCE | December 2018

INTERVIEW

Rana Kapoor reveals how innovation became YES BANK’s major growth engine The bank pioneered the use of technology initiatives such as AI and blockchain in India’s banking space.

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ana Kapoor is YES BANK’s Founder, Managing Director, and CEO. Under his leadership, the bank has evolved into one of the largest private sector banks in India and obtained numerous accolades up its sleeve. Asian Banking & Finance caught up with Kapoor to discuss the bank’s growth, the innovations it is adopting, and its major differentiator vis-à-vis other banks in India.

space across all products and has set-up a central data science team to drive its decision-making culture. The bank uses advanced analytics and data science techniques to understand customers’ behaviour throughout their life cycle—from acquisition, cross-sell, and portfolio management, to retention and delinquency management.

This ensures that the customer remains at the centre of our strategy wherein we create products/services based on their stated, unstated, and constantly evolving needs.

The bank also leverages on our sectoral “knowledge banking” approach across eight segmented relationship groups, which allows us to build expertise across key growth sectors of the Indian economy, thereby, helping create customised banking solutions.

Another innovation that has been a huge success for the bank is the YES FINTECH and YES SCALE (multi-sector accelerator) programmes, which have leveraged the ART philosophy and strengthened innovation culture of the bank by developing an ecosystem to co-create and interact with more than 2,000 startups and fintechs in the country.

What was the journey like for Yes Bank as it goes through its 3rd phase of growth? What were the challenges you faced and how did you overcome them?

It has been a truly remarkable journey for the bank. In our lifecycle evolution, we have grown manifold from being the largest small private sector bank in 2010 to being the largest medium-sized private sector bank in 2015.

Digital and technology-driven innovation, knowledge banking, responsible banking, and a focus on future-ready human capital have been the major growth engines driving our consistent growth rate in the last few years. We had realised early on that the future of banking lies in thriving in a disruptively innovative world. As such, we leveraged technology and innovation as mission-critical pillars much ahead of our peers—pioneering implementation of several technology initiatives in corporate and retail banking services such as blockchain, banking from ERP, and AI/ML backed solutions amongst others.

The most critical challenge that the banking sector faces is the obsolescence risk of technological architecture, and business models, as well as skillsets of human capital.

Recognising this, the bank’s strategy was recalibrated.

With technology fast-changing the competitive landscape, the need to grow out of legacy systems was imminent. Also, recognising the need to scale up and be a differentiator, we invested significantly in our digital transformation—digitising our products and processes through Aadhar-based authentication, Chatbots, SIMsePAY, API banking, and UPI. With a 50% market share in UPI, we have leapfrogged ahead of the banking sector on a level-playing field.

How does the bank continue to innovate and how are you leveraging these efforts to offer your customers topnotch products and services?

YES BANK, being an early adopter of technology, has established itself as a pioneer in new digital ecosystems such as payments (market leader in UPI merchant payments), API, AEPS, and blockchain technologies. Together with its ART (Alliance-Relationships-Technology) philosophy and successful investments in people, infrastructure, and technology, YES BANK is poised to be the cutting-edge digital bank in India.

Over the last few years, in addition to corporate banking, YES BANK has been expanding in the retail banking

We pride ourselves on being a contemporary and new age bank. We are treating the startup community as an engine of growth.

What is your major differentiator vis-à-vis local banks?

At YES BANK, we pride ourselves on being a contemporary and new age bank. We are treating the startup community as an engine of growth. What has changed dramatically in India is segmentation and industry specialisation. You have to be a specialist today.

I personally believe that the future of Indian banking depends on the willingness and ability to foster new business and inventions, and in effect, become agents of change. To catapult the Indian Startup scenario, we have launched YES:Head-Startup—a full service banking proposition for tech or tech-enabled startups, complemented by a first-of-its-kind privilege programme.

YES BANK was also the first Greenfield Bank to be established in India 14 years ago. As a young organisation being run by professional entrepreneurs, the bank focusses on: (1) new age knowledge sectors such as renewable energy, media & entertainment, social infrastructure, and affordable housing etc.; (2) being nimble-footed to adapt to changing scenarios; (3) unwavering focus on technology and innovation; and (4) commitment towards responsible and sustainable banking.

All of the above has resulted in enabling YES BANK to navigate exogenous and endogenous challenges successfully whilst delivering consistent profitability and best-in-class asset quality. YES BANK is the only bank in India to be selected in all major global sustainability benchmarking indices in 2017 including DJSI, MSCI ACWI ESG Leaders & SRI Indexes, and FTSE4Good Emerging Index. The bank is also a pioneer in digital banking by establishing a leadership position in new age payments lion’s share of market in UPI, IMPS, and AePS. ASIAN BANKING AND FINANCE | December 2018 17

In support of Singapore’s drive to be a cashless society, the bank aims to provide consumers and merchants with onestop financial services through product development and technological advancement.

Wang Fang Deputy General Manager & Deputy Country Head Bank of China Singapore 18 ASIAN BANKING AND FINANCE | December 2018

INTERVIEW

How is Bank of China Singapore applying China’s system in Singapore’s cashless push?

The bank has partnered up with local e-retailers and is developing mobile and smart POS terminals.

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ith China being the global leader in mobile payments, it offers several key learnings that Singapore can use for reference as it builds a cashless and cardless society. Bank of China Singapore’s deputy general manager and deputy country head Wang Fang tells Asian Banking & Finance what key lessons Singapore banks should consider to support the lion city’s goal to create a digital economy.

What can Singapore banks learn from China’s cashless economy to build Singapore’s digital economy?

With the fast growing cashless trend in China, we have identified the following aspects for reference: To build an “Internet Thinking” culture, which represents connectivity at anytime, anywhere to anyone so as to create and capture customer value, involves having customer centricity, internet technology, and a digital experiential mindset.

To replicate the rapid rise and acceptability of an aggregated payment mode will mean creating a demandbased payment ecosystem whereby a common integrated platform is created for all card schemes, customers, merchants, and the financial institutions.

Low cost of infrastructure and development has allowed fintech companies to participate in the mobile payment growth with low barrier of entry. What used to be a competitor to the banks are now collaborating to create an ecosystem allowing cross-border joint collaboration and interoperability amongst players.

Learning from Tencent’s startup experience, banks can consider collaborating with social media companies to grow the customer base and subsequently add on payment platforms once the customer base has grown substantially.

We must create a constant engagement and sharpening of technology capabilities with a customer-first mindset to create a demand-based solution.

To create an ideology of “smartphone is all you need for your purchases—anywhere, everywhere, anytime”. This will mean creating a holistic and fully integrated tech-solution to pay for everything that can replace cash, with a dedicated focus on offline and online POS merchant acceptance.

How is Bank of China Singapore pushing for the citystate’s pursuit of a fully cashless society?

Bank of China (BOC) fully supports the Singapore government to push for a cashless society and we recognise that it is an essential revolution in “financial technology innovation.” Recently, The Association of Banks in Singapore launched PayNow, a good example of a cashless payment innovation in Singapore which BOC is proud to be one of the nine participating banks.

BOC benefitted from China’s rapid development in fintech, and we will be introducing cashless payments

as part of our participation in Singapore’s Smart Nation initiatives. BOCSG has launched a co-brand Mastercard credit card with Singapore’s largest online retailer Qoo10 in May 2018. This marks the first-ever partnership between a bank and e-retailer locally. There will be more of such innovative products and services in the pipeline, such as new-to-market mobile point-of-sale (Mpos and Smartpos) payment terminals and providing international financial services in crowdsourcing for e-commerce merchants.

We have experimented with the use of big data, artificial intelligence, blockchain, and mobile payment, and commercialised some of these solutions.

How are you leveraging the strategy of your main bank?

Guided by Bank of China’s strategy of “Build Bank of China Into A World-Class Bank in the New Era by Persistently Enabling Advancement through Technology, Driving Development through Innovation, Delivering Performance through Transformation and Enhancing Strength through Reform,” BOCSG has implemented a series of action plans: An Innovation Committee (governing body) is set up in the bank to oversee and provide guidance and approval on innovation development and projects. We have also strengthened our cooperation and exchanges with MAS, universities, leading internet & fintech companies to promote innovation and development of fintech.

BOC will be launching an Innovation Lab in Singapore this November, focussing on driving innovation and investment in fintech. This is BOC’s first global innovation centre to showcase the innovative ideas and technological development that the bank has embarked on.

We have experimented with the use of big data, artificial intelligence, blockchain, and mobile payment, and commercialised some of these solutions. In Singapore last year, we became the first bank in Singapore to launch a cross-border UnionPay e-wallet for QR code payment, which can be used in over 5 million merchant outlets in China and with worldwide acceptance.

BOCSG is also currently working with Mastercard on the launch of Mastercard QR in Singapore. This is expected to make a bigger impact on changing the payment method in Singapore. With Mastercard QR implementation, the use of smartphone to make payment will be more than cash and/or card. Mastercard QR can be used anywhere in the world that has Mastercard QR acceptance.

BOCSG will continue to enhance and innovate its payment platform to provide a suite of market leading payment products, beginning with the upcoming re-launch of the mobile banking application which will provide a holistic banking solution to its customers. In support of Singapore’s drive to be a cashless society, the bank aims to provide consumers and merchants with one-stop financial services through product development and technological enhancement. This will help develop a new payment ecosystem for consumers, merchants, and the bank, which will further improve the customer journey with BOC. ASIAN BANKING AND FINANCE | December 2018 19

Being a leader in digital banking is a key driver to help us better respond to the changing lifestyle of customers and maintain a leading position in the mortgage loan market.

Nathapol Luepromchai Head of Mortgage Loan Division Bank of Ayudhya 20 ASIAN BANKING AND FINANCE | December 2018

INTERVIEW

Krungsri’s Nathapol Luepromchai on making sustainable returns from mortgage loans It starts with developing a tool that enables staff to update the status of loan approval anytime, anywhere.

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ank of Ayudhya, more commonly referred to as Krungsri, revealed an impressive 5.9% loan growth in the first half of 2018 driven by auto hire purchases and mortgages. Whilst this showed how digitalisation in the bank’s morgage loan division has become one of the most important strategies under the bank’s medium-term business plan, it also unveiled a number of opportunities for the bank to leverage its mortgage business to create sustainable returns.

In an exclusive interview with Asian Banking & Finance, Nathapol Luepromchai, Krungsri’s head of mortgage loan division, talks about how the bank has developed a digital mortgage roadmap and how it will drive returns.

Second is developing new functions in mortgage-related applications developed by our business partners including property developers and search portals through the Open API (application programming interface) platform, which will enhance accessibility of our services for customers whenever they think about mortgage loans.

Third is deploying Big Data analytics and Robotic Process Automation (RPA) to advance our ability to approach target customers and increase customer service efficiency.

Finally, offering an application on demand, providing our customers with self-service lending toward a fullfledged digital journey.

How does Thailand’s property market look like and how is it affecting the bank’s mortgage loan business?

In 2018, Thailand’s property market is in a full recovery mode after a slowdown in recent years amidst the country’s slowing economy. The main driver for the recovery this year is the continued growth of the country’s GDP, which helps revive consumer confidence and encourage them to buy properties.

With the favourable economic environment, the mortgage loan business is experiencing a healthy growth.

This year’s mortgage loan industry is expected to grow by 6%-10%, whilst the outstanding mortgage loans will rise by 6%-8%.

In a massive move to go digital within the banking sector, how is Krungsri developing its mortgage loan business to better serve its customers? Do you have current initiatives that other banks don’t offer?

Krungsri is determined to serve customer needs, especially through digital services. As part of our drive toward digital transformation, we have deployed agile working processes to promote the development of technology, business, and organisational culture.

We design new applications under the customercentricity concept as our customers take part in designing solutions throughout the development process. At this initial stage, we aim to develop the digital business to enhance customer experience in a high-tech and hightouch approach.

For Krungsri mortgage loan, we continue to focus on building sustainable development, which will differentiate us from other banks. We aim to enhance knowledge and expertise for our staff, so that they will have a learning mindset for sustainable growth.

How important is digitalisation in Krungsri’s mortgage loan division?

Mortgage digitalisation is one of the most important strategies under our Medium-Term Business Plan 20182020 to create sustainable returns and enhance customer satisfaction, as well as reinforce our drive to become a main bank for our customers. Being a leader in digital banking is a key driver to help us better respond to changing lifestyle of customers and maintain a leading position in the mortgage loan market.

We have laid out a digital mortgage roadmap comprising four phases in the following: First is using the agile deployment strategy to develop an application to enhance customer experience. The tool enables our staff to advise and update the status of mortgage loan approval process anytime, anywhere through mobile platforms such as Line, Facebook, WhatsApp, and email.

What are the latest trends and challenges in Thailand’s banking sector?

The most challenging issue for the banking sector is how banks can cope with technology changes that lead to digital lifestyles, digital platforms, and fintech. The digitalisation will change business models and the ways banks manage and serve customers. Banks are required to deliver financial products and services to retain maximum customer satisfaction with lower operating costs.

Meanwhile, banks need to explore ways for digital transformation and utilise the synergy between banks and fintech companies to stay competitive and support a sustainable growth.

We aim to enhance knowledge and expertise for our staff, so that they will have a learning mindset for sustainable growth.

What are three goals you will be focussing on in the coming year?

Over the next 12 months, we aim to maintain our leading position as the Tier One Mortgage player. We are also committed to improving our internal process to reduce operating costs and adopting digital solutions to enhance the quality of services through branches, sales staff, and business partners including Property Search Portal and real estate developers. This will eventually enable our customers to have a real digital experience through complete digital solutions and self-service mortgage lending.

ASIAN BANKING AND FINANCE | December 2018 21

We are different, because we are focussed on doing one thing, and the one thing that we are good at, which is wealth management for private clients and institutions.

Eric Morin Market Head North Asia Union Bancaire PrivĂŠe 22 ASIAN BANKING AND FINANCE | December 2018

INTERVIEW

Union Bancaire Privée’s Eric Morin bares the bank’s fierce ambition to dominate in Asia Should local Asian private banks be threatened as the major Swiss player establish ground in the region?

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ric Morin is the market head for the North Asia region at Union Bancaire Privée. He has over 25 years of banking experience and is responsible for growing the private bank’s business sales force in markets such as Hong Kong, Taiwan, China, and the Philippines.

In this exclusive interview with Asian Banking & Finance, Morin discusses the bank’s growth targets, its competition and biggest challenges, and what makes it different compared to local Asian private banks.

How are you pushing for growth in Asia amidst Chinese private banks dominating the region’s wealth management business?

It is quite clear that Asia is a powerhouse of global wealth creation. According to the Capgemini Asia-Pacific Wealth Report 2017, the region continues to top high net worth individual (HNWI) population and wealth; and this is expected to grow, driven by shifts of geography of global influence, as Asia and in particular China continues to grow in stature. However, the wealth management industry remains fragmented, with different offerings and structures.

I don’t believe, however, that it is a zero-sum game, and that we each can offer clients something different and distinct—at UBP, we occupy a very particular space as a pure play private bank. We are focussed on the UHNW and family office space, where we are able to showcase our expertise in developing bespoke investment, wealth planning and asset protection solutions. In this regard, I would say, we are a niche player, and our approach is different from the mainland Chinese private banks.

The mainland Chinese clients today are more open to the idea of an international wealth management relationship than they were ten years ago, when they were focussing on growing their businesses. Back then, the best thing they could do was reinvest excess capital into those businesses.

This has obviously changed—the economy in China has matured, and the clients have become more international in their outlook, and become far more open to a conversation around diversification and classic wealth preservation solutions, which we are very well placed to provide.

Asia is clearly one of the drivers for the bank’s growth globally, and we have the ambition to grow. Our CEO, Guy de Picciotto, has set a medium-term target, of within five years, for the bank to achieve 30% of its total AUM from Asia, along with an increase in overall assets, but we will do so, in a sustainable and profitable manner.

What makes UBP different compared to local private banks in the region? Are there any trends from your Swiss business that you are adopting in Asia?

We are different, because we are focussed on doing one thing, and the one thing that we are good at, which is wealth management for private clients and institutions.

The fact that we are privately owned provides us with a long-term view and a very good understanding of the needs of entrepreneurs in Asia, particularly the Chinese entrepreneurs with whom, we can demonstrate an alignment of interest and understanding. Being privately owned also means there are no big layers of management to get through, which allows for quick and direct decisions to match the expectations of our clients.

Our DNA also includes a strong expertise in alternative investments such as hedge funds where we have strong advisory capabilities, and also in direct investments, where we are able to offer our clients the opportunity to invest in private deals and companies in a unique manner. We also have a unique approach to our long-term portfolio recommendations, which aim to preserve the wealth of our clients whilst being structured around personalised mandates. As most of our clients are active entrepreneurs who take risk in their businesses, our discretionary capabilities provide a robust and diversified management of their personal wealth, whilst mitigating risk and taking a long-term aim to help them transfer this wealth to the next generation.

What do you consider as your biggest achievement so far as the head of North Asia and CEO of Hong Kong branch at UBP? How has the company progressed under your leadership?

I am very proud of the team’s achievements. We have been able to grow the North Asian business by over 40% since April 2016, as well as our revenue and ROA soaring above expectations over this same period of time.

We also became profitable: our operations in Hong Kong have been profitable after one full year of activity in 2017, which is a remarkable achievement. We successfully integrated two teams of new bankers in 2016 and 2017, whilst creating positive synergies with existing teams. All this combined to allow for a rapid growth of business.

Our CEO has set a mediumterm target, of within five years, for the bank to achieve 30% of its total AUM from Asia, along with an increase in overall assets.

What are your goals in the next 3 to 5 years?

The road map for us is very clear. We want to continue growing in Asia—a growth that continues to be profitable, sustainable, and in line with the group’s values and ambitions. We will continue to capitalise on our agility and flexibility to better serve our clients and provide value to all of them.

At a time when the wealth management industry is undergoing transformation and transition, the only KPIs which are relevant to us, is to ensure the quality of service and the investment return to our clients from the advice provided by our private bankers. Our goal is to continually do better in these areas. As a pure play private bank, our client’s satisfaction is a priceless reward, and continuing to serve these families for generations is our “raison d’Etre.”

ASIAN BANKING AND FINANCE | December 2018 23

Our focus at HDFC Bank has been on agility and outcomes.

We are very clear about the fact that our innovations are successful only when ideas become actions.

Rajnish Khare SVP, Head of Digital Transformation, Social Business & New Media and Mobility Banking HDFC Bank

24 ASIAN BANKING AND FINANCE | December 2018

INTERVIEW

How a ‘business first innovation’ model boosted HDFC Bank’s digital transformation The bank worked closely with its business units and sister organisations to streamline innovation metrics.

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s HDFC Bank’s senior vice president and head of digital transformation, social business & new media and mobility banking, Rajnish Khare is responsible for the essential implementation of innovation in the bank, as well as its digital, social, and mobility strategy.

Asian Banking & Finance caught up with Khare to talk about the lessons they learned during the bank’s digital transformation and what’s next after digitalisation.

What are the most important factors for the success of HDFC’s digital transformation?

Our focus at HDFC Bank has been on agility and outcomes. We are very clear about the fact that our innovations are successful only when ideas become actions.

Here are the key factors that I hold responsible for the successful digital transformation of HDFC Bank: Rigorous process and approach to innovation: We have successfully made the innovation process repeatable and scalable. The effectiveness of the process is further improved through productivity gains delivered by digital collaboration tools.

Business First Innovation selection model: We work extremely close with our business units and sister organisations to ensure that all innovations are closely tied to business and customer metrics. Therefore, everyone is involved in making the solutions a success, and is of direct benefit to our customers, employees, and shareholders.

Ecosystem approach to include 360 stakeholders: We have not stopped at organisation and customer only.

As mentioned above, we have extended this culture of innovation excellence to partners across government sector, regulators, startups, and academic institutions as well.

Clear understanding of the emerging digital customer: We are not only relying on past understanding of our customers but have evolved a new segmentation approach that focusses on the digital evolution of our customers.

Building internal, digital capability via the Centre of Digital Excellence (CODE): We are completely committed to making HDFC Bank the most digitally mature organisation in the banking domain. To ensure this, we have created CODE to deliver knowledge around areas like digital product development, customer journey, user experience, digital marketing, data science, and many emerging areas. This will allow us to empathise with customers better and deliver true value.

What challenges did you encounter along the way and what are some of the lessons you learned?

Having worked for almost twenty years in the digital and innovation space, here are some of the practises that I was able to institute at HDFC Bank that prevented many key issues from surfacing: Having a clear strategy and methodology: One of the

biggest challenges whilst working in an abstract field is to go in without a watertight approach. Strategy and methodology helps to galvanise the team, rally support across the organisation, and remain focussed, especially during the incubation phase.

Hiring a diverse team: Having just one or two people for innovation is doing lip service to innovation that is doomed to fail. Our success has been in our ability to identify and attract a diverse, young team that has a bias for action. This includes people from inside as well as outside of banking, product development shops, startups, [and] premier consulting organisations. Their collective energy, when available to rest of the organisation, leads to alchemy.

Move from push to pull innovation: Key pillar of our innovation approach is Business First approach, our work is aligned very closely to business. It is kept front and centre.

This increases ownership across the organisation.

Focus on results and right KPI: Since we are part of the Information Revolution, all our actions and outcomes are measured. We have been able to identify certain KPIs captured across the innovation lifecycle that allow us to intervene, learn, and improve. This way you can never fail, you only learn. If these are not in place, the innovation practise will surely fail.

Business impact approved by CFO’s office: Another important step that we were able to secure is to ensure that all innovations budgets have a rigorous financial approval process. This keeps us in the startup mode constantly, and often pushes us to ask the tough questions that ensure that only the strongest ideas make it through.

I must add though, that without the complete backing of our senior management, I would not have been able to put these learnings into action.

We are betting big on moving from an organisation only approach to an ecosystem approach.

We believe that the more players we can galvanise, the better the outcomes.

What is next in HDFC Bank’s digital transformation journey?

Our focus is on the transition to our new Evolutionary Innovation Model. Here, the focus will be greater decentralisation of innovation across the organisation.

Initiatives like CODE, Internal Collaboration, and Digital Innovation Summit are all poised to make spontaneous innovation to happen across various businesses.

We are also betting big on moving from an organisation only approach to an ecosystem approach. We believe that the more players that we can galvanise, the better the outcomes. Part of this approach will see us collaborating with some of the largest tech companies in the world for conversational banking, home banking, and a fully paperless organisation.

Finally, as we move out of the innovation incubation stage, our next area of focus will be to scale up our experiments to ensure that the last mile customer and feet on street employee come under the fold of each innovation.

ASIAN BANKING AND FINANCE | December 2018 25

INTERVIEW

Machine learning in APAC banks: What are the best practices and who’s doing it right?

Simon-Kucher’s Iraklis Kordomatis tackles how the technology is being implemented in banks in the region. partnerships, outsourcing (ML as a service) or strategic investments into fintechs, which usually have a steeper learning curve when it comes to applying machine learning methods. The latter is most transparent to observe in the market and provides the opportunity to compare different regions with each other.

The main takeaways are that Asia is not top in number of deals, with North America being the market leader.

However, a change of leadership in the near future is on the horizon with Asia having the highest growth rate amongst the regions. Europe cannot keep up with the pace of Asia and North America and is expected to fall behind further.

M

achine learning (ML) is a strand of artificial intelligence (AI) giving computer systems the ability to learn data through experience without being explicitly programmed. One feeds a model with data which then automatically adjusts its parameters to improve outcomes that reflect real-life situations. Such constant updating of data models worth petabytes (1 million gigabytes) has given rise to finance applications like chatbots and robo-advisors.

Asian Banking & Finance caught up with Simon-Kucher & Partners’ senior consultant, Iraklis Kordomatis, to talk about machine learning adoption in Asia Pacific and what banks in the region should best do to leverage the technology to enhance customer experience and internal services.

What is the status of machine learning adoption in Asia Pacific banks? Are they at the forefront, are they lagging, or are they in the process of experimenting?

A good indicator for the adoption of machine learning for banks in Asia Pacific compared to other markets, is the number of VC-backed fintech deals around the globe.

The reasoning behind is that most banks acquire machine learning (ML) knowledge from external partners via R&D

26 ASIAN BANKING AND FINANCE | December 2018

The main opportunities for banks to leverage ML can be in enhanced client experience, new products & services, and improved internal services.

How can banks specifically in the Asia Pacific leverage machine learning to offer better products and services and improve their core systems?

The opportunities to leverage machine learning are vast.

The main areas of improvement can be divided into three categories: enhanced client experience, new products & services, and improved internal services.

Enhanced Client Experience: Customer behaviour is very heterogeneous in Asia Pacific economies. On the one hand, countries like China, Japan, Australia, Singapore, and South Korea have a tech-savvy client base, who demand a great digital banking experience. Whereas on the other hand, countries with a low smartphone penetration have a higher demand of face-to-face- or telephone-banking.

Tech-Savvy Economies: For basic functionalities, the implementation of ML techniques are usually not required.

However, if a bank wants to go the extra mile and increase the likelihood of a high client satisfaction, applying ML techniques can do the trick. Applications of ML algorithm can range from payment authentication with face or voice recognition, automatic credit approvals, dynamic pricing to tailored client recommendations for products and others.

Face-to-Face: Providing relationship managers with tools and systems which enable a short handling time to increase the request throughput and reduce the waiting time in branches. These tool’s and system’s decision-making can be enhanced with ML techniques. Usually, most of the applications are in the lending area in those markets.

New Products & Services: Based on the nature of Asian economies, the highest impact of ML can be reached in the following product offerings: crowdfunding & crowdinvesting, microfinancing, and real-time fraud detection for payments.

Crowdfunding & Crowdinvesting: Alternative lending becomes increasingly popular in Asia. Due to the large population, it is an attractive business area for providers.

Current developments indicate an increase in alternative lending for SMEs. In order to run such a crowdfunding or crowdinvesting platform, certain services need to be provided. For some like analysing funding or investing

INTERVIEW Global venture capital (VC) fintech deal share

Source: CB Insights, Global Fintech Report Q2 2018

proposals and providing client ratings, ML techniques should be leveraged.

Microfinance: Asia has the highest amount of people at the bottom of the pyramid. Serving those clients efficiently is challenging. An enhanced decision-making and optimised risk management with ML algorithms would provide the potential to maintain a healthy and profitable credit portfolio.

Payments - Real Time Fraud Detections: Asia’s e-payment providers are amongst those with the highest transaction volume. The need for fraud detection is challenging when expected to happen in real time with a broad set of transactional data. With the right ML techniques, those requirements can be met. For textual (e.g. emails) or acoustical (e.g. telephone recordings) input data, an upgrade to deep learning fraud detection systems needs to be considered.

Improved internal services: In Asia, labor costs are significantly low, which makes large investment in automation of systems relatively unattractive. As a result, business processes in banks are less automated compared to the North American or European peers. Given this stage of low business process automation in Asia, ML is not the game changing technology yet. However, risk management is a domain where ML can have a huge impact. Measuring risk more accurately than via classical methods leads to better decision making and reduces the need of too high safety margins. Eventually, the sum of those effects results in lower cost of capital for banks and therefore increased profitability.

What are the best practices in implementing machine learning in banks? Is there a particular Asia Pacific country that is doing it right?

That depends on the goal and the current state of the bank.

The fastest way is to acquire a fintech with the required technology. However, banks usually acquire a fintech, because they want to offer the fintech’s product or service to their client base. Banks do not want to learn from the ML capabilities which have been leveraged for the product or service offering as such. Another disadvantage of acquisitions is that those are usually quite expensive compared with other approaches.

Another approach is to team up with a company, which

provides ML services. Australia’s top four banks are going into this direction. An advantage is that this approach is rather inexpensive and depending on the setup, short time to market still can be achieved.

However, building a trustworthy relationship with a company, with whom a bank usually shares quite sensitive information, potentially at the other side of the globe is usually not as easy.

The last approach would be to build the capabilities inhouse, which is generally more expensive than teaming up with an ML service company, but less costly than acquiring another company. However, the time to market for a potentially ML enhanced service, product, etc. will be likely the longest.

Building ML capabilities in-house do not necessarily mean to do everything in-house. Having an ML expert inhouse as a sparring partner for the business will be already beneficial as the expert can quickly assess which ideas can be realised with applying ML algorithms and will help funnel ideas into concrete projects.

Another potential role for an internal expert is to advise the board on strategic acquisitions of fintechs. A third role is to be the relationship manager for the ML service company the bank is mandating, to delivering the ML solutions. Anyhow, it has to be said that establishing a team of ML experts within a bank is strongly recommended.

What benefits will machine learning bring to banks that will use it?

Derived from question two, the three main advantages of applying ML is the increase in client satisfaction, reduced cost structure, and increased profitability.

Increased client satisfaction: Serving clients better than peers results in a reduced client churn and increased consumption (happy clients spend more). All this results in higher revenue potential for a bank.

Reduced cost structure: Optimising internal process and decrease in cost of capital can significantly reduce a bank’s cost structure.

Increased profitability: An increase in revenue potential with a decrease in cost will lead to increased profitability of the bank.

Banks must take advantage of systems with the ability to learn from data

ASIAN BANKING AND FINANCE | December 2018 27

Country report: HONG KONG

One of its latest moves is digitising trade finance in collaboration with over 20 banks

Hong Kong makes huge headway in realising smart banking ambitions It rolled out a real-time fund transfer system, open API guidelines, virtual banks authorisation in 2018 alone.

I

n a bid to sharpen the competitiveness of its banking sector, Hong Kong’s top financial regulator rolled out an industry blueprint in September 2017 outlining seven key policy initiatives aimed at easing the city’s transition into the Smart Banking era. The move aims to bring back the fading glory of the SAR’s banks who have been losing luster as they trail behind London and New York in the latest industry GFCI 23 Industry sector sub-indices

Source: Global Financial Centres Index

28 ASIAN BANKING AND FINANCE | December 2018

The domestic banks have a long way to go to compete with the likes of HSBC or Citibank from a technology standpoint.

reading of the Global Financial Centres Index as rising tech upstarts like Shanghai and Beijing also pose a threat to its financial dominance.

“The domestic banks have a long way to go to compete with the likes of HSBC or Citibank from a technology standpoint. However, the Hong Kong regulators have responded to this by promoting and driving tech, RegTech, and FinTech,” Sankar Krishnan, executive vice president, Banking and Capital Markets at Capgemini told Asian Banking & Finance.

One year later since the roll out of the blueprint and the Hong Kong Monetary Authority (HKMA) has made good on this pledge after operationalising four key initiatives outlined in the document in a techpowered drive to rev up the sector.

This includes real-time fund transfer service called Faster Payment System (FPS) which officially went live on September 30. With the FPS,

users can make and receive mobile payments in Hong Kong dollar and renminbi on a real-time basis by registering their mobile phone number or email address with the system as an account proxy for receiving funds.

Part of the blueprint also came with the hotly anticipated announcement that the regulator will issue virtual banking licences by end of 2018 to Q1 2019. This will enable entities to deliver the full suite of retail banking services through an app or a website without the need to maintain a physical presence.

Enter APIs Another initiative that was successfully implemented in June is the guidelines for Open Application Programming Interface (API) framework for the banking sector which lays out how banks should interact with third party service

Country report: HONG KONG providers. To set an example for the industry, the HKMA pledged to launch an open API on its own website where around 130 information sets on exchange rates, interest rates, and Exchange Fund will be made available via the technology.

The incorporation of standardised APIs can help facilitate easier integration between internal and partner systems and potentially reduce the cost of integration and maintenance for new apps, said Keith Pogson, senior financial services partner at EY in Hong Kong.

“At UOB, we have developed an API Gateway which our ecosystem partners, such as FinTech startups, can use to request for and to retrieve information from our systems,” said Christine Ip, CEO - Greater China, UOB. “We have in place a governance and security framework to ensure that our customers’ information is protected and secure.”

The launch of the framework may just give the rankings boost to Hong Kong who trails behind Singapore in the open banking readiness index released by the International Data Corporation (IDC) last May. The report observes that although Hong Kong has a supportive fintech/FTT ecosystem that has nurtured some of the world’s biggest funded fintech startups, the SAR is lacking in clear guidelines that could significantly speed up open API implementation.

All that is expected to change with the guidelines that give banks clearcut guidance on how to onboard the open API train. The HKMA expects banks to have the capacity to deploy Phase I Open APIs within six months and Phase II Open APIs within 12 to 15 months. “Banks improving performance using technology and API banking is a great way to get there faster than waiting for general ledger upgrades and investments. In the U.S., API Banking is the single largest initiative on a bank’s transformation agenda,” noted Capgemini’s Krishnan.

Testing the digital capabilities of banks is made possible by the Fintech Supervisory Sandbox (FSS 2.0) which was updated by the regulator in 2017 to provide banks and partnering fintech firms with a controlled environment where they can gather

real-life data and feedback on new product and service offerings before their commerical launch. In a mere two years time since its debut in 2016, over 20 technology products and services that have been trialled in the sandbox have been successfully rolled out into the market.

“Sandbox use has steadily expanded since its establishment. I understand the industry appreciates the sandbox’s ability to expedite new fintech products, allowing banks and technology companies to obtain user and regulatory feedback at an early stage,” finance secretary Paul Chan said at a conference.

Such was the success of the HKMA’s sandbox that the Securities and Futures Commission and the Insurance Authority launched similar models for their respective industries in 2017 and was consequently linked up to the HKMA’s to speed up the trial of cross-sector fintech products.

Digitising trade finance Beyond the obvious retail applications, the HKMA has also made it a point to expand technology applications to other banking segments like trade finance. In one such large-scale collaboration involving the participation of over 20 lenders including HSBC, Standard Chartered, Bank of China Hong Kong, Hang Seng Bank, Bank of East Asia, ANZ, and DBS, a blockchainpowered trade finance platform was officially rolled out to upgrade operations in the paper intensive industry.

“Trade finance is just one example of a process that has historically been highly manual but also quite complex, given the need to understand the validity of the underlying collateral and associated documentation. As such, it is an ideal use case for new technologies, such as blockchain, and we expect to see other uses in similar areas soon,” added EY’s Pogson.

Using distributed ledger technology designed by Chinese insurer Ping An Group, the regulator aims to significantly reduce processing time and cost by doing away with documentation requirements in an effort to capture the shift in trade towards Asia. This

Sankar Krishnan

Keith Pogson

Christine Ip

Ivy Au Yeung

adds to an existing partnership by the HKMA with the Monetary Authority of Singapore (MAS) for the Global Trade Connectivity Network, a trade finance solution built on blockchain that aims to streamline cross-border trade and financing.

“We are in active discussions with our clients with trade flows between our home markets of Australia and New Zealand and Hong Kong/ Greater China to bring them on the platform,” said Ivy Au Yeung, CEO Hong Kong, ANZ. Smaller players who are unable to access banking services due to high cost obstacles will also be able to benefit from this platform as they are afforded better access to trade and supply-chain finance. Given the nature of the platform, fraudulent activity will also be easier to detect as parties will be able to view transactions once trades are logged in the blockchain.

On its own, the initiatives already represent a massive boost to maintain Hong Kong at the forefront of financial services and the regulator plays a huge role to cementing this leadership.

“The HKMA is also driving collaboration between banks and non-banks and also fostering an environment of cooperation across central banks in Asia,” Krishnan added. “For example, the HKMA’s Bank Culture Reform circular announced in March 2017 that it will focus on governance, incentives, assessment and feedback is being adopted across the industry in 2018.

Overall, the HKMA is performing extremely well to address challenges facing banks. That said, some work remains to be done to give the global counterparties even more comfort that there will be no surprises.”

Cost-to-income ratios

Source: extracted from individual banks’ financial and public statments, KPMG

ASIAN BANKING AND FINANCE | December 2018 29

Vendor View: cybersecurity

Banks should ensure a 360-degree approach to data security

Next level security measures Asian banks should intensify amidst cyber attacks Attacks have evolved and now banks need more than just password protection and static identity checks.

A

fter Singapore was hit with its largest cyberattack to date in the form of the SingHealth data breach where personal information of nearly 1.5 million individuals including that of Prime Minister Lee Hsien Loong were illegally accessed, the discussion shifted to which type of data deserves the strongest level of protection. But whilst healthcare data has become the topbill target for attackers, Asian banks still remain highly vulnerable, especially now that digital technologies continue to evolve rapidly.

As banks in the region catch up with the rest of the world, they realise that keeping data secure is a tall order and requires dedicated effort in terms of development and strategy. Alisdair Faulkner, chief identity officer, ThreatMetrix, said that we now live in a post-breach world where digital identities have been compromised

30 ASIAN BANKING AND FINANCE | December 2018

on a massive scale. According to him, Banking, Financial Services, and Insurance (BFSI) organisations have to face the reality that user IDs, passwords, and other personally identifiable information is widely available to cybercriminals who steal identities to create bogus accounts.

“Modern phishing attacks are very well targeted, can be difficult to detect, and aim to grant malicious individuals broad permissions over user data, user devices, and online services,” echoed David Shephard, vice-president for sales of Asia-Pacific and Japan (APJ), Bitglass. “The days of basic phishing schemes have more or less passed. Attacks now rely on advanced forms of infiltration that better disguise malicious intent— more people are vulnerable to attacks that obfuscate their intention. Asian banks are taking note of this.”

Following the attack, the Monetary Authority of Singapore (MAS) urged

Attacks now rely on advanced forms of infiltration that better disguise malicious intent —more people are vulnerable to attacks that obfuscate their intention.

financial institutions to avoid reliance on the information stolen from the SingHealth attack which includes, names, NRIC number, address, gender, race and birth date, for verifying customer identities.

In its latest move to outpace the growing sophistication of cyberthreats, the MAS has also proposed to make a slew of cybersecurity measures under the existing Technology Risk Management Guidelines legally binding as part of baseline hygiene standard for cybersecurity.

“Raising these measures into legally binding requirements will require FIs to focus on and ensure that these measures are well implemented,” said a MAS spokesperson. “Setting these requirements as a mandatory baseline for FIs will help enhance the security of their systems and networks, and ensure that the

Vendor View: cybersecurity Singapore financial sector continues to be cyber resilient.”

The city state, which has experienced quite a number of breaches in the past years, is planning to prevent and mitigate cyberattacks with the new Singapore Cyber Bill.

Gino Bello, senior director, FTI Consulting, said that most of what they have seen with their work with local and international banks is that they are quite sophisticated with their Cyber Resilience posture, considering that they are highly regulated and will be classified as Critical Information Infrastructure once the Singapore Cyber Bill is successfully passed.

“The main lessons that banks can take into account is that the SingHealth response, in terms of timing and communication to key stakeholders and the public, was well prepared and executed,” Bello added.

Organisations should prioritise initiatives such as Cyber health checks, Cyber Risk Reviews, table-top trainings, and/or simulations that will serve them well from a preparedness standpoint when an attack does indeed occur. Coupling these proactive measures with technology ensures a Cyber Resilience posture that will hold up during an attack.”

Tight tech With the onslaught of digital breaches across the region, banks have tried to put in place additional layers of protection such as passwords and other static identity checks. However, analysts argue that these are near useless and that there is a need to turn to more intelligent forms of security.

Banks may benefit more from augmenting device intelligence with location, identity, and threat analytics from billions of online transactions around the world.

“In addition to ‘traditional’ firewalls, ‘air-gapping’, timely patching, multi-factor authentication, leveraging cloud technology when they are able, investment in people and training, the technology we have seen being well utilised by the financial sector is artificial intelligence and data analytics,” Bello said.

“Through this heavy investment in AI and analytics, organisations have been better able to monitor,

Alisdair Faulkner

David Shephard

Gino Bello

Jeffrey Kok

Jaivinder Singh Gill

predict, and detect attacks, whether they be large data leakages or intellectual property thefts, inside jobs by trusted employees, distributed denials or service, fraud, bribery and corruption, money laundering, or advanced persistent threats.”

In terms of added layers of defense to prevent unauthorised access, risky external sharing, and costly breaches, banks can use cloud access security brokers (CASBs). Shephard said that CASBs can go along way in protecting data in the era of the cloud.

According to him, leading CASBs are built to defend sensitive information in any app, any device anywhere.

“Specific requirements for banking IT infrastructure also apply: selfservice networks should be isolated from the bank’s overall network as well as the card issuing environment.

They should typically be isolated. All organisations should take a similar approach to security by adopting an onion or layered concept. This approach has to consider risks from two different attack vectors: Online, meaning cyber attacks against operational environments.

Offline, meaning attacks against environments,” said Bernd Redecker, director of Corporate Security and Fraud Management, Diebold Nixdorf.

Despite all the recommendations from top tech leaders, banks should realise that there is no single solution to stop hackers and fraudsters.

Faulkner said that there is a need for a far-reaching strategy that considers all possible scenarios, one that allows BFSI institutions to make sure that they are secured against data breaches and adopt solutions to properly authenticate identities when dealing with customers and partners online.

Meanwhile, Jeffrey Kok, vicepresident of solution engineers, Asia Pacific and Japan, CyberArk noted that banks need to look at the assets they want to protect when determining the right security technology to mitigate against attacks.

“Banks have had the criticality of privileged access security highlighted to them, as well as a different way of thinking about attacks,” he said.

“Their most effective way of developing a robust defence strategy is to put themselves in the hackers’

shoes and think about the path they will take to get to what they want. Banks should assume that the attacker is already inside and to adopt privileged access security as a key layer of defence to hamstring intruders that have successfully breached the perimeter from being able to move laterally to gain access to sensitive information or critical assets,” Kok added.

Policy gaps Jaivinder Singh Gill, regional vice president, Banking - Asia Pacific, Diebold Nixdorf, said that whilst banks and government agencies share the same attack target which is information, banks have a second asset: cash. At present, compliance requirements apply in both sectors, but policies should be specific for the respective environment.

Furthermore, banks are expected to adhere to global standards, such as the card handling level when processing cardholder data. Gill said that all financial institutions that accept, process, store, or transmit card information must comply with the Payment Industry Data Security Standard (PCI DSS). In Singapore, the MAS standards, as well as international standards such as EMV compliance, work in tandem to ensure the protection of the end-user.

Shephard noted that Singapore is transitioning to open banking and is utilising cloud technology in the financial services sector. According to him, rather than aiming for the bare minimum level of protection, organisations should seek to exceed regulatory requirements and deploy the latest cybersecurity technologies.

This will help defend against phishing, malware, insider threats, and other threats.

At the end of the day, it is important for banks to ensure that the people who interact with the technology and tools are doing it effectively and in the best way they can. Kok said that the most sophisticated processes, technology, and tools are useless if employees are not educated on cybersecurity best practices. For him, people are the most important part of security defense and offensive controls.

ASIAN BANKING AND FINANCE | December 2018 31

SECTOR REPORT 1: Islamic banking

The sector’s respect for transparency perfectly matches blockchain’s goals

How compatible are blockchain and Asia’s growing Islamic banking sector?

Islamic banks are adopting the technology in Shariah compliant smart contracts and fraud prevention.

W

hen UAE’s Emirates Islamic Bank introduced blockchain technology into its cheques as a fraud prevention measure in 2017, it signaled the start of a seamless convergence between the new technology and a fastgrowing sector that has an estimated $2t in Shariah compliant assets across about 60 countries. Analysts reckoned blockchain technology could further fuel the sector’s rapid transformation and expansion—some experts

Islamic banking is a leader with respect to fair and transparent enforceable contracts which is exactly what blockchain is striving to accomplish.

Potential to innovative newer financial solutions by the Islamic banking industry in the next three years

Source: Global Islamic Bankers’ Survey 2018, General Council for Islamic Banks and Financial Institutions (CIBAFI)

32 ASIAN BANKING AND FINANCE | December 2018

estimate it will add another $1t in assets by the end of 2018—although the lack of global standards remains a key hurdle.

The International Monetary Fund (IMF) executive board proposed to incorporate guidance from the Malaysia-based Islamic Financial Services Board into the Washington, D.C.-based lender’s assessments, which should improve regulation in this sector, said Sankar Krishnan, executive vice president, capital markets and banking at Capgemini.

“This is very good as we will have more consistency in Shariah compliant products and just like we have generally accepted rules, we will have global Islamic finance rules which will augur well for even more Islamic financing.”

Islamic banking operates in accordance with the rules of the Shariah, or Islamic law, which pushes for finance based on sharing of profit

and loss concept and forbids the payment of interest on debt.

Blockchain’s promise Along with the growth of Islamic banking as a whole, analysts view blockchain technology as having potential in driving innovation in the sector similar to what is being seen in conventional banking. “Islamic banking is a leader with respect to fair and transparent enforceable contracts which is exactly what blockchain is striving to accomplish,” said Krishnan.

Krishnan reckoned Islamic banking will play a critical role in promoting one of the use cases of blockchain, which is delivering profitsharing agreements on the blockchain with a high degree of transparency.

“How can we take smart contracts and make them Shariah compliant?

I believe that Shariah law and blockchain have more convergence

SECTOR REPORT 1: Islamic banking than divergence and we will see this come together in the next few years,” he said.

In fact, the convergence has already been started in late 2017 when the Islamic Research and Training Institute, a member of the Islamic Development Bank Group, partnered up with fintech firms Ateon and Settlemint in working on blockchainbased smart contracts to create Sharia-compliant financial products and automate the entire contractual process for Islamic institutions. Not only are these blockchain smart contracts easy to verify, immutable, and secure, but they also alleviate additional administrative and legal complexities and redundancies associated with Shariah compliant financial products.

Meanwhile, Emirates Islamic’s security enhancement feature, called Cheque Chain, involves the bank issuing new cheque books carrying a unique quick response (QR) code on every leaf along with 20 random characters. The next phase of the project will see the bank registering each cheque leaf on its blockchain platform to validate the authenticity of the cheque at source.

“Blockchain has the potential to significantly increase security and protection in banking transactions and we are delighted to be amongst the first in the UAE to utilise this new technology,” said Emirates Islamic COO Suhail Bin Tarraf when the blockchain-powered measure was announced. “We anticipate that Cheque Chain will dramatically reduce cheque frauds in this market, helping us provide our customers greater peace of mind and security,” he added.

Concerns over IT systems have risen amongst Islamic banks to become the second most important in 2018, up from seventh and eighth in 2016 and 2015, respectively, according to the Global Islamic Bankers’ Survey 2018 by the General Council for Islamic Banks and Financial Institutions (CIBAFI).

However, “it is unclear whether this represents a long-term strategic apprehension about the impact on business structures of new artificial intelligence, blockchain and cloud, or

shorter-term concerns about cyber security and ageing systems,” the survey noted.

Other key opportunities Outside of blockchain, fintechs can facilitate growth in Islamic banking, specifically in sukuk, mudarabah, wadiah, musharakah, murabahah, and takaful, added Krishnan. “There is no reason why we cannot have a digital bank committed to these forms of financing which have a great future. I will not be surprised if there is a digital-only Islamic bank that gets created which does significantly better than its traditional counterpart.”

Fintechs are also a good match for Islamic banks as they are always seeking to innovate and come up with new products and services in personal finance, wealth management, insurance and corporate financing, said Ho Kok Yong, Deloitte Southeast Asia financial services industry leader.

“Used properly, it can transform core banking systems by providing an agile platform to achieve corporate objectives,” said Ho, adding that Islamic banking and commercial banking might differ in many respects but they also share the same business, regulatory, and technology requirements; use similar customer channels; and functionally offer the same products.

As a sign of fintech’s growing significance amongst Islamic banks and their quest to secure key partnerships to advance in this area, over 40% of industry leaders think their institution has placed fintech and digital transformation at the forefront of their strategic planning decisions and deemed it ‘highly important’, CIBAFI’s survey found.

It added that whilst cyber security, budget constraints, and lack of skilled staff have made Islamic banks wary of adopting new technologies, some Islamic financial institutions have indicated they were launching technology departments to cope with digital change, whilst others were forming joint ventures with fintechs, or buying them up.

In February, Bahrain’s Al Baraka Banking Group announced its

Sankar Krishnan

Ho Kok Yong

partnership with Bahrain FinTech Bay, the largest fintech hub in the Middle East and North Africa region, and launched a digital Islamic bank in Germany in September. Meanwhile, Malaysia’s MBSB Bank Berhad announced in April that it will be focussing on developing its fintech capabilities to attract more customers.

Regulatory setbacks However, when it comes to regulation and forming global standards, Islamic banking still has a long way to go relative to conventional banking. IMF directors have said that Islamic banks’ operations possess different risk profiles and balance sheet structures compared with conventional banks, which brings associated financial stability implications and prompted the call for stronger regulatory and supervisory frameworks. That said, the directors acknowledged that Islamic finance’s expansion “presents key opportunities to strengthen financial inclusion, deepen financial markets, and mobilise funding for development by offering new modes of finance and attracting ‘unbanked’ populations that have not participated in the financial system.”

Krishnan said there is a need to establish global standards and integrate them to digital banks and fintech startups, and noted that the regions of Asia and the Middle East and North Africa “have a big role to play” in this area. “We have to look at Shariah compliant assets as an ‘asset class’ and incorporate that asset class to every type of financing we do,” said Krishnan. “We should not move away from creating Shariah compliant regulators inside every central bank so that we can supervise this asset class and promote this asset class to interested parties,” he added.

Importance of fintech and digital transformation in strategic planning decisions

Source: Global Islamic Bankers’ Survey 2018, General Council for Islamic Banks and Financial Institutions (CIBAFI)

ASIAN BANKING AND FINANCE | December 2018 33

SECTOR REPORT 2: Forex

Singapore leads innovation in Asia’s forex sector with distributed ledger and eFX It rolled out Project Ubin, a collaboration exploring blockchain for settlement of payments and securities.

W

hen Singapore overtook Japan in having the highest volume of forwards traded by financial institutions in Asia, tripling to $60b between 2013 and 2016 based on a KPMG survey, it further cemented Singapore’s status as a top global FX trading centre—and the country’s de facto central bank has been looking to further enhance its attractiveness to banks by leading the exploration of blockchain technology in the sector.

The Monetary Authority of Singapore and the Singapore Exchange had launched Project Ubin, a collaboration to develop delivery versus payment, or DvP, capabilities for settlement of tokenised assets across different blockchain platforms, and it has progressed in the past two years to a point where technology partners and participants are noting its potential game-changing impact.

Primarily, the initiative allows 34 ASIAN BANKING AND FINANCE | December 2018

The daily FX market is estimated at about $5t a day and EM currency trading represents about 17% of all spot volume.

financial institutions and corporate investors to carry out simultaneous exchange and final settlement of tokenised digital currencies and securities assets, which improves operational efficiency and reduces settlement risks, said Ho Kok Young, Southeast Asia financial services industry leader at Deloitte, which partnered with SGX and MAS on the initiative and lent their expertise in blockchain technologies together with its APAC Blockchain Lab. “Using two different open source blockchain technologies to implement and design the distributed ledger technologies (DLT) prototype, we are able to mitigate counterparty risks in DvP and achieve DvP settlement finality with clearing members,” Ho said. “This will also enable transactions to be facilitated in a secure and transparent way, in turn strengthening investors’ experience and confidence.”

Ho noted that Project Ubin aimed to understand DLT’s potential in making financial transactions and processes more transparent, resilient, and at lower cost, and that the first two phases focussed on domestic interbank payment and settlement.

The project’s participating banks include Bank of America Merrill Lynch, Citi, Credit Suisse, DBS, HSBC, J.P. Morgan, Mitsubishi UFJ Financial Group, OCBC, Standard Chartered, and UOB. Under the system, participating banks use tokens issued by the central bank on an Ethereum-based DLT platform to conduct inter-bank transactions, with the third phase now looking to assess the technological feasibility and economic impact of using a tokenised version of the Singapore dollar.

“Why should we bother with this technology when we are perfectly OK with the existing centralised clearing house?” said Sopnendu Mohanty,

SECTOR REPORT 2: Forex Project Ubin’s process diagram

Ho Kok Yong

Source: MAS, Deloitte

chief fintech officer of the MAS. “For us, the biggest killer app is the third part of the project: using DLT for cross-border payments.”

Whilst it takes two to three days to transfer money from one country to another because of the necessary checks to prevent money laundering and other potential fraud schemes, Mohanty reckoned that the next phase of Project Ubin will investigate whether overseas transfers can be settled instantly and at a fraction of the cost through the use of trusted distributed node. Such a possibility is being explored by MAS in partnership with the Canadian central bank, which already has a similar DLT platform in place.

“If we can solve the problem of cross-border payments, as well as the issues of identity and document authentication, then we can apply DLT to the whole value chain of trade and finance, and that’s where the commercial benefit will come in,” he said.

Electronic foreign exchange The MAS has also partnered with UBS to launch an electronic foreign exchange, or eFX, engine in Singapore by the second quarter of 2019, which it expects to bolster transparency and efficiency in the FX market. The two worked together to develop the eFX pricing and trading engine, in line with the central bank’s push to enhance the eFX trading infrastructure in the Lion City, the world’s third-largest FX centre and the biggest in the Asia-Pacific region.

“The engine will provide our clients with greater liquidity and

Andrew Gilder

increased efficiency in the foreign exchange markets. Our collaboration with the MAS reaffirms Singapore’s importance as a global FX centre and reflects the growth of opportunities in Asia,” said Anthony Hall, head of foreign exchange, rates and credit (FRC) in Asia Pacific at UBS. The bank is reportedly the first global bank to launch such an eFX engine and expects the initiative to further bolster growth prospects in the AsiaPacific region.

As the MAS and other Asian central banks such as the Hong Kong Monetary Authority and the Reserve Bank of India usher in digital initiatives to make the industry more competitive, Asian banks are seeing “dramatic opportunities” from growth in technology, said Sankar Krishnan, executive vice president, banking and capital markets at Capgemini. He noted that the top three banks in both China and India, which are digitally savvier compared with their global counterparts, are posting record revenues.

For example, China’s biggest bank, the Industrial and Commercial Bank of China (ICBC), has signaled plans to develop blockchain projects as it seeks to be a pioneer in smart banking and boost efficiency in transactions. In April, ICBC revealed it had filed a patent application with the State Intellectual Property Office related to authenticating digital certificates, which are matched with credentials before storing data securely onto the blockchain.

“Traditionally users have to obtain a certificate from an authority that issues it, which does that manually.

Gerry Keefe

And then they present it to entities that require the certificate. This process is inefficient and poses the counterfeit issue,” according to the bank’s patent filing. ICBC Chairman Yi Huiman also reportedly said that ICBC would focus on blockchain as well as in cloud computing, big data, artificial intelligence and Internet of Things.

Opportunities in Asia The stronger push for digitisation comes as Asian corporate banks look to benefit from projects related to the China’s Belt and Road Initiative.

Opportunities mainly stem from outbound Chinese corporates seeking corporate banking services like FX exposure management alongside trade solutions and cross-border cash management, said Andrew Gilder, Asia-Pacific banking and capital markets leader at EY. “Corporate banking business in Asia remains strong for banks that serve the key trade corridors and actively capitalise on the importance of China in the region,” he added.

Citi has been investing more resources to provide services to key trade corridors in Asia-Pacific, increasing the number of its Asia desks in the past two years to 21 as well as expanding headcount. The bank now has 11 China desks, nine Korea desks, and an India desk in New York.

These desks offer FX hedging as part of their suite of services, together with trade finance, corporate loans, and capital markets financing. Citi noted that revenues linked to intraAsian trade are up over 30% year-todate in the region.

“These desks and their continued expansion clearly depict where we see trade flows moving,” said Gerry Keefe, head of corporate banking, Asia Pacific at Citi, adding that Citi’s growth has mainly come through a series of key trade corridors in the Asia Pacific region, namely Korea to ASEAN, Korea to China, Korea to India, Japan to ASEAN, Japan to China and China to ASEAN. He further noted that Asia is capturing a greater share of global trade and U.S. companies will increasingly target Asia for growth.

ASIAN BANKING AND FINANCE | December 2018 35

Case study: Taishin BANK

Richart has almost 140,000 followers on Facebook and 4.1 million subscribers on LINE

How Taishin Bank’s Richart captivated Taiwan’s youth Attracting more than 450,000 applications for its savings accounts from people aged 35 or under, Richart is making a mark in Taiwan’s banking scene.

U

pon the discovery that its customer portfolio was drastically short of users aged 20-40 years old, Taiwan’s Taishin Bank made a dedicated effort to capture the younger and more tech-savvy demographic.

Thus, Richart, the country’s first digital bank, was born in 2016.

The team behind Richart has since developed over 20 financial products and services under the Richart brand, four of which are protected by patent. This includes AnyPay, a smart money transfer system that enables users to split expenses and track receipts; a pre log-in service that helps customers access their account balance and credit card bill without the need to log in and a cash rebate service that can be directly credited into Richart savings account instead of the bill statement.

“Richart is the first digital bank designed for the young generation in Taiwan. Richart has integrated different financial products to help young people easily manage their wealth,” said Oliver Shang, president and CEO of Taishin Bank.

36 ASIAN BANKING AND FINANCE | December 2018

Richart now has the biggest captive market segment for comprehensive digital banking in Taiwan with more than 60% market share.

Richart also addresses a common consumer pain point by developing a consolidated and open banking platform that is able to respond to a wide array of financial needs. The bank is able to achieve this feat by forging strategic partnerships with industry giants like B.N.P. Paribas and TaiAn to provide a diverse mix of insurance products that can be bought online in 5 minutes, doing away with the need to download multiple accounts to access different financial services.

“Through the partnership, we have created a win-win situation by saving a great deal of system developing and maintaining costs for our company, and increasing the profits and brand awareness of our partners,” said Shang.

Over two years since its debut, Richart and its software has undergone over 15 major updates to improve its product offerings and services, which has already attracted more than 450,000 applications for its savings accounts—more than 70% of these are people aged 35 or under with over 60% being firsttime customers of Taishin Bank.

Shang noted Richart’s success both in improving the bank’s product and service offerings as well as in presenting Taishin Bank as the most interactive, digitally savvy, and inclusive financial institution in Taiwan.

Richart now has the biggest captive market segment for comprehensive digital banking in Taiwan with more than 60% market share, whilst also being the most interactive with almost 140,000 followers on Facebook and 4.1 million subscribers on its official LINE account, Taiwan’s most popular messaging application.

This, according to Shang, is what keeps Richart the number one digital bank in Taiwan.

“Although competitors KOKO and O-Bank also provide lots of products, the experiences of both is not optimised for mobile users.

The service still needs paperwork and human intervention,” he said. “Richart creates a real digital banking experience which provides a comprehensive product set by one single mobile application.”

Attractive features Part of Richart’s appeal lies in its attractive offerings, said Shang, which include high interest rate offer of savings account at 1.0%, a low threshold investment starting from NT$10, and a high cashrebate credit card at 3.5%, which directly goes back to customers’ savings accounts as a cashback transaction.

Another innovative feature of Richart is the adoption of a more agile framework for software development and marketing communication which has helped shorten the development time of Richart and all its features by over 67%. This effectively supported Taishin Bank to launch the service through a minimum valuable product version in only 10 months.

“It also enables Richart to keep monitoring customers’ opinions and needs, then respond to them quickly,” added Shang.

To mitigate security risks associated with the purely digital nature of the platform, Richart has

Case study: TAISHIN BANK on Richart’s capabilities enables it to stay ahead of the game. This is facilitated by an integration system that helps make the Richart app flexible in getting better and faster information from different systems and functionalities.

Oliver Shang, president & CEO, Taishin Bank

designed a hi-tech and multi-level security system to guard against cybercrime including a 128bit SSL firewall, overtime automatic logout, instant notification through text and email, and One Time Password (OTP). Shang claims that since its inception, Richart has not encountered any security incidence as the bank works overtime to improving app capabilities as well as its information security frameworks.

In a revamp started in October 2017, Richart 2.0 was developed to provide more comprehensive and advanced financial services to help Taishin Bank fulfil customers’ financial needs more thoroughly.

Richart 2.0 helped expand Taishin Bank’s portfolio to include a foreign currency account, a financial advisory service based on artificial intelligence (AI), online insurance that allows clients to purchase policies within five minutes, and smart personal loans that allow them to get the funding they need within an hour with a precalculated credit line.

“Richart also keeps cooperating with different industry partners to provide customers with more comprehensive financial services.

Customers can use the Richart app to complete transaction, manage their wealth anytime, anywhere,” Shang explained, adding that the team’s willingness to relentlessly improve

Social responsibility In line with the bank’s goal to teach young Taiwanese residents how to effectively manage their wealth at an early age, Richart has been conducting campus lectures in universities and schools across the country. The bank has since conducted nearly 50 such lectures through the assistance of leading wealth management professionals which also serves as an effective platform to reach Richart’s target market and promote the app.

In fact, Shang claims that over 5,000 students have attended the lectures and over 1,000 students have opened the Richart account on their journey towards financial literacy.

Some of Taishin Bank’s efforts to improve its social responsibility and inclusive finance push include helping charity organisations teach young people the concept of wealth management whilst contributing to community improvement. One initiative is the bank’s active campaign to help raise funds for social issues including animal welfare, which raised $16,000 from over 11,000 participants.

The initiative is also the first digital banking product in Taiwan

Along with the ever increasing customer base, Richart will further dive deeper into the different lifestyle segments of the digital population.

to undergo the Social Return on Investment (SROI), an internationally recognised project performance evaluation approach, to provide insight into Richart’s influence on the society. It showed that every NT$1 of investment into Richart has the potential to create NT$5.5 of societal value—which is 1.5 times greater than the global SROI average of 3.77.

“Through the SROI evaluation, we also found that Richart has made positive changes to customers’ financial management habits,” Shang said. “Customers start increasing their savings intention, and reducing impulse and excessive consumption.”

Push for progress Following a positive response from its target market, Shang said that Richart will not let up in experimenting as it trials emerging technologies like blockchain and distributed ledger across verticals like e-commerce, telecommunication and music in an effort to remain relevant to a demographic with constantly evolving digital needs.

“Along with the ever increasing customer base, Richart will further dive deeper into the different lifestyle segments of the digital population and cooperate with foreign and local partners as well as startups in various industries to provide relevant services to Richart users,” Shang said. “We want to be the forerunner in digital banking, always providing the most thoughtful and ‘wow’ services that go beyond customers’ expectations.”

Team members of Taishin Bank’s digital bank Richart

ASIAN BANKING AND FINANCE | December 2018 37

Case study: YES BANK

Blockchain representation

YES BANK unlocks blockchain to champion vendor financing Now customers and their clients can be in one platform and access real-time information on financing, improving process speed and productivity.

Y

ES BANK, India’s fourth largest private sector bank, decided to take the plunge into the blockchain trend in early 2017, marking the beginning of a revolution not only in the country’s supply chain and financing landscape, but also in its ever evolving banking industry. Launched in January 2017, YES BANK’s multi-nodal blockchain services suite aimed to fully digitise the business processes—from payments to invoices—of Bajaj Electricals Limited, a consumer electrical equipment manufacturer based in Mumbai, India.

But in the process of launching the service for Bajaj Electricals, YES BANK also opened a treasure trove of possibilities for the whole of India’s banking and finance industry— that the time for blockchain to improve transactions, processes, and economic prospects of players in the vendor and supply chain financing sector is now.

Following the official launch of the bank’s blockchain services, YES BANK’s managing director and chief executive officer Rana Kapoor noted 38 ASIAN BANKING AND FINANCE | December 2018

Since the technology’s implementation, transaction time for Bajaj Electricals and its clients have been reduced from almost 4 days to near real-time.

that a central focus on innovation has and will always remain a part of the bank’s DNA to serve its clients better. “Since inception, YES BANK has used technology and innovation, as mission critical pillars, to offer a superior banking experience to its corporate and retail customers.

Our blockchain implementation is a continuation of this philosophy to offer revolutionary banking technology to our clients,” he said. “I strongly believe that we are only at the tip of the iceberg.”

Revolutionary step YES BANK’s current blockchain services suite for Bajaj Electricals Limited offers a list of comprehensive innovative solutions, with a focus on leveraging the technology to improve services—an industry first in India’s competitive banking industry.

The solution uses and leverages the Hyperledger Fabric supported

by IBM to design a vendor financing solution, which allows Bajaj Electricals to digitise the process for discounting and disbursal of funds to its vendors by integrating seamlessly with the bank’s systems.

It will also facilitate an automated debit from Bajaj Electricals’ account

by YES BANK, whilst the business logic and rules are captured in a blockchain-based smart contract (Chain Code), implemented in partnership with fintech startup Cateina Technologies.

For Anup Purohit, YES BANK’s chief information officer, the decision to take a deep dive in blockchain for vendor financing is simple: make the process better and more convenient for clients. “The to and fro of invoices, paperwork, and the subsequent paper trail was a time consuming process involving rigorous due diligence and needed innovative intervention,” he explained, noting that all stakeholders involved enjoyed being part of the same platform and access to real-time information, whilst at the same time increasing productivity for all.

Purohit said that since the technology’s implementation, transaction time for Bajaj Electricals and its clients have been reduced from almost 4 days to near real-time. But the list of benefits doesn’t end there.

“The application of blockchain developed by YES BANK benefits by making information readily available and accessible to all parties online, secure and tamper-proof mode of transactions, and an entirely transparent process whilst maintaining a secure audit trail owing to the nature of blockchain technology,” he said.

But the journey to launch YES BANK’s blockchain services— first for Bajaj Electrical and then a commercial launch in March 2018—was anything but straightforward. This is despite YES BANK’s unwavering commitment to be at forefront of innovative banking, particularly for blockchain. The bank’s CIO explained that it was an arduous process of brainstorming, trying, and learning about how to implement the best blockchain solution for its client and gaining support for the endeavour.

Purohit explained that one of the key learnings has been

Case study: YES BANK Purohit emphasised that these are the benefits of blockchain technology that YES BANK was banking on.

“Our interest in blockchain was owing to its potential of ushering an era of efficient processes through transparency, speed, security, and seamless connections in order to maintain records and make quicker transactions,” he explained.

“We wanted to create a blockchain banking solution for our clients, which would have immediate, measurable impact and provide a quantum leap compared to the current process,” Purohit said. This line of thinking and innovative pursuit made them become the first in India’s banking industry to implement a multi-nodal blockchain transaction, fully digitising vendor financing for its client.

Anup Purohit, CIO, YES BANK This focus on blockchain and other innovative technologies in accepting the model of collaboration the banking and financial sectors is over ownership. Collaboration and growing around the world. Purohit creating an open environment for explained that during the process innovative developments ensured the development of new technologies of designing and implementing the blockchain service for Bajaj Electrical, like blockchain application, which help institutions like YES BANK offer a handful of other banks across the globe are also dipping their toes in the better solutions to clients, improve sea of possibilities that the technology business operations, and strengthen can offer for their products and banking relations, he said. services. And for the bank’s CEO, this “One of the challenges was to find is not a surprise. a client who would truly partner us With the belief that banks are in spirit; be willing to mobilise teams increasingly becoming more like to test the process and help us in technology companies that are in the quick implementation,” he noted. “We business of banking, Kapoor noted found our match in Bajaj Electricals that technology will not anymore be and the process is a success today.” an option but part of the DNA of any The biggest win in this success story, however, is how this could pave the way for more implementation of blockchain technology within the sector and across various sectors in India—and even across countries in the Asia Pacific region.

Blockchain trend Blockchain has been the hottest item in innovative banking and finance sectors over the last few years. It is a cryptographically secure list of records that is resistant to modification of data. It allows for fast, secure, transparent, permanent, and tamper-proof way of recording a transaction—something that appeals in transactional industries like banking and finance.

YES BANK is planning to scale the supply chain financing solution on blockchain to several other players in manufacturing and other sectors, thereby easing their operations and providing a real-time bill discounting solution.

financial institution wanting to stay in the game. “We envision that blockchain coupled with IBM’s Cognitive solution on Cloud platform will make a significant impact in the global transaction banking space by ensuring that the financial supply chain is more robust, secure, seamlessly connected, and provides a great customer experience,” he said.

Looking forward With the blockchain technology already in commercial operations since March 2018, Purohit noted that they are now looking to extend the service to other clients and industry consortiums, and explore new use cases on blockchain for know-yourcustomer, bank guarantees, and more.

“YES BANK is planning to scale the supply chain financing solution on blockchain to several other players in manufacturing and other sectors, thereby easing their operations and providing a real-time bill discounting solution,” he said. “Considering that our infrastructure is already in place and the comfort of having a readysolution live on blockchain gives us the confidence to build several more use cases on the blockchain technology either through standalone or consortium-led models, giving us substantial competitive advantage.”

There is also the possibility of creating differentiation through the plug and play model to scale various digital banking solutions through a range of APIs available within the bank, he concluded.

YES BANK is also looking to explore blockchain for KYC, bank guarantees, and more

ASIAN BANKING AND FINANCE | December 2018 39

Special REPORT: Virtual Banking

Will virtual banks make the sun set for Hong Kong’s incumbent banks?

Are Hong Kong lenders under threat as virtual banks zero in on their market?

The HKMA has received around 30 applications in the first round of screening ending August 31.

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ho will emerge as the first ever batch of Hong Kong virtual banks? All eyes are on the city’s banking sector as its top regulator prepares to grant the first online-only banking licences as early as Q4 2018 or Q1 2019 as part of its comprehensive digital blueprint for the financial services sector.

After unveiling revised guidelines on the authorisation of such entities in May, the Hong Kong Monetary Authority (HKMA) has received around 30 applications in the first round of screening ending August 31, according to local media reports, as a motley array of fintech, telecommunications operators, retail banks, stored value facility (SVF) licence holders, and Chinese tech giants are gunning to wrestle market share from old-guard banks.

Confirmed applicants for the licence include Standard Chartered Hong Kong, online lending platform 40 ASIAN BANKING AND FINANCE | December 2018

Virtual banks can offer better pricing and services because they do not have legacy operations and technology costs.

WeLab, a consortium led by CASH Financial Services Group, Zhong An Bank allied with China Citic Bank and HKT, a joint venture by Bank of East Asia, Airwallex, and Sequoia Capital China.

With no need to set up branches, these virtual entities will deliver the full suite of retail banking services which can range from extending loans, operating savings accounts, issuing cards and offering payment services through an app or a website—although they are required to maintain a level of physical presence with which to address customer inquiries and interface with the HKMA. “It’s a big step for Hong Kong because this allows for new market entrants providing pure digital banking, and in a city which has historically experienced relatively traditional financial services. This shift is accelerated by non-traditional

players applying for the licence, leveraging new technology and distribution mechanisms, rather than incumbent banks undergoing digitisation,” said Marc Entwistle, director at the Fintech Association of Hong Kong (FTAHK) and AsiaPacific FinTech Strategy at EY. Taking inspiration from a number of global initiatives, Hong Kong’s dedicated virtual banking push signals its commitment to cement its leadership in the banking scene and capitalise on the growing number of tech-savvy residents embracing mobile for their financial needs.

“Virtual banks can offer better pricing and services because they do not have legacy operations and technology costs. In virtual banks, middle and back office functions are coupled together seamlessly,” said Sankar Krishnan, executive vice president, banking and capital markets, Capgemini.

Special report: Virtual Banking Virtual banks will be subject to the same level of minimum paidup capital requirements of $300m like their retail counterparts. They are also required to invest heavily in cybersecurity and information security frameworks since there is not much in the way of back-up when there are no physical branches to fall back on, noted Entwistle.

The HKMA also requires applicants to produce an exit plan that will enable them to gracefully unwind their business without causing disruption to the financial system in the event that they shut down operations. Entwistle notes that it is likely for this reason that a lot of tech players have been forming joint ventures to pursue a banking licence as they pool their capital, tech and managerial expertise should they graduate from being startups to fullfledged virtual banks.

“At the end of the day, we’re not talking about startups anymore— we’re talking about the banks. Banks are something that the Hong Kong public have to trust because you’re giving them your payroll. Sometimes, it’s acceptable for startups to fail but it’s not acceptable for a bank to fail.”

Should banks be afraid?

With fintechs fast encroaching in on their territory, do entrenched banks have reason to fear? A recent report by market research firm J.D. Power revealed that more than half (57%) of Hong Kong customers have expressed readiness to try out virtual banks as they lament growing problems with their existing e-banking platforms with 35% admitting to have encountered a problem with their online banking account and 56% experiencing difficulties with their banking app.

A third (32%) of Hong Kong customers are also considering switching from their main banks, suggesting higher levels of dissatisfaction compared to their peers in Singapore (18%) and Australia (16%) and creating the perfect launch environment for the banking upstarts.

“Virtual banks will likely challenge traditional banks to innovate and provide more value-added digital

platforms to customers as the choices for consumers expand,” said Chua Han Teng, head of Asia country risk at Fitch Solutions Macro Research.

Banking on first-mover advantage, Standard Chartered Hong Kong has decided to throw its hat early on in the race as it sets up a separate entity in support of its virtual banking ambitions. “People do not want another account with a different brand, they want their financial lives simplified. That is why we believe that the launch of a virtual bank will give clients the choice of going completely digital for their everyday banking needs,” Samir Subberwal, regional head, retail banking, Greater China and North Asia, said in a statement.

Other banks are instead choosing to direct their resources to digitising their core services like DBS Bank who was quoted in a local media interview in July that it doesn’t “feel the need to launch a virtual bank” amidst significant headroads on its existing e-banking initiatives.

“DBS Hong K ong might change opinion if SC eats its market quota.

I understand DBS might not need to do so in Singapore since it is one of the large incumbents but, in my opinion, it should follow SC’s strategy,” said Alicia Garcia-Herrero, chief economist for Asia Pacific at Natixis.

However, there is no better time for traditional lenders to take advantage of this opportunity especially as they command the lion’s share of the banking market and any new player will still have to first work at chipping away at their dominance in addition to other problems that are unique to their nature as digital entities.

“Aging is a roadblock for virtual banks which is why it is easier for banks with physical presence to launch a parallel strategy based on virtual banking but much harder for those newcomer which do not count on such physical platform,” added Garcia-Herrero.

Despite the massive market potential, a number of banks are still weighing their options as they study the strengths of going the virtual banking route. “Bank of China (Hong Kong) will proactively drive financial innovation and study the feasibility

Marc Entwistle

Sankar Krishnan

Chua Han Teng

Alicia GarciaHerrero

of virtual banking development, in order to provide customers with diversified banking services,” the bank said in an emailed statement.

Hang Seng Bank echoed the cautious sentiment. “With regard to applying for a virtual bank licence, we are conducting a review based on various considerations, including market conditions, the needs of our customers and whether the development of a virtual bank would complement our existing business.”

Capgemini’s Krishnan, however, believes that it is only a matter of time that banks get onboard the virtual banking train. “In five years’ time, all banks will be virtual banks, as they re-platform themselves by connecting to each other’s platforms, creating a giant utility,” he forecasted. “Almost all traditional banks are applying for virtual bank licences in Hong Kong, so the stage is being set for a lot of competition that will hopefully benefit consumers.”

On its own, the virtual banking guidelines already represent a massive step forward for Hong Kong’s banking sector. However, the initiative is only one of seven dedicated efforts spearheaded by the HKMA to future-proof the city’s financial services sector for the digital age. Other initiatives that are expected to come online this year include the formulation of a policy framework on open API rules; a Faster Payment System that encourages the use of mobile phone numbers or email address for HKD and renminbi payments; and enhancing the fintech supervisory sandbox.

“There’s a shift along multiple fronts which are pushing Hong Kong into a very positive direction,” said Entwistle. “It’s down to who will move fastest, who can innovate fastest.”

Standard Chartered Hong Kong is one of the first to apply for a virtual banking licence

ASIAN BANKING AND FINANCE | December 2018 41

retail banking forum: Bangkok

Banks lack a “test and learn” discipline due to the fear of failure

How can Thailand make the most out of the country’s digital banking boom?

As more players flood the digital market, experts and bankers alike discuss what to do and what to avoid.

T

hree in four banking transactions in Thailand are now digital in nature, significantly up from a measly one in 10 back in 2012. Mobile and internet banking in the country accounted for a total of $718.4b in 2017, a 22% compounded increase since 2010.

This number continues to grow amidst Bank of Thailand’s initiatives to push the National E-Payment Master Plan and FinTech Regulatory Sandbox to stimulate the expansion of the digital landscape and Internet of Things (IoT) in the country.

With the pace of technological change always increasing in speed, banks hope to transform as fast and deliver better solutions than the next financial service provider. Asian Banking & Finance gathered thought leaders and banking executives in Bangkok for its annual Retail Banking Forum to discuss the latest trends in banking as well as how emerging 42 ASIAN BANKING AND FINANCE | December 2018

When once convenience was the motivation for banks to go digital, customer experience is now key for banks to be able to keep them.

challenges are being addressed.

When once convenience was the buzzword and the motivation for clients to go digital, customer experience is now the key for banks to be able to keep them. Avishek Nandy, principal, Bain & Company, said that today’s customers want banking to be personalised, easy, and innovative, and that banks these days are investing in simple and digital experiences that compel customers.

UX or nothing But how do banks really compel customers to do their banking journey with them? Executives may be willing to invest huge amounts of resources in a specific solution, but if customer expectations are not met, banks will not only lose from this experience. Bad customer experience can lead banks to lose their most prized possession—their clientele.

Yuenyong Ken Songsiridej, head,

Branch Operations Excellence, TMB Bank, said that the best way to design a branch to deliver best customer experience is to think of three important things: understanding their customer demographics before diving into design planning; utilising designthinking and customer journey maps in store planning and design; and integrating technology and smart devices to create an immersive instore experience.

For TMB, Songsidirej shared the new design of the customer journey when in a physical branch. The A-E-C Model or Attract-EngageConnect model transforms the bank from viewing a digital facade to reading an e-brochure and joining a smart queue to receiving regular TMB advisories. He emphasised the role of the navigator, who facilitates and provides service for customers at the engagement zone as well as acts as a medium for enabling adoption of

retail banking forum: Bangkok digitalised banking.

To further enhance their digital capabilities, Bank of Ayudhya (Krungsri) established a subsidiary that places particular focus on fintechs and startups in Thailand. Sam Tanskul leads Krungsri Finnovate as managing director and steers it around three key areas: accelerator and academic collaboration, startup project management, and corporate venture capital.

With the continued emergence of new technologies and solutions, the otherwise peaceful existence of banks have become disrupted and their usual services unbundled.

According to Tanskul, banks can take this as an opportunity to partner with innovators and forge their services ahead. For instance, Krungsri Finnovate ties up with several fintechs and startups to offer various financial services such as mortgage, SME and corporate banking, and lending. One example is its potential investment in Organice and Foodstory to provide credit assessment and spending/ expenses database of the SME direct to the bank.

Let the APIs come Banks must be willing to take risks to innovate and bring better solutions to their customers, however not all ideas must be made tangible just because they sound exciting and new. Sambit Pattayanak, Applied Predictive Technologies (APT) vicepresident client services, MasterCard, highlighted that in a constantly evolving region, innovative industries and organisations cannot depend on past performance as an indicator of success. According to him, financial institutions are constantly innovating or reacting new initiatives.

However, he cautioned that leading organisations noted that over 50% of new initiatives did not break in 2017.

Application programming interface or API, has taken the reins of financial services not just in Thailand, but all over the world. According to Jigar Bhansali, vice-president, Solution Architecture, Asia & China, at Software AG, APIs are revolutionising banking and building partnerships in the digital ecosystem, changing how customers look at user experience.

Bhansali said that banks who engage in the deployment of APIs should treat their API as a product, and not just a means by which to promote their primary product. To fully maximise the API experience, banks must ensure that they are covered from documentation to lifecycle management, and all the other steps in between such as analytics, collaboration, security, monetisation, and development.

Eiichiro Yanagawa, senior analyst at Celent said that banks will have to undertake a broad range of activities to prepare for implementation of any new regulation. First, they must define their “open API” business and commercial model, including their appetite for data openness, monetisation strategy and roadmap.

Second, they must think about the integration of product and service providers to enhance the bank offering, restructuring internal processes to leverage the API integration model along the way.

According to Yanagawa, banks must also define architecture requirements for security, data, and channel applications as well as opportunities to simplify architecture by leveraging new APIs and streamlining data integration.

They must also be able to identify developer pathways that are favorable to bank objectives and design developer support model to enable easy build-out of 3rd party applications.

Roadblocks Despite its popularity and positive reception, digital transformation raises profound organisational questions for banks. As more banks transform their business models and immerse themselves in the digital landscape, a huge number of jobs remain at risk of automation. Bain noted that by 2020, 85% of customer engagement will be managed without human interaction at all.

Many banks in Asia are still trying to address challenges that come with embracing the digital space. In fact, digital adoption remains an issue in countries that have only had a digital banking landscape for less than ten x said that there is years. Bain’s Nandy

Customers are more open to buying from tech firms in countries where banks underserve digitally.

still significant room for additional adoption of mobile banking, with less than 25% of customers adopting it to date. According to him, customers are more open to buying from tech firms in countries where banks underserve digitally.

According to Nandy, banks are still highly traditional and traditional operating models struggle with several pain points. At present, processes do not move fast enough to keep up with changing customer and competitor demands. He said that quarterly reporting and annual incentives dominate, resulting in unsynchronised timelines.

In terms of decision making, banks are still too risk averse, as leadership is used to approaches suited to big investments and decisions, compared to the dynamism that technological innovation requires. Due to the fear of failure, banks lack a “test and learn” discipline, something that has helped other companies around the globe figure out the best solutions.

Furthermore, banks deem innovation to be too hard to scale and integrate, due to the lack of a clear vision and alignment around priorities. Nandy said that whilst the digital space is borderless, there is still insufficient cross functional collaboration, and missing processes to initiate, integrate, and scale new initiatives.

And like anywhere else in the world, Thailand also experiences digital talent gaps, and sometimes these gaps cannot be filled. Bain & Company showed that the changing landscape continues to create new capability gaps that further the current scarcity of talent.

Unfortunately, existing talent also lack practice to make external partnerships work.

Thailand also experiences digital talent gaps

ASIAN BANKING AND FINANCE | December 2018 43

COVER STORY

ABF Awards 2018 recognises record number of winners

O

ver 155 outstanding banks and insurance companies from nearly 40 countries were recognised at the 2018 Retail Banking Awards, Wholesale Banking Awards, and Corporate & Investment Banking Awards held at the Shangri-La Singapore on 13 July 2018. The event beat last year’s record after gathering more than 330 executives and guests in one roof.

This year’s nominations were judged by representatives from the Big Four accounting firms: Mohit Mehrotra, strategy consulting coleader at Deloitte Asia Pacific; Liew Nam Soon, ASEAN managing partner at Ernst and Young; Egidio Zarrella, ASPAC head of banking and capital markets, KPMG; and Andrew Taggart, partner, financial services leader, PwC Southeast Asia Consulting.

“Whilst the rest of the world is occupied with the World Cup, tonight is a night to recognise banks who are well deserving of their recognition,” said Tim Charlton, publisher of Asian Banking & Finance magazine.

Below is a list of all the winning companies. Congratulations!

WINNERS OF THE RETAIL BANKING AWARDS 2018 Alliance Bank Malaysia Berhad Financial Inclusion Initiative of the Year - Malaysia Azizi Bank Domestic Retail Bank of the Year - Afghanistan Baiduri Bank Berhad Credit Card Initiative of the Year - Brunei Domestic Retail Bank of the Year - Brunei Bank Asia Limited Financial Inclusion Initiative of the Year - Bangladesh Bank Audi Domestic Retail Bank of the Year - Lebanon Financial Inclusion Initiative of the Year - Lebanon

Banque Pour Le Commerce Exterieur Lao Public (BCEL) Financial Inclusion Initiative of the Year - Laos Mobile Banking Initiative of the Year - Laos BDO Unibank Corporate Social Responsibility Program of the Year - Gold Bank for Investment and Development of Vietnam JSC. (BIDV) SME Bank of the Year - Vietnam Cambodian Public Bank Plc. Domestic Retail Bank of the Year - Cambodia Citibank Singapore Limited Credit Card Initiative of the Year - Singapore International Retail Bank of the Year - Asia Pacific Social Media Initiative of the Year - Singapore Citibank India Debit Card Initiative of the Year - India Citibank N.A., Indonesia Digital Banking Initiative of the Year - Indonesia Citibank (Hong Kong) Limited Wealth Management Platform of the Year - Hong Kong CB Bank Domestic Retail Bank of the Year - Myanmar Commercial Bank of Ceylon PLC Automobile Lending Initiative of the Year - Sri Lanka DBS Bank (Taiwan) Advertising Campaign of the Year - Taiwan Employer Award of the Year - Gold DBS Bank Domestic Retail Bank of the Year - Singapore Wealth Management Platform of the Year - Singapore Open Banking Initiative of the Year - Singapore Service Innovation of the Year - Singapore HDFC Bank Limited Service Innovation of the Year - India Branch Innovation of the Year - Gold Hong Leong Finance Ltd ASEAN Finance Company of the Year Mortgage and Home Loan Product of the Year - Singapore HSBC Bank (Singapore) Limited Advertising Campaign of the Year - Singapore HSBC Sri Lanka Advertising Campaign of the Year - Sri Lanka HSBC Bank Australia Ltd Debit Card Initiative of the Year - Australia

PT Bank Commonwealth Indonesia Social Media Initiative of the Year - Indonesia Wealth Management Platform of the Year - Indonesia

HSBC Bank (China) Company Limited International Retail Bank of the Year - China Wealth Management Platform of the Year - China

Bank of Ayudhya Public Company Limited Mortgage and Home Loan Product of the Year - Thailand

The Hong Kong and Shanghai Banking Corporation Limited, India Corporate Social Responsibility Program of the Year - Bronze

Bank of Ayudhya - Krungsri Auto Open Banking Initiative of the Year - Thailand Automobile Lending Initiative of the Year -Thailand Bank of China (Hong Kong) Limited Digital Banking Initiative of the Year - Hong Kong Mobile Banking Initiative of the Year - Hong Kong Service Innovation of the Year - Hong Kong Gold and Precious Metals Bank of the Year - Hong Kong Bank of Guam Corporate Social Responsibility Program of the Year - Silver ​ ank of the Philippine Islands (BPI) B Domestic Retail Bank of the Year - Philippines 44 ASIAN BANKING AND FINANCE | December 2018

ICICI Bank Online Banking Initiative of the Year - India Website of the Year - India Credit Card Initiative of the Year - India Islamic Finance and Investment Limited Finance Company of the Year - Bangladesh Joint Stock Commercial Bank for Foreign Trade of Vietnam Mobile Banking Initiative of the Year - Vietnam Kazkommertsbank (Qazkom) Digital Banking Initiative of the Year - Kazakhstan Mobile Banking Initiative of the Year - Kazakhstan

WHO BETTER, TO HELP YOU SHAPE A FUTURE IN ASEAN. We and ASEAN were born in the same momentous decade; Maybank in 1960 and ASEAN just 7 years later.

Since that time, we have lived and breathed all the flavours and nuances of the ASEAN story.

Today, as the only financial institution whose footprint covers all 10 ASEAN countries, we were the first investment bank to bring ASEAN, as a single marketplace, to the world.

With resources in every ASEAN market, we are closest to the source. Nobody is more capable in connecting the dots for you, to bring you what we call, opportunity with a capital ‘O’.

So, who better to help you shape ASEAN’s opportunities?

We are proud recipients of these prestigious awards: Domestic Project Finance Bank of the Year - Malaysia ABF Wholesale Banking Awards 2018 Equity Deal of the Year - Malaysia ABF Corporate & Investment Banking Awards 2018 Mergers and Acquisitions Deal of the Year - Malaysia ABF Corporate & Investment Banking Awards 2018 Online Securities Platform of the Year - Malaysia ABF Retail Banking Awards 2018

ASEAN’s Investment Bank

COVER STORY KASIKORNBANK PCL. Credit Card Initiative of the Year - Thailand Financial Inclusion Initiative of the Year - Thailand Domestic Retail Bank of the Year - Thailand KBZ Bank Mobile Banking Initiative of the Year - Myanmar Maritime Bank (MSB) Mid-sized Domestic Retail Bank of the Year - Vietnam Maybank Domestic Retail Bank of the Year - Malaysia Mobile Banking Initiative of the Year - Malaysia Open Banking Initiative of the Year - Malaysia Online Banking Initiative of the Year - Malaysia Maybank Singapore New Consumer Lending Product of the Year - Singapore

Siam Commercial Bank Branch Innovation of the Year - Silver Service Innovation of the Year - Thailand Sovcombank Consumer Finance Product of the Year - Russia Standard Chartered Bank (Hong Kong) Credit Card Initiative of the Year - Hong Kong International Retail Bank of the Year - Hong Kong Advertising Campaign of the Year - Hong Kong Standard Chartered Bank India Digital Banking Initiative of the Year - India State Bank of India Mobile Banking Initiative of the Year - India

MUTHOOT MICROFIN LIMITED Finance Company of the Year - India

Taishin Bank Credit Card Initiative of the Year - Taiwan Branch Innovation of the Year - Bronze Domestic Retail Bank of the Year - Taiwan Mobile Banking Initiative of the Year - Taiwan New Consumer Lending Product of the Year - Taiwan Digital Banking Initiative of the Year - Taiwan

National Bank of Pakistan Consumer Finance Product of the Year - Pakistan Rural Bank of the Year - Pakistan

The Saudi British Bank (SABB) Advertising Campaign of the Year - Saudi Arabia Domestic Retail Bank of the Year - Saudi Arabia

National Development Bank PLC Domestic Retail Bank of the Year - Sri Lanka Financial Inclusion Initiative of the Year - Sri Lanka SME Bank of the Year - Sri Lanka

TMB Bank Public Company Limited Mobile Banking Initiative of the Year - Thailand Wealth Management Platform of the Year - Thailand

Maybank Investment Bank Berhad Online Securities Platform of the Year - Malaysia

OCBC Bank ASEAN SME Bank of the Year OCBC Malaysia SME Bank of the Year - Malaysia OCBC NISP SME Bank of the Year - Indonesia PT Bank OCBC NISP Tbk International Retail Bank of the Year - Indonesia Mobile Banking Initiative of the Year - Indonesia OJSC Optima Bank Mobile Banking Initiative of the Year - Kyrgyzstan Ping An Bank Domestic Retail Bank of the Year - China Gold and Precious Metals Bank of the Year - China PNB Savings Bank Consumer Finance Product of the Year - Philippines Service Innovation of the Year - Philippines

Turk Ekonomi Bankasi Digital Banking Initiative of the Year - Turkey Union Bank of the Philippines Online Banking Initiative of the Year - Philippines Digital Banking Initiative of the Year - Philippines United Overseas Bank Debit Card Initiative of the Year - Singapore Financial Inclusion Initiative of the Year - Singapore Mobile Banking Initiative of the Year - Singapore UOB Vietnam Online Banking Initiative of the Year - Vietnam UOB Indonesia Employer Award of the Year - SIlver YES BANK Mortgage and Home Loan Product of the Year - India SME Bank of the Year - India

Phongsavanh Bank Limited Mid-sized Domestic Retail Bank of the Year - Laos

WINNERS OF THE WHOLESALE BANKING AWARDS 2018

PrimeCredit Limited Finance Company of the Year - Hong Kong

Abu Dhabi Commercial Bank UAE Domestic Trade Finance Bank of the Year

RAKBANK Advertising Campaign of the Year - UAE Digital Banking Initiative of the Year - UAE Service Innovation of the Year - UAE

Ardshinbank CJSC Armenia Domestic Trade Finance Bank of the Year Armenia Domestic Project Finance Bank of the Year

RHB BANK BERHAD Digital Banking Initiative of the Year - Malaysia Saigon-Hanoi Commercial Joint Stock Bank Financial Inclusion Initiative of the Year - Vietnam South East Asia Commercial Joint Stock Bank Credit Card Initiative of the Year - Vietnam Security Bank Corporation Advertising Campaign of the Year - Philippines Financial Inclusion Initiative of the Year - Philippines Mobile Banking Initiative of the Year - Philippines 46 ASIAN BANKING AND FINANCE | December 2018

AtaBank OJSC Azerbaijan Domestic Technology & Operations Bank of the Year Babylon Bank Iraq Domestic Technology & Operations Bank of the Year Bangkok Bank Thailand Domestic Trade Finance Bank of the Year Bank of Ayudhya Public Company Limited (Krungsri) Thailand Domestic Technology & Operations Bank of the Year Bank of China (Hong Kong) Limited Hong Kong Domestic Cash Management Bank of the Year

COVER STORY Bank Saderat Tashkent Uzbekistan Domestic Cash Management Bank of the Year Bank Sinopac Taiwan Domestic Technology & Operations Bank of the Year BDO Unibank Philippines Domestic Cash Management Bank of the Year Philippines Domestic Trade Finance Bank of the Year Bhutan National Bank Limited Bhutan Domestic Technology & Operations Bank of the Year BPI Capital Corporation Philippines Domestic Project Finance Bank of the Year CATHAY UNITED BANK Taiwan Domestic Cash Management Bank of the Year Taiwan Domestic Trade Finance Bank of the Year CB BANK (Co-operative Bank Ltd.) Myanmar Domestic Cash Management Bank of the Year Commercial Bank of Ceylon PLC Sri Lanka Domestic Trade Finance Bank of the Year Sri Lanka Domestic Technology & Operations Bank of the Year Sri Lanka Domestic Foreign Exchange Bank of the Year

PT Bank OCBC NISP Tbk. Indonesia Domestic Technology & Operations Bank of the Year Indonesia Domestic Foreign Exchange Bank of the Year PT Bank Mandiri (Persero) Tbk Indonesia Domestic Trade Finance Bank of the Year Indonesia Domestic Cash Management Bank of the Year RHB Bank Berhad Malaysia Domestic Foreign Exchange Bank of the Year Malaysia Domestic Trade Finance Bank of the Year Malaysia Domestic Technology & Operations Bank of the Year Saigon-Hanoi Commercial Joint Stock Bank Vietnam Domestic Project Finance Bank of the Year Security Bank Corporation, Philippines Philippines Domestic Technology & Operations Bank of the Year Standard Chartered Bank India India International Trade Finance Bank of the Year India International Technology & Operations Bank of the Year Techcombank Vietnam Domestic Cash Management Bank of the Year Vietnam Domestic Trade Finance Bank of the Year

CTBC Bank Taiwan Domestic Foreign Exchange Bank of the Year

TURK EKONOMI BANKASI (TEB) Turkey Domestic Cash Management Bank of the Year

DBS Bank Singapore Domestic Technology & Operations Bank of the Year

UNITED OVERSEAS BANK (MALAYSIA) BERHAD Malaysia International Cash Management Bank of the Year

Doha Bank Qatar Domestic Trade Finance Bank of the Year

Westpac Institutional Bank Australia Domestic Trade Finance Bank of the Year

Emirates NBD UAE Domestic Cash Management Bank of the Year

YES BANK India Domestic Trade Finance Bank of the Year India Domestic Technology & Operations Bank of the Year

Hang Seng Bank Limited Hong Kong Domestic Trade Finance Bank of the Year Hong Kong Domestic Technology & Operations Bank of the Year ICICI Bank Limited India Domestic Cash Management Bank of the Year Joint Stock Commercial Bank for Investment and Development of Viet Nam Vietnam Domestic Foreign Exchange Bank of the Year Joint-stock commercial bank “Agrobank” Uzbekistan Domestic Technology & Operations Bank of the Year KASIKORNBANK PCL. Thailand Domestic Cash Management Bank of the Year

WINNERS OF THE CORPORATE & INVESTMENT BANKING AWARDS 2018 Bank for Investment and Development of Vietnam JSC (BIDV) Corporate Client Initiative of the Year - Vietnam Bank of Ayudhya PCL (Krungsri) Corporate Client Initiative of the Year - Thailand

KBZ BANK Myanmar Domestic Trade Finance Bank of the Year

BDO Capital & Investment Corporation Corporate & Investment Bank of the Year - Philippines Equity Deal of the Year - Philippines Syndicated Loan of the Year - Philippines

LAO VIET JOINT VENTURE BANK Laos Domestic Technology & Operations Bank of the Year

BPI Capital Corporation Debt Deal of the Year - Philippines

Maybank Malaysia Domestic Cash Management Bank of the Year

Cathay United Bank Co., Ltd Syndicated Loan of the Year - Taiwan

Maybank Investment Bank Malaysia Domestic Project Finance Bank of the Year

China International Capital Corporation Limited Corporate & Investment Bank of the Year - China

National Development Bank PLC Sri Lanka Domestic Project Finance Bank of the Year

CIMB Investment Bank Corporate & Investment Bank of the Year - Malaysia Debt Deal of the Year - Malaysia

OJSC Bank Eskhata Tajikistan Domestic Trade Finance Bank Of The Year 48 ASIAN BANKING AND FINANCE | December 2018

CTBC Bank Debt Deal of the Year - Taiwan

COVER STORY DBS Bank Syndicated Loan of the Year - Singapore Equity Deal of the Year - Singapore GIB Capital Mergers and Acquisitions Deal of the Year - Saudi Arabia Habib Bank Limited Corporate & Investment Bank of the Year - Pakistan Mergers and Acquisitions Deal of the Year - Pakistan Debt Deal of the Year - Pakistan ICICI Bank Limited Corporate Client Initiative of the Year - India JOINT DEVELOPMENT BANK Corporate & Investment Bank of the Year - Laos

A full house awards dinner

Joint stock commercial bank “Agrobank” Corporate & Investment Bank of the Year - Uzbekistan ​ aybank Investment Bank M Equity Deal of the Year - Malaysia ​Mergers and Acquisitions Deal of the Year - Malaysia Meezan Bank Limited Syndicated Loan of the Year - Pakistan National Australia Bank Debt Deal of the Year - Australia Equity Deal of the Year - Australia National Development Bank PLC Debt Deal of the Year - Sri Lanka Syndicated Loan of the Year - Sri Lanka Corporate Client Initiative of the Year - Sri Lanka

Asian Banking & Finance Team

OJSC Bank Eskhata Corporate & Investment Bank of the Year - Tajikistan SB Capital Investment Corporation IPO Deal of the Year - Philippines Siam Commercial Bank Corporate & Investment Bank of the Year - Thailand Debt Deal of the Year - Thailand Equity Deal of the Year - Thailand UOB Mergers and Acquisitions Deal of the Year- Singapore Debt Deal of the Year - Singapore Bangkok Bank Team

Over 250 trophies were awarded to winning banks

50 ASIAN BANKING AND FINANCE | December 2018

Bank of Ayudhya (Krungsri) Team

COVER STORY

Ping Hu of Bank of China (Hong Kong)

Jackal Wu of Bank Sinopac

Walter Wassmer of BDO Unibank

Francis Peng of Cathay United Bank

Yang Ping Choong & Anand Singh Chanelet of DBS Bank

Sanath Manatunge of Commercial Bank of Ceylon

Fazlur Rahman Bin Kamsani of Doha Bank

Mouli Vasan of Abu Dhabi Commercial Bank

Jenny Yuen of Hang Seng Bank

Christopher Tan of Emirates NBD 52 ASIAN BANKING AND FINANCE | December 2018

Sachin Kuman of ICICI Bank

Supin Makboon Prasith of KASIKORNBANK

COVER STORY

Mayanthi Kamuburugamuwa of National Development Bank

Thomas Low of OCBC NISP

RHB Bank Berhad representatives

Daniel Yu and Pipo Padayhag of Security Bank Corporation

Lucas Chew of United Overseas Bank (Malaysia)

Zuzar Tinwalla and Yusuf Roopawalla of Standard Chartered Bank India

Etibar Babashli of AtaBank OJSC 54 ASIAN BANKING AND FINANCE | December 2018

Bee Lian Toh of Westpac Institutional Bank

COVER STORY

Foziah Amanulla of Alliance Bank Malaysia Berhad

Networking break

Foziah Amanulla and Aaron Kee of Alliance Bank Malaysia Berhad

Azaleen Mustapha and Andy Yong of Baiduri Bank

PT Bank Commonwealth Indonesia Team

Kwanchai Wanmaneeroj and Taleongsak Trakulwangveera of Bank of Ayudhya (Krungsri) 56 ASIAN BANKING AND FINANCE | December 2018

Pairote Cheun-Krut and Pornthep Tirasuntrakul of Bank of Ayudhya - Krungsri Auto

Sarder Akhter Hamed of Bank Asia Limited

Amanda Cheng and Ping Hu of Bank of China (Hong Kong)

Nantalath Keopaseuth and Somchanh Visisombath of Banque Pour Le Commerce Exterieur Lao Public (BCEL)

Starting from Home Shining the World CTBC keeps its growth momentum to reach customers all over the world with 260

branches in 14 countries. We take Taiwan to the horizon, and set its shining brilliance free.

CTBC Financial Park, Nangang Dist., Taipei City

CTBC wins more than 100 awards in six consecutive years, and renews Taiwan’s benchmark of excellence for the finance sector.

・No.1 for the 6th consecutive year in Taiwan of Brand Finance “Top 500 Banking Brands” ・No.1 in financial industry of Industrial Development Bureau, MOEA and Interbrand “2017 Best Taiwan Global Brands” ・No.1 in Taiwan of The Banker “Top 1000 World Banks 2017” ・Best Bank in Asian IDC Financial Insight ・Best Bank in Taiwan FinanceAsia / Asiamoney / Business Weekly / Common Wealth Magazine ・Best Retail Bank The Asian Banker / International Finance Magazine

www.ctbcbank.com

COVER STORY

Pham Thi Van Kanh of Bank for Investment and Development of Vietnam JSC. (BIDV)

Eduardo Francisco and Walter Wassmer of BDO Unibank

Sanath Manatunge of Commercial Bank of Ceylon

Yet Pek Yeen of Hong Leong Finance

Vu Thi Bich Thu of Joint Stock Commercial Bank for Foreign Trade of Vietnam

Representatives from DBS Bank

Representatives from Citibank

Alice Fok of Citibank Singapore 58 ASIAN BANKING AND FINANCE | December 2018

Shokan Dussipov of Kazkommertsbank (Qazkom)

Bidyut Dumra of DBS Bank

COVER STORY

HSBC Bank Team

Kalyani Nair and Tee Meng Kiong of Maybank

Dan Tan of Maybank Kim Eng Securities

Sadaf Sayeed of Muthoot Microfin Limited

Thusitha Boyagoda and KV Vinoj of National Development Bank

ICICI Bank Team

Chee Seng Wong of OCBC Malaysia 60 ASIAN BANKING AND FINANCE | December 2018

Sariya Taweesang of KASIKORNBANK

Tan Chor Sen of OCBC

COVER STORY

Southideth Nalyvan of Phongsavanh Bank Limited

Thomas Low of OCBC NISP

OCBC Executives

Jovencio Hernandez and Christopher Gene Lapuz of PNB Savings Bank

Sim Ee Chiew of RHB Bank

Mingkwan Pattanawong of TMB Bank 62 ASIAN BANKING AND FINANCE | December 2018

Gary Cheng of PrimeCredit Limited

Representatives from Security Bank Corporation

State Bank of India Team

COVER STORY

Siam Commercial Bank Team

Networking

Steven Chang and Jerry Chen of Taishin Bank

Standard Chartered Bank Executives

Union Bank of the Philippines Team

Networking

Executives from United Overseas Bank 64 ASIAN BANKING AND FINANCE | December 2018

UOB delegates celebrating their win

COVER STORY

BanPham Thi Van Khanh of k for Investment and Development of Vietnam JSC (BIDV)

Eduardo Francisco of BDO Capital & Investment Corp.

Saranya Srijakklawanwutt of Bank of Ayudhya (Krungsri)

KV Vinoj and Mayanthi Kamuburugamuwa of National Development Bank

Bidyut Dumra of DBS Bank

Sachin Kumar of ICICI Bank

Awards dinner 66 ASIAN BANKING AND FINANCE | December 2018

UOB Team

Joy Supan of SB Capital Investment Corp.

Albert Lim of UOB

Trade Transaction.

Seamless domestic and cross border transactions.

Westpac Institutional Bank provides a comprehensive suite of solutions to help our customers grow their domestic and international trade business.

Our innovative and integrated approach across trade, commodities and foreign exchange is backed by the insights of our trade team and our comprehensive supply chain offering.

We have a market makers license allowing direct interbank AUD/CNY and NZD/ CNY trading in China, positioning us to facilitate trade between Australasia and China. Our streamlined approach positions us to ensure you can capitalise on opportunities whilst managing risk. To find out more contact your Westpac representative or visit westpac.com.au/trade

Best.

Best.

Best Service Provider – Trade Finance, Australia1

Best Supply Chain Solution, Australia for ARA Group Limited1

Best.

No.1.

Best Service Provider – Structured Trade, Australia1

Domestic Trade Finance Bank of the Year – Australia2

Source: 1. The Asset Triple A Treasury, Trade and Risk Management Awards 2018. 2 ABF Wholesale Banking Awards 2018. Westpac Institutional Bank is a division of Westpac Banking Corporation ABN 33 007 457 141 AFSL 233714 (“Westpac”). Information current as at 24 August 2018. The services and products described in this material are provided in accordance with appropriate local legislation and regulation and may not be available in all countries. New Zealand: In New Zealand Westpac Institutional Bank refers to the brand under which products and services are provided by either Westpac or Westpac New Zealand Limited (NZBN 942 903 432 4622) (“WNZL”). Any product or service made available

by WNZL does not represent an offer from Westpac or any of its subsidiaries (other than WNZL). Neither Westpac nor its other subsidiaries guarantee or otherwise support the performance of WNZL in respect of any such product or service. WNZL is not an authorised deposit-taking institution for the purposes of Australian prudential standards. The current disclosure statements for the New Zealand branch of Westpac and WNZL can be obtained at the internet address www.westpac.co.nz. Both entities are registered banks in New Zealand under the Reserve Bank of New Zealand Act 1989. U.K.: Westpac Banking Corporation is registered in England as a branch (branch number BR000106), and is authorised and regulated by the Australian Prudential Regulatory Authority in Australia. WBC is authorised in the United Kingdom by the Prudential Regulation Authority. WBC is subject to regulation by the Financial Conduct Authority and limited regulation by the Prudential Regulation Authority in the United Kingdom. Details about the extent of our regulation by the Prudential Regulation Authority are available from us on request. Westpac Europe Limited is a company registered in England (number 05660023) and is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. China, Hong Kong, Singapore and India: Westpac Singapore Branch holds a wholesale banking licence and is subject to supervision by the Monetary Authority of Singapore. Westpac Hong Kong Branch holds a banking licence and is subject to supervision by the Hong Kong Monetary Authority. Westpac Hong Kong branch also holds a licence issued by the Hong Kong Securities and Futures Commission (SFC) for Type 1 and Type 4 regulated activity. Westpac Shanghai and Beijing Branches hold banking licences and are subject to supervision by the China Banking Regulatory Commission (CBRC). Westpac Mumbai Branch holds a banking licence from the Reserve Bank of India (RBI) and is subject to regulation and supervision by the RBI. U.S.: Westpac operates in the United States of America as a federally licenced branch, regulated by the Office of Comptroller of the Currency. Westpac is also registered with the US Commodity Futures Trading Commission (“CFTC”) as a Swap Dealer, but is neither registered as, or affiliated with, a Futures Commission Merchant registered with the US CFTC. Westpac Capital Markets, LLC (‘WCM’), a wholly-owned subsidiary of Westpac, is a broker-dealer registered under the U.S. Securities Exchange Act of 1934 (‘the Exchange Act’) and member of the Financial Industry Regulatory Authority (‘FINRA’).

financial inclusion initiative of the year - bangladesh

Bank Asia led financial inclusion in Bangladesh

A

social safety net beneficiaries, and Readymessage from Md. Arfan Ali, Made Garment (RMG) workers which is the president and managing director of way to enable them to manage their finance Bank Asia: I’m privileged to share adeptly and make decisions judiciously. that Bank Asia is the pioneer in introducing To outweigh the religious barrier, Islami agent banking service in Bangladesh. Bank Agent Banking is also a step forward Asia made a unique tech-based agent for the local community. From aspiring banking model ensuring appropriate entrepreneurs to smallholder farmers, security with real-time banking for its everyone is eligible for receiving small customers. It is turning financial inclusion amounts of loan. Salary payment and efforts tuned to people’s demand. other financial services to RMG workers Within a span of only four years of have been started through this platform. inception, we noticed a substantial headway Advantages of agent banking broaden the in this specialised banking service in terms smiles of the beneficiaries of a number of the number of agents, accounts, and of government and non-government deposits. Around 1.5 million unbanked development programs. people have already been included in our With support from the government’s agent banking network.

Union Digital Center (UDC), Bank Asia is This service started eliminating the poised to rapid expansion of its specialised difference in time and distance. It is banking service to the grassroots. providing customers with full-fledged Around 1.8 million beneficiaries of the banking services to their doorstep, government’s “Ektee Bari Ektee Khamar” and making convenient channeling of (One house, one firm) project that focuses remittance, depositing and withdrawing of on poverty eradication of the ultra-poor cash, and supporting small loans for cottage people in Bangladesh and aims to bring micro and small enterprises and also for down the poverty level agricultural farmers to 10% until 2021 have at an affordable “Around 1.5 million unbanked been enjoying banking cost. Of late, people people have already been services in Bank Asia’s in many remote corners of the included in our agent banking digital banking platform.

Already our agent country are able to network. This service started banking network receive structured eliminating the difference in covered all districts banking facilities time and distance.” in Bangladesh with with safety, comfort 2,300 agents at the and ease. grassroots as of August 2018. Above 250 Receiving social safety net payments is of the outlets are being operated by female no longer a troublesome experience for the entrepreneurs. As such, this digital banking beneficiaries, turning it into a convenient service is being used to reach rural women, experience through maximum availability attaining gender balance in employing of transaction points. Even school people at the grassroots. A recent study students are not left behind for availing revealed that out of the total users of agent financial services. Because we believe that banking, 29% are small businesses whilst students need to be brought under banking 18% are housewives, 15% are public and services to help them contribute to the private employees, 7% are farmers, 7% are national economy through their financial students, and 3% are day laborers. management activities. We facilitated Agent banking is the solution to financial literacy through school children,

68 ASIAN BANKING AND FINANCE | December 2018

Md. Arfan Ali, president & managing director, Bank Asia

provide financial services more advantageously for the rural people of Bangladesh, from providing individuals and farmers insurance, to creating e-commerce opportunities for ambitious entrepreneurs. In the next 5 years, we can expect to see that every village has a financial kiosk ready to serve the population who never had the opportunity to have a bank account and were left out.

CONTACT Company name: Bank Asia Limited Address: 68, Purana Paltan,Rangs Tower (Level 2 to Level 8), Dhaka - 1000 Phone number: +88-02- 47110062, 47110247, 47113867, 47110278, 47110173 Email: contact.center@bankasia-bd.com Website: www.bankasia-bd.com

Digital Banking Initiative of the Year - Hong Kong Mobile Banking Initiative of the Year - Hong Kong Service Innovation of the Year - Hong Kong

BOCHK is devoted to provide the best banking experience through mobilisation

Michael Wang, deputy general manager of E-Finance Centre, BOCHK

B

ank of China (Hong Kong) Limited (“BOCHK”) is dedicated to provide quality banking experience through digitalisation and mobilisation to enhance its reach and service inclusion, bringing in innovation with convenience and security.

With increasing mobility and flexibility in banking service provision, BOCHK is now setting an eye on promoting cross-border services, penetrating fintech development and BOCHK’s competitive edges from Hong Kong to the Greater Bay Area to Southeast Asian nations, to drive borderless banking services and omni-channel experience.

Holistic banking With the idea to permeate banking into everyday life, BOCHK has renovated its personal mobile banking application with more diversified functions and features to cater for the ever-changing demands of customers nowadays. The new design comes with a refreshing interface with homepage and shortcuts being customised according to individual’s usual banking practice, making its service more 70 ASIAN BANKING AND FINANCE | December 2018

interactive. Customers can also access Vein Authentication and iService, a virtual their bank accounts through WeChat for teller machine, in order to help customers enquiries and payment. embracing digitalisation.

Michael Wang, deputy general manager of E-Finance Centre at BOCHK said, “The The future of banking concept of mobilisation has brought With the backing from regulatory disruptive innovation to the banking institution and stepping in of technology industry in terms of accessibility, companies, fintech development is set interactivity, scalability, and usability. to bloom and new breed of services and Instead of simply providing a digital version products have emerged. “The banking of traditional ecosystem of the banking services, future will include “With mobilisation and banking through far more than just emerging technology, more mobilisation will financial services,” re-create a new said Michael Wang, dynamic solutions could be value network and “BOCHK will use big accomplished in terms of ecosystem, bringing analytics and financial products and wealth data holistic reform other innovative management.” expeditiously.” technology to The release of aggregate its core BoC Pay, a mobile payment app settling value across different sectors.” In one expenditure seamlessly in Guangdong-Hong way or another, BOCHK will continue to Kong-Macao Greater Bay Area, has marked accelerate its pace on making progress a cornerstone in cross-border mobile in fintech development with the payment. commitment to provide the best banking Facing proliferating usage of digital experience. channels, BOCHK is providing a solution Experience the personalised that is both secure and convenient by mobile banking service now! adopting biometrics like fingerprint and face ID to verify customer’s identity.

Designated mobile devices allow customers to authenticate digital transactions in a split second. In addition, mobile token has been introduced in BOCHK mobile banking Search “BOCHK” on App Store or Google Play, application. Customers can perform twoor scan this QR code to download the BOCHK factor authentication without the hassle to Mobile App to enjoy the one-stop banking! use a dedicated physical device, securing Superior payment transactions with greater flexibility and experience with BoC Pay convenience.

Omni-channel experience BOCHK believes that customer satisfaction is of utmost importance and big data plays a pivotal role. It helps the bank to better understand its customers and adjusts its strategies and deliverables accordingly.

Individual’s preferences can be precisely handled and shared across different channels thus to create an integrated and cohesive customer experience.

Aside from digital channels, physical branches are undergoing modernisation as well. The innovative branch located in The Hong Kong Science Park is equipped with emerging technologies such as Finger

Search and download “BOC Pay” on App Store or Google Play to enjoy cross-border shopping spree by scanning QR code!

The above products and services are subject to the relevant terms. For details, please refer to the relevant promotion materials or contact the staff of BOCHK.

CONTACT Company name: Bank of China (Hong Kong) Limited Website: www.bochk.com

Digital Banking Initiative of the Year - Kazakhstan Mobile Banking Initiative of the Year - Kazakhstan

Kazkommertsbank and Halyk Bank merge to continue banking innovations in Kazakhstan

K

Halyk Bank’s infrastructure comprises 635 azkommertsbank, one of the regional branch offices, 4,400 ATMs, and first private financial institutions 66,600 POS-terminals. established right after independence During Halyk Bank’s and of Kazakhstan, has successfully ended this Kazkommertsbank’s integration process, year by a merger with its major shareholder, joint team of specialists chose and Halyk Bank. The integration of two biggest adapted the best financial technologies, lenders in the country became the most products, services, and approaches of significant event on the local market in the two institutions. After completion of the second half of 2018. merger, it is high time for the combined To finalise this major project within 7 banks to pay close attention to the months, Halyk Bank and Kazkommertsbank improvement of customer service. spent around 95,000 man-days, including “Now we are focussing on optimising 5,700 man-days of vendors. Around 150 internal business processes, accelerating IT-systems were integrated with more than servicing clients, and 1500 test cases relocating routine were developed “Now we are focussing on operations from branch and carried out. optimising internal business network to online All of this was to integrate processes, accelerating servicing platforms,” said Nurlan Zhagiparov, deputy CEO the two major clients, and relocating routine banks without operations from branch network of Halyk Bank, JSC. “Our highly any disruption to to online platforms.” professional team customer service. continues to develop “Having rapidly and implement the most innovative accomplished the biggest and the most banking technologies into our product sophisticated M&A transaction in the line. The merger of two largest financial history of Kazakhstani banking sector, institutions in the country helped us to Halyk Bank has significantly improved its preserve the best practices and ‘knowleading positions on the local market, at the hows’ of Kazkommertsbank in order to same time remaining to be the strongest keep on providing the most demanded and and the most reliable private financial useful financial services to millions of our institution in the country with more than customers.

11 million customers who own 9.4 million The combined bank’s new online products, payment cards. We process about 55% of Homebank™ and Onlinebank™, which were payment transactions in Kazakhstan, and previously designed by KKB, both remain have the biggest market shares in terms of the most advanced and popular internetloan portfolio and deposit accounts, which amount to 23% and 37%, respectively,” said Umut Shayakhmetova, CEO of Halyk Bank.

Branch and acquiring networks of the combined Halyk Bank are the biggest and most extensive in Kazakhstan, whose population amounts to 18.2 million people, 5 million of which considered ‘unbankable’.

In order to service its huge customer base,

CONTACT Company name: JSC Halyk Bank Address: 40, Al-Farabi ave, Almaty, Kazakhstan, 050000 Phone number: +7 (727) 3322820 Email: pr@halykbank.kz Website: https://halykbank.kz/about

72 ASIAN BANKING AND FINANCE | December 2018

Umut Shayakhmetova, CEO, Halyk Bank

banking platforms on the local market, servicing more than 4.5 million private customers and 120,591 companies throughout the country.

In 2017 Kazkommertsbank became one of those few banks in the world who launched QR-payments based on VISA mobile application, a breakthrough that helped alter the long-standing dominance of cash payments in Kazakhstan.

Nurlan Zhagiparov, deputy CEO, Halyk Bank, JSC

Mid-sized Domestic Retail Bank of the Year - Vietnam

Maritime Bank’s secret to continuous growth and connecting with retail banking customers

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bank has been continuously investing in ietnam Maritime Commercial Joint upgrading its technology platform to meet Stock Bank (Maritime Bank) was the evolving requirements of a modern established on July 12, 1991 in bank to better serve customers. Technology Haiphong City in Vietnam. With 26 years is now a key factor in the implementation of striving forward in its history, the bank of Maritime Bank’s Strategies, illustrated has accomplished steady growth and has through the completion of a number of become a prominent brand in Vietnam. backbone projects in 2017.

Thanks to the ambition of the bank’s leaders and their shared vision for the High quality products and services future prospect of the Vietnamese Aiming at providing the best experiences financial market from the early days, to customers and partners when using Maritime Bank became the first private its products and joint stock services, apart from commercial bank continuously upgrading to be licensed “Maritime Bank was the the IT network, Maritime in Vietnam. The first commercial bank to roll Bank has regularly pioneering spirit of out international payment launched new products the first generation and programmes to services in Vietnam.” has been kept increase added value to in the bank’s customers. For individual business strategies customers, Maritime Bank aims to be a bank throughout its development journey of families that not only provides benefits to grow up to be one of the leading for customers, but also their families and banks today with a set of extraordinary friends through optimally-designed product achievements. packages. For corporate customers, it is a bank of partnership and connection ideal Incessantly expanding in scale that provides financial services to both the Starting as a young private bank with customers themselves and their partners in 24 shareholders, charter capital of order to optimise their business efficiency.

VND40b, and a handful of branches in large cities, Maritime Bank has grown Attention to risk management both in scale and financial capacity into As one of the 10 banks chosen by the State a financial organisation with charter Bank of Vietnam (SBV) to pilot Basel II capital of VND11.75t, a network of over compliance, Maritime Bank has set up a 800 branches, transaction offices and Basel II steering committee and established ATMs nationwide serving over 1.6 million trusting individual customers, 39,000 corporate customers, and more than 2,000 large-scale corporate and financial institutional customers.

Committed investment in technology Right after its establishment, Maritime Bank stunned the Vietnamese banking sector by pioneering the use of modern technology: it was the first commercial bank to roll out international payment services. It also helped build the core banking system that almost all local banks now use in Vietnam. Moreover, Maritime Bank was the first to use LAN and WAN to shorten the time of money transfers from a few weeks to a few minutes.

Not stopping there, over the past quarter century of development, the 74 ASIAN BANKING AND FINANCE | December 2018

Huynh Buu Quang, CEO, Maritime Bank

the Basel II Centre and a specialised risk tool model to successfully carry out the project. Currently, the bank is maintaining a strong capital adequacy ratio at 19.48 per cent, above the 9 per cent required by SBV. Thanks to this strong foundation, the bank has been able to implement new business plans as scheduled.

Given its continuous efforts throughout all stages of operations to bring the best experiences to the bank’s customers, Maritime Bank has received numerous awards from prestigious domestic and international organisations, including Vietnam Domestic FX Bank of the Year in 2017 from Asian Banking & Finance for three consecutive years, Outstanding Contribution to SMEs and Innovation in Vietnam 2017 by Capital Finance International, Best Retail Bank in Vietnam 2017 by International Finance Review, Best Co-branded Program in Vietnam 2017 by MasterCard, and Vietnam Outstanding Bank for SMEs by IDG.

CONTACT Company name: Vietnam Maritime Commercial Joint Stock Bank (Maritime Bank) Address: 54A Nguyen Chi Thanh Street, Lang Thuong Ward, Dong Da District, Ha Noi, Vietnam Phone number: +24 3 771 8989 Fax: +24 3 771 8899 Email: msb@msb.com.vn Website: www.msb.com.vn

Mid-sized Domestic Retail Bank of the Year - Laos

Phongsavanh Bank: Building a business model on trust and good governance opportunity as the Indo-China region within ASEAN is growing rapidly. A senior leadership role in a smaller fast growing bank gives me a broader exposure across the entire risk spectrum.”

Johnson Abraham, CRO, Phongsavanh Bank

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Phongsavanh Bank has been successful in n Vientiane, the capital city of Laos, attracting well-experienced foreign banking Phongsavanh Bank’s headquarters is talent. In 2017, Thomas Neidhardt from abuzz with activity. The management Austria joined the bank as treasurer, whilst team is busy discussing new product George Kong, a UK citizen, was appointed as launches, meeting clients, and charting the its chief technology officer. bank’s future strategic direction.

The latest addition to the bank’s C-suite Phongsavanh Bank (PSVB) was management team is its CRO, Johnson established in 2007 as the nation’s first Abraham, a Singapore citizen and banking private sector bank. Its visionary promoter, veteran of three Prof Dr Od “Banking is a business of decades. He spent Phongsavanh, honorary intelligent risk taking. Trust and over 26 years with Citi in various functions chairman of the good governance are the key and businesses, and Phongsavanh building blocks for our business previously worked Group, formed model. Given our large customer in markets like the bank with the base and strong brand reputation, Singapore, India, Saudi social objective of building public it is crucial for us to stand tall in Arabia, and Oman.

Lao PDR shares trust in the nation’s an over-banked market.” its border with banking system, China, Thailand, Vietnam, Myanmar and whilst stabilising the country’s credit and Cambodia. The country’s economy has been foreign exchange markets. growing at an annual rate of 6.9%, and the Other businesses within the government has made significant progress conglomerate include insurance, petroleum in implementing structural reforms, private trading, construction, trading, retail, sector development, and public financial transportation, and food & beverage. PSVB management, along with improvement caters to individuals, SMEs, and corporate in foreign investment law to facilitate clients in Laos. The bank has over 20 trade extension with Asia and the region. branches and several service units, ATMs, The nation has taken major strides in and POS terminals across the country. strengthening the legal and regulatory Anti-Money-Laundering (AML) framework.

The transformation journey As a result, the Financial Action Task Force Over the past 12 months, the familyremoved Laos from its “grey list” in 2017. owned bank has quietly embarked on Says Johnson, “I found the CRO role a journey of transformation. In the at Phongsavanh an exciting career quest to internationalise its operations,

76 ASIAN BANKING AND FINANCE | December 2018

Strengthened risk management Johnson commented that risk management was a relatively alien concept for Laos. “Phongsavanh is probably the first bank to appoint a CRO that is based here. This reflects the progressive mindset of the promoter family to embrace change.”

On his vision for the bank, he said, “Banking is a business of intelligent risk taking. Trust and good governance are the key building blocks for our business model.

Given Phongsavanh Bank’s large customer base and strong brand reputation as a leading private sector bank in Lao PDR, it is crucial for us to stand tall in an overbanked market.”

The bank’s commitment to strengthen its risk management and governance is expected to strike a right note with international banks and institutional investors. “As part of a leading and wellrespected conglomerate in Laos, we would like Phongsavanh Bank to be the first port of call for international partners and investors, who are interested in doing business here,” remarked the CRO. Johnson shared his key risk management priorities. “The role of risk management is to identify and monitor the top and emerging risks that potentially impact our business activities, financial results, reputation, and strategic initiatives. Also, we are working towards achieving international standards in our AML programme.”

CONTACT Company name: PHONGSAVANH BANK LIMITED Address: Unit 01, Khaisone Phomvihanh Road, Phakao Village, Xaythany District, Vientiane Capital, Lao PDR, P.O Box:3099 Call Center: 1188 Phone number: (+856-21) 218 912, 219 221 Fax Number: (+856-21) 711 558 Email: info@phongsavanhbank.com Website: http://www.phongsavanhbank.com

online banking initiative of the year - vietnam

UOB makes account opening simpler, safer, and smarter for its customers in Vietnam

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the Asian Banking & Finance Retail Banking he account opening experience is Awards 2018. The bank was recognised for one of the first encounters a person its efforts to create a frictionless digital has with a bank. Traditionally, this experience that catered to the needs of the experience has been time consuming as the country’s digitally-savvy population. customer needs to visit the bank’s branch to Fred Lim, country head of retail banking, complete multiple application forms.

UOB Vietnam, said that as smartphones With the growth of smartphone ownership become more intrinsic to the lifestyles of in Vietnam, consumers there are also using Vietnamese consumers, the bank wanted their mobile devices more to perform tasks to help customers bank more quickly and quickly and conveniently. To make it simpler, conveniently by harnessing the benefits of safer, and smarter for consumers to open a mobile technology. personal bank account, UOB Vietnam has “We applied design taken a mobilethinking principles—which first approach in “UOB Vietnam has taken a is to design a product the redesign of its mobile-first approach in the or service based on the account opening process. redesign of its account opening user’s needs—as we To open a process, enabling consumers to simplified the account bank account, open a bank account with their opening process. With the understanding consumers simply mobile phone.” that consumers are download the already relying on their bank’s mobile app, smartphones to conduct daily tasks on-theUOB Mighty, and provide the necessary go, we developed a mobile account opening information such as their personal details. service for customers to open a bank To finalise the process, an associate from account at their convenience. By doing so, we the bank will visit the customer at their are able to save our customers’ time and also convenience for a face-to-face meeting to deliver a better customer experience.” verify their personal details and to provide the customer with their account details.

Supporting Vietnam’s economic With UOB Vietnam’s mobile account development opening service, consumers no longer need UOB is committed to contributing to the to visit the branch and can complete the development and progress of Vietnam, account opening process in just 10 minutes. its industry, and its people. It was the first This saves them up to 80 per cent of time Singapore bank to open a fully-owned that used to be taken to open an account, subsidiary in Vietnam, reaffirming its which was 45 minutes on average.

confidence in and commitment to the country since it commenced operations under a branch licence in 1995.

With the launch of its fully-owned subsidiary bank in Vietnam, UOB looks forward to deepening its presence in the country and to providing financial solutions that meet the needs of local consumers and businesses.

UOB Vietnam’s mobile account opening service cuts the time taken to open an account from 45 minutes to 10 minutes

Online Banking Initiative of the Year UOB Vietnam’s mobile account opening service was recently awarded the Online Banking Initiative of the Year – Vietnam at

CONTACT Company name: United Overseas Bank (Vietnam) Limited Address: Ground Floor, Central Plaza Office Building 17 Le Duan Boulevard District 1, Ho Chi Minh City Phone number: Personal and Business Banking: 1800 599921 Commercial Banking: 1800 558880 Website: www.uob.com.vn

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Second from left: Vivian Lien, managing director, group technology and operations, UOB and Fred Lim, country head of retail banking, UOB Vietnam, received the Online Banking Initiative of the Year - Vietnam award

United for growth For the past 45 years, Singapore and Vietnam have strengthened diplomatic relations through mutual respect and support of one another’s progress. Similarly, we have forged strong ties with Vietnam for over 2 decades through our continual support of both regional and local clients as they expand in this vibrant country. As Vietnam’s economic growth continues to soar, we will deepen our commitment to providing trusted advice and progressive financial solutions.

UOB Vietnam Website: Personal and Business Banking: Commercial Banking:

2018 Online Banking Initiative of the Year

www.uob.com.vn 1800 599921 (within Vietnam) 1800 558880 (within Vietnam)

International Retail Bank of the Year - Asia Pacific Credit Card Initiative of the Year - Singapore Social Media Initiative of the Year - Singapore

Digital innovation for customers at the heart of Citibank Singapore’s growth

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convert large purchases or statements he evolution of technology and the into instalments using the Equal Payment digital space continues to transform Plan option available on the app. Besides consumer lifestyles; from the way credit card features, the eBrokerage and they socialise to the way they engage eFX components were also added to enable financial services. Citibank Singapore has trading of stocks and foreign currencies harnessed the advancements of technology on-the-go. and its keen understanding of the digital At the same time, Citi launched Citi customer journey to bring meaningful Bot SG, a natural-language chatbot on banking experiences to its customers whilst Facebook Messenger, to further support enabling them to lead a digitally enriching customer servicing needs lifestyle. including enquiries on As technology “In order to stay relevant to recent transactions and provides greater our customers, we need to credit card rewards and connectivity points balances. The and access to bring banking to them and chatbot was launched information, make the experience truly following six months of customers now seamless.” successful collaborative expect to do more beta testing with 900 anytime, anywhere.

Citi customers and employees. The chatbot, This changing customer behaviour has which was developed in Singapore, was resulted in the smartphone’s growing named the Social Media Initiative of the importance as not only a communication Year in Singapore at the ABF Retail Banking but a transaction platform. “In order to Awards 2018. stay relevant to our customers, we need For digitally savvy wealth customers, to bring banking to them and make the Citi’s Total Wealth Advisor, an in-house, experience truly seamless—whether it is proprietary tool, offers greater flexibility to seeking simple account-related information set and track wealth goals at their preferred on social media platforms or performing pace. Customers are also able to gauge how regular transactions on an app”, said Han diversified a portfolio is by benchmarking Kwee Juan, chief executive officer of it against the Citigold Diversification Index, Citibank Singapore Limited. and stress test a portfolio under different To better serve the needs of customers, simulated market conditions.

Citi adopted a mobile-first strategy Even as the bank evolves, its core mission and enhanced the functions of the Citi of putting the customer in the centre of Mobile® app. With just a few taps on the everything and delivering the best possible smartphone, a holistic suite of mobile banking tools become available in every customers’ hand. This strategy has proven to be successful and the bank saw strong growth in the number of active mobile users by over 50% from June 2017 to June 2018.

As Citibank continues to stay ahead of the mobile banking trend, the Citi Mobile® app is regularly being updated and the products and services that it offers are progressively becoming more contextualised for a more personal banking experience, one that is beyond the basic display of account balances. A brand new interface was rolled out for credit card customers and today individuals can access a host of functions such as reading PDF statements, activating a credit card, locking and unlocking a card, and activating Han Kwee Juan, CEO, Citibank Singapore Limited overseas use. Customers can also easily

80 ASIAN BANKING AND FINANCE | December 2018

value remains unwavering. For instance, the Citi Cash Back Card, which won Credit Card Initiative of the Year in Singapore, offers the customer value proposition of the best cash back in town, with 8% cash back on Grab rides, dining, groceries, and petrol. This rewards spending that fits customers’ daily expenditure, allowing them to make the card a core part of their spending routine.

Overall, Citibank Singapore delivers innovation and experiences to customers through its extensive network of digital partnerships and its reach into digital ecosystems. For its efforts, the bank was recognised as the International Retail Bank of the Year in Asia Pacific.

“The awards affirm that Citibank remains on the cutting edge of technology in the financial world and is poised to continue providing customers with digital banking solutions that are the future of the industry.

Our approach to digital innovation, tied to our customer-centric commitment, puts us on the right path towards meeting the evolving needs of every customer,” Han said.

CONTACT Company name: Citibank Singapore Limited Address: 8 Marina View, Asia Square Tower 1, Singapore 018960 Website: www.citibank.com.sg

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*Receive cash back of 0.25% on all retail purchases and additional cash back of 7.75% on Dining, Groceries, Petrol and Grab transactions worldwide if you accumulate a total retail spend of S$888 or more in a statement month. The additional 7.75% cash back on Dining, Groceries, Petrol and Grab spend is capped at S$25 cash back per category per statement month. The additional 7.75% cash back on Grab is valid till 31 December 2018. Cash back earned will not expire. For full terms and conditions, visit www.citibank.com.sg/cashback. Citibank full disclaimers, terms and conditions apply to individual products and banking services. Š2018 Citibank. Citi, Citibank and Citi and Arc Design are registered service marks of Citigroup Inc. Citibank Singapore Limited Co. Reg. No. 200309485K. Printed on 09/2018.

International Retail Bank of the Year - Hong Kong Credit Card Initiative of the Year - Hong Kong Advertising Campaign of the Year - Hong Kong

Standard Chartered Hong Kong unveils innovations that show how ‘banking can be fun’ prominent locations and provide its clients with greater convenience. In addition, the launch of an innovation lab, the eXellerator, promotes innovations within the bank and aims to bring better products and services to its clients in Hong Kong.

Part of Standard Chartered Hong Kong’s charm is its rootedness to the territory’s economy, culture, and overall banking sector, whilst maintaining a global perspective and standing as it navigates a landscape currently dominated by digitisation and innovation.

“Our brand promise, ‘Here for good,’ underpins everything we do,” Kong said, noting that the bank has launched a refreshed brand promise in April: Good enough will never change the world. “It has developed ‘Here for good’ further by posing a new and tougher challenge—how banks can help tackle some of the problems that stand in the way of global prosperity and commerce.”

Vicky Kong, managing director and head of retail banking, Standard Chartered Hong Kong

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tandard Chartered Hong Kong puts another laurel in its excellence cap as it bagged three recognitions at the recently concluded Asian Banking & Finance Retail Banking Awards 2018 . The bank brought home trophies for these categories: Hong Kong International Retail Bank of the Year, Hong Kong Credit Card Initiative of the Year (Simply Cash credit card), and Hong Kong Advertising Campaign of the Year (MARVEL ATM card campaign).

For Vicky Kong, Standard Chartered Hong Kong’s managing director and head of retail banking, the key to gaining these recognitions lies on the bank’s commitment to provide top-notch products and services that embody excellence. “Our business strategy is clear, and we continue to invest in our future by building distinctive differentiators,” she said. “We keep challenging ourselves to find opportunities to disrupt the market and win the customers’ heart.”

Apart from these initiatives, the bank is committed to expanding its footprints by relocating four branches to more 82 ASIAN BANKING AND FINANCE | December 2018

Standard Chartered Hong Kong is committed to providing excellent and effective financial services, as well as making sure that their clients are having an enjoyable banking experience. “We aim to shape our future in relation to digital marketing and creative promotion activities, to show that banking with Standard Chartered can be fun and innovative,” Kong said.

Digital prowess In terms of customer engagement and digitisation efforts particularly on marketing campaigns, Standard Chartered Hong Kong has also been trailblazing.

Kong explained that, now more than ever, institutions have more opportunities and platforms to engage with their clients and send across messages that will be beneficial for their reputation and business operations.

“Digitisation helps us better connect and engage with our target customers. The Award-winning edge tools of the digital marketing stack enable Standard Chartered Hong Kong has a host us to stay connected with customers and of products and services that are all at the provide them with product information forefront of the banking sector’s push for they need at the right time,” she said. “This digitisation and modernisation. One such also helps the bank in reducing wastage initiative is the launch of MARVEL-themed and driving efficiency.”

ATM cards in May Kong emphasised the 2017. fact that digitisation “We aim to shape our The MARVELfuture in relation to digital also enables themed cards interactivity. “Videos marketing and creative combined cool on social channels promotion activities to characters with such as Facebook show that banking with stylish designs that and Instagram allow excited many of the Standard Chartered can be instantaneous bank’s clients and responses and fun and innovative.”

MARVEL fans in dialogues, which are Hong Kong. It was also the first ATM card in pretty much what customers of today the market to be provisioned in Apple Pay, expect,” she said. “This interactivity helps which enabled payment convenience and reinforce our brand values as campaigns cash rebates for its cardholders. become much more three dimensional During the first year of the program, than before.” qualified cardholders enjoyed other CONTACT privileges such as exclusive MARVEL franchise premiums and shopping and dining privileges at Hong Kong Disneyland.

Company name: Standard Chartered Bank Another initiative is the Simply Cash (Hong Kong) Limited credit card which brings a concept of Address: GPO Box 21, Hong Kong straightforward and unlimited rewards. This Phone number: (852) 2886-8868 complements the existing card portfolio of Website: www.sc.com/hk the bank and serves a wider spectrum of its target segment.

ASEAN SME Bank of the year

OCBC Bank champions SME banking in ASEAN in Singapore, which makes up 99% of the country’s enterprises, consider OCBC as their bank of choice.

“As a regional leader in SME banking, we have a wealth of information that helps us understand the behaviour and needs of SMEs,” said Tan Chor Sen, executive vice president, Global Commercial Banking, OCBC Bank.

“We are continuously trying to innovate and improve in order to be SMEs’ bank of choice as they advance through their business lifecycle: from the day they set up, expand, and even go public,” Tan added.

Tan Chor Sen, executive vice president, Global Commercial Banking, OCBC Bank

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mall and medium-sized enterprises (SMEs) are finding fertile ground for growth and development in Southeast Asia over the past few years with the region’s continued positive economic prospects and vibrant working population.

This is a trend that OCBC Bank, with its track record of providing excellent and top-notch products and services, has been working on—becoming the bank of choice for SMEs not only in Singapore but in the whole region.

This continued commitment to excellence was evident when OCBC bagged the ASEAN SME Bank of the Year award at Asian Banking & Finance’s Retail Banking Awards 2018 for the 8th consecutive year. This shows OCBC’s efforts to provide innovative and cutting-edge products and services to SME clients, ensuring that these solutions are tailor-fit to what these enterprises need for their growth and development.

Startups and growing businesses have been pillars to OCBC’s evolving strategies, with SME banking a key element in its operations in key markets in Malaysia, Indonesia, China, and Singapore. For instance, half of more than 215,000 SMEs 84 ASIAN BANKING AND FINANCE | December 2018

and e-payments within a webapp, so businesses can track transactions easily whilst their customers can also make payments biometrically.

OCBC also remains to be the only financial institution in Singapore to offer the loan to SMEs as young as 6 months from their establishment date. This is a groundbreaking product given that SMEs less than two years old are traditionally viewed as high-risk clients and should possess sound financials and assets before being approved for loans.

One more innovative and in-demand solution is the OCBC Business Revolving Focus on Innovation Short Term Loan—another first in the What sets OCBC apart from other banks market. This product caters to short term is its continued efforts to remain at the working capital needs, particularly of forefront of understanding the evolving SMEs, allowing them to draw, repay, and challenges, needs, and expectations of its redraw any number of times at their own SME clients, according to Tan. convenience with interest only paid for For one, the bank has a dedicated team the amount used and no penalty for full of data scientists who actively use and repayment before the loan matures. analyse data to uncover insights for product OCBC’s SME Digital Loan, meanwhile, development, segment understanding, reflects the bank’s understanding of the and predictive financing, using advanced changing needs of its clients and their analytical techniques such as spatialoperating landscape. It is a bridging loan temporal modelling and machine learning. to help businesses transform and improve This focus on machine learning helps OCBC productivity and competitiveness.

Bank develop propensity models to predict It also supports the Singapore when customers government’s push to are most likely help SMEs digitise, to take up loans “We are continuously trying to utilise technology for and enables the innovate and improve in order cost effectiveness, and bank to be more to be SMEs’ bank of choice as develop new solutions. targeted when Tan said, “Companies they advance through their reaching out to that embrace business lifecycle: from the customers. digitalisation both in day they set up, expand, and Data analytics the way they engage has also been and serve their even go public.” helpful in customers and in the determining way they manage their pre-approved loan limits, making it more operations, develop a competitive edge convenient to existing borrowers who do and a more sustainable foundation for not need to submit further documents their business growth.” anymore.

Tailor-fit solutions Some of the innovative products and services that OCBC rolled out over the years—which have been integral in the bank’s leading position for SME banking— include funding, cash management, and reconciliation solutions.

Its OneMerchant solution provides more seamless operations for enterprises, providing e-reservations, e-orders,

CONTACT

Company name: OCBC Bank Address: 65 Chulia Street, OCBC Centre, Singapore 049513 Phone number: +(65) 6538 1111 Website: www.ocbc.com

BDO bags 6 banking awards and solidifies its status as the Philippines’ top bank the bank, through BDO Foundation, took home the CSR Program of the Year award in recognition of its efforts to develop a model community for persons with disabilities that were severely displaced

by Typhoon Haiyan—the first of its kind in the Philippines.

BDO Capital & Investment president Eduardo V. Francisco and BDO Unibank executive vice president and head of Institutional Banking Group Walter C. Wassmer received the awards

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develop operations by providing support DO has once again proven its mettle for trade finance. Over the years, the and cemented its status as the bank has been able to provide customised Philippines’ leading bank as it bagged trade solutions to meet individual clients 6 awards at the Asian Banking & Finance needs, whilst remaining instrumental on Awards 2018. The recognitions it took a national scale by lending support to home include Philippines Domestic Trade the public-private partnership initiatives Finance Bank of the Year, Philippines of the government. In 2017 alone, BDO Domestic Cash Management Bank of has processed over $5.9b worth of trade the Year, Gold award for the Corporate transaction , accounting for about 25% of Social Responsibility Program of the the industry’s trade business.

Year, Corporate & Investment Bank of the Having the country’s largest distribution Year - Philippines, Equity Deal of the Year network with more than 1,000 operating - Philippines, and Syndicated Loan of the branches, over 3,800 Year - Philippines.

Consistently the “Having the country’s largest ATMs, and more than 400 cash acceptance country’s biggest distribution network, BDO machines, BDO has bank in terms of has allowed its clients the allowed its clients the assets, capital, best accessibility to fulfil best accessibility to fulfil deposits, and loans, their cash management their cash management BDO credits its requirements through strong legacy to requirements through the high premium it alliances with partner banks.” alliances with partner banks around the region places on customer and the rest of the world. centricity that has served as the backbone “We continue to expand our reach to of the bank’s operations. provincial areas especially the second“We support our clients as they have tier cities where capacity growth appears grown and expanded their businesses,” promising.” Walter Wassmer, head of BDO said Eduardo Francisco, president of BDO Institutional Banking Group, explained.

Capital and Investment. “We also have The bank’s operational objectives, developed expertise in key industries, however, does not end in the spectrum of especially in power and infrastructure to providing effective financial products and bring value to the table.” services as it also focuses on corporate social responsibility (CSR) programs that Award-winning initiatives largely benefit the Filipino people. In a BDO has helped a huge number of testament to its role in community-building, businesses and enterprises to improve and 86 ASIAN BANKING AND FINANCE | December 2018

A look forward True to its slogan, BDO emphasises that it will continue finding ways to help the improve banking and financial services available to the Filipino people in every corner of the Philippines.

“We continue to expand our reach to provincial areas, especially, the secondtier cities where capacity growth appears promising,” added Wassmer.

“We are constantly on the look-out for opportunities to service foreign companies investing in the Philippines.”

To achieve this goal, BDO will continue investing in technology, processing capabilities, and human capital development. “We plan to introduce a front-end solution that will enable our clients to do online letters of credit applications and allow them to view their trade maturities and payment history through their BDO online banking accounts,” he explained, adding that they are also preparing to roll out an online payment facility for import duties with the Bureau of Customs and the Bankers Association of the Philippines.

“Under our foreign bank partnerships, both BDO and bank-partner can undertake a full-scale initiative on cash management,” added Wassmer. “Through these collaborative efforts, our foreign bank partners are able to extend their cash management service offering in the Philippines to a much wider local and regional customer base.”

CONTACT Company name: BDO Unibank, Inc. Address: BDO Corporate Center, 7899 Makati Avenue, Makati City 0726, Philippines Phone number: +63 (2) 840-7000 Website: www.bdo.com.ph

Your vision, our mission to help you build and expand your business in the Philippines.

Partner with BDO Unibank.

www.bdo.com.ph

/BDOUnibank /BDOPhilippines

The BDO, BDO Unibank, and other BDO-related trademarks are owned by BDO Unibank, Inc.

Mergers & Acquisitions Deal of the Year - Singapore Debt Deal of the Year - Singapore

UOB provides integrated financial solutions to help companies meet their strategic needs

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global footprint, coupled with its swift and ince opening its doors in 1935 to timely execution of the deal, contributed provide banking services for the to an order book of more than S$800m. merchant community in Singapore, There was also strong participation from United Overseas Bank (UOB) has been a high quality and well-diversified investor building and maintaining deep client base, including banks, government agencies, relationships, caring for its clients’ fund managers, and private bank investors. businesses as if they were its own. The This bond had the lowest coupon for a bank supports its clients’ business growth non-retail bond offering amongst SIA’s by offering astute market insights and bond issuances. The transaction reinforced integrated banking solutions in areas UOB’s position as a leading player in the such as cash management, trade finance, high-grade Singapore dollar corporate bond financial supply chain management, market. treasury and investment banking.

M&A Deal of the Year In the area of “The bank’s multi-product Singapore investment banking, capability enables it to UOB acted as the sole UOB’s expertise structure solutions that are financial adviser and spans debt and customised to each of its acquisition finance equity capital corporate clients’ financing provider to the markets, mergers consortium, comprising and acquisitions, and advisory needs.”

Yanlord Land Group corporate finance, Limited, Perennial leveraged finance, Real Estate Holdings Limited and two project finance and specialised finance. This of its sponsors, Kuok Khoon Hong and multi-product capability enables the bank Wilmar International Limited, as well as a to structure solutions that are customised private investor, for the acquisition of and to each of its corporate clients’ financing mandatory cash offer for UE and WBL. and corporate advisory needs.

This transaction was one of Singapore’s In 2017, UOB successfully led several largest public market takeovers and one of landmark event-driven capital market the largest public acquisition financings in transactions, two of which were recognised 2017. at Asian Banking & Finance’s Corporate & Pua Seck Guan, chief executive officer Investment Banking Awards 2018. of Perennial Real Estate Holdings Limited, said, “UOB supported my first transaction Debt Deal of the Year - Singapore on the syndicated acquisition of I12 Katong UOB was the Joint Lead Manager and Bookrunner for SIA’s issuance of S$700m 3.035% eight-year Fixed Rate Notes under its existing Medium Term Note Programme, its largest bond offering since 2001. The issuance was also the largest corporate bond offering in the Singapore dollar market in 2017.

The bank’s strong credit profile and

CONTACT Company name: United Overseas Bank Limited Address: 80 Raffles Place UOB Plaza, Singapore 048624 Phone number: (65) 6222 2121 Email: (65) 6534 2334 Website: www.UOBgroup.com

88 ASIAN BANKING AND FINANCE | December 2018

The winning teams for the Debt Deal of the Year - Singapore and the M&A Deal of the Year - Singapore awards

when I started my own business. Since then, the trust and relationship have grown from strength to strength. The Bank has continued to demonstrate its strong support as one of the core bankers of Perennial. UOB differentiates itself by staying close to us, understanding our business needs and responding expediently with tailored solutions to support our growth journey. The reliable partnership is deeply valued and we hope to strengthen our relationship further as we scale our business.”

UOB executives receiving the awards

Right by every generation of forward thinkers Every generation wants to discover their own path. We support the courage and passion of those who seek a better way. uobgroup.com/rightbyyou

United Overseas Bank Limited Co. Reg. No. 193500026Z

OPINION

mellody & Tay The IBOR transition: A certainty, not a choice

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s the pace of global regulatory change increases, it is clear that the Inter-Bank Offered Rates (IBORs) of major currencies will evolve or that alternate nearly risk-free reference rates (ARRs) will soon be introduced. These changes will have an impact across a wide range of organisations, including banks, buy-side, sell-side and corporates. In this environment, organisations in Asia-Pacific with IBOR exposures should be taking active steps to understand the scale of the transition and the associated risks in order to prepare for the changes ahead.

Since the announcement in July 2017 by the UK’s Financial Conduct Authority (FCA) that it would no longer persuade or compel banks to make London Inter-Bank Offered Rate (LIBOR) submissions from the end of 2021, global regulators have started to select ARRs. In Asia-Pacific countries too, regulators have begun proactively assessing the implications of this change to their respective markets. Amongst the considerations for regulators across the region is the potential need to revisit their own IBOR characteristics or, alternatively, to create their own ARR. Although the pace of change around IBOR is accelerating, regulators’ progress and approach to the transition varies significantly across markets. The table provides a quick snapshot of the current state of play across the globe.

The enhancements come as an opportunity for organizations to overcome the potential liquidity issues in benchmark by further strengthening their internal methodologies, processes and governance around selecting the eligible transactions for deriving rates.

In June 2018, the International Swaps and Derivative Associations (ISDA) and other trade associations released a market survey facilitated by EY assessing the market’s readiness for IBOR transition.

The research found that around half of the survey participants intend to trade using new IBORs within the next two years. However, while 53% said they have initiated internal discussions for transitioning, only 11% have allocated budgets and resources to support the change.

Operational and financial challenges To avoid adverse scenarios as a result of the transition, market participants will need to consider either actively re-trading their IBOR positions maturing beyond 2021 and replacing them with ARR equivalents or amending existing contractual terms to clarify what should happen in the event that the reference IBOR permanently ceases to exist.

Both of these options introduce a number of operational and financial challenges where significant costs are likely to be incurred.

These include: Legal: If amending reference rates for legacy positions while the relevant IBORs still exist, counterparties may decide to sue if they

90 ASIAN BANKING AND FINANCE | December 2018

Gary Mellody ASEAN Financial Services Risk Advisory Leader, EY

Patricia Tay Hong-Kong Financial Services Partner Ernst & Young Partnership

IBOR Transition Summary Table

Source: EY

can see that the newly negotiated terms have resulted in worse outcomes than they would have had if they had remained on their original terms.

Risk management and finance: As ARRs are not equivalent to IBORs – in terms of credit spread and term premiums, for example – the transition may impact products’ profitability, as well as treasury and risk management activities. As IBOR is used throughout the finance and accounting operations, including valuations, models, forecasts, regulatory and financial reporting, these processes and systems will need to be revised to accommodate new ARRs. Additionally, the IBOR transition will pose major challenges on hedge accounting strategies and may ultimately bring volatility to the income statement.

Operations: Day-to-day processes, such as reconciliations between the banking and trading book, and the measurement and monitoring of market risks, will need to be significantly updated for financial institutions. Corporates, on the other hand, will need to reinforce the skillset of their teams in the treasury and finance departments around areas such as credit risk and risk modelling.

Significant investments in technology may also be required for a broad range of impacted systems, such as trade data repositories, data providers and middleware, core retail and commercial banking systems, and non-financial corporate systems.

Tax: IBORs have historically been considered to be the relevant reference rates for tax calculations. With the IBOR transition, it is unclear whether new ARRs will be widely accepted for this purpose, especially across various jurisdictions.

Given the scale and complexity of this inevitable transition, impacted Asia-Pacific organizations should begin initiating steps now to prepare for this change. Identifying IBOR exposures, development of tailored road maps up to launch, and the implementation of IBOR programs should all be part of transition journey.

Domestic Retail Bank of the year - CHINA GOLD AND PRECIOUS METALS Bank of the Year - CHINA

Ping An Bank brings customers an extraordinarily golden banking experience

Ping An Gold Bank thrives in China

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ing An Bank offers diversified financial services for retail and corporate customers. In 2017, they innovatively created the business model of “Gold Bank,” which provided to their customers better financial experience.

Business model and product innovation On September 9th of 2014, Ping An Banktook the lead in launching the brand “Gold Bank”, based on physical gold, focussing on gold monetization, providing the product and service valued and settled in gold, and establishing gold balance sheet and asset pool to satisfy clients in all dimensions. Gold bank has drawn great attention since then and so far has gained over 2.66 million users, with the number still climbing up to 10,000 per day.

For the Gold Bank business, retail customers can use the “gold account”, which is similar to an RMB account, to complete the deals. The deals include gold purchase, fixed deposit, automatic investment, finance, exchange, transfer, pledge, etc.

As the most important product

in Gold Bank, the gold share has the In 2014, the bank’s gold trade ranked following strengths: flexible in operation, top 3 on SGE and moved up to number 1 exchangeable for physical gold, and in the first quarter of 2015. Its platinum automatic investment by weight or amount. and silver trading also ranked amongst the It is flexible for investors can choose top listings in SGE. Ping An Bank offers investment strategies on their own. It could its customers stable and excellent service either be long-term investing for value thanks to its extraordinary strategy and maintenance and appreciation purpose, or floor trading ability. short-term speculating to make profit from gold price going up.

Structured Products Gold Bank also provides the exchange In order to meet the demands of service for physical gold and gold share, for institutions and individuals, Ping An physical gold can be drawn from any branch.

Bank offers the Ping An Gold structured Customers can purchase the gold share product which is designed for clients who on a daily or monthly basis as well and the pursue high revenue with high risk. Ping fixed investment can be rolled-over. The An Gold structured product is managed gold share from this channel could be used by professional teams from its asset for fixed deposit via gold account, through management division and HQ financial which customers can obtain fixed returns. markets SBU, market risk and operating In order to satisfy the various demands risk controllable. of retail customers, Gold Bank provides The financial products of Ping An Gold is 24-hour services through online and mobile a floating-rate financing product. Clients banking. The Ping An Gold app was launched put their money into the bank as deposit on September 2016 and is designed in and short a gold put option. Their revenue traditional Chinese style which contains lots is composed of interest from deposit and of interactive gaming option premium. On such as shake-itthe strike date, the “Ping An Bank offers its to-win-gold, countbank decides if it will step-to-win-gold, exercise the option customers stable and gold smelting, and based on the terms of excellent service thanks to more. It is the first the gold put option. its extraordinary strategy app that is tailorThis structured and floor trading ability.” made for precious product provides metal customers in clients with higher China and shows that yield and higher Ping An Bank pays great attention to user market risk, as clients need to undertake experience. the market risk of falling gold price.

These financial products of Ping An Helping customers seize the opportunity Gold earned great feedbacks from its As one of the initial financial members of clients who showed satisfaction with the Shanghai Gold Exchange (SGE) that has the yield and structure of the products. The largest spot gold trading volume globally, bank eyes designing more structured Ping An Bank has been qualified to develop products which will bring customers with the business of proprietary trading, agency high yield, an vital development direction. trading, physical & paper commodity CONTACT trading, leasing, consignment, pledge, liquidation, warehousing, intermediator, Company name: Ping An Bank Co., Ltd interbank cooperation, enquiry, importAddress: 8F, Pingan of China Financial Tower, export, and other businesses. The bank has Nn. 1333 Lujiazui Ring Road, Pudong New been conducting gold-importing, agency Area, Shanghai China Postcode 200120 trading, proprietary trading, and goldPhone number: 86-21-5097-9573 leasing in a sorted-out manner. Various Fax Number: 86-21-2025-9969 precious businesses are developing rapidly Email: baowenjuan239@pingan.com.cn which improve its market share globally, Website: http://bank.pingan.com/ building its reputation.

OPINION

hv & Bhargava An Asia perspective: A bank branch for the digital age

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he bank branch as we know it, with tellers behind windows and bankers huddled in cubicles with desktop computers, needs reinvention. Most customers now carry a bank in their pockets in the form of a smartphone and only visit an actual branch to get advice or buy complex products. Across Asia, digital transactions are 1.6 to 5 times as frequent as branch transactions.

Despite such systemic changes, branches remain an essential part of the operations, sales and customer-advisory functions for Asian banks. Instead of signaling the end of the branch, new technologies and changing customer behavior are ushering in the era of “smart branches”—a concept that has the potential to dramatically improve how branches operate. These new formats have reduced staffing, lower real-estate requirements, and enhanced customer experience for a resulting 60 to 70 percent boost in branch effectiveness, as measured by cost savings and increased sales.

In a traditional branch, 70 percent of the floor space is devoted to tellers and other sales and servicing areas, with 30 percent dedicated to self-service. Smart branches flip this ratio and have a significantly smaller and more streamlined footprint. When customers enter, employees immediately guide them to self-service technology or assist them directly on their tablets. Save for a few large, flagship branches, teller counters and most of the back offices are gone. In their place is a distinctive layout constructed from three building blocks: A self-service area at the entrance of the branch that takes up most of the space and is open 24 hours; a standing-desk zone within the self-service area where bankers can proactively approach customers for sales and assisted services; and a priority lounge for larger branches where customers and businesses can receive premium advisory services and support.

Asian banks can do a lot more to embrace each of the three building blocks necessary for full value potential: 1) the adoption of the above-mentioned new teller- and desk-free branch formats at every location; 2) the seamless integration of cutting-edge branch technology; 3) and the use of digital technology and advanced analytics to improve the branch operating model.

Smart-branch technology Whether they are in the middle of Beijing or in a quiet mountain town in the Philippines, customers should be able to come into a smart branch any time of day or night and get anything they need quickly, from new products like loans or credit cards to service. A variety of technology solutions can enable this goal.

Next-generation banker tablets give bankers freedom to roam the branch—much in the way Apple Store employees do—allowing them to increase sales and provide superior customer service. They are equipped with four critical features: Live customer-transparency dashboards alert bankers when customers make transactions at branch machines, like ATMs, so they can offer support or personalised offers.

92 ASIAN BANKING AND FINANCE | December 2018

Vinayak HV Senior Partner McKinsey & Company Singapore

Prateek Bhargava Associate Partner McKinsey & Company Bangkok

Smart branches employ a range of technology solutions to provide full service at any time

Source: McKinsey & Company

Advanced customer-relationship-management software gives bankers a holistic view of a customer’s history with the bank. These platforms use comprehensive customer data and analytics-based models to generate real-time, next-best-product recommendations.

Digital sales modules allow bankers to use their tablets to approve customers quickly for any new product, whether a credit card, auto loan, mortgage or deposit account. Documents can be scanned and uploaded onto bank systems; fingerprints, ID cards, and passports read; and credit scores accessed.

Assisted migration modules enable bankers to introduce customers to digital channels for basic services such as money transfers, address and email updates and check cashing.

Featuring a remote connection to a human banker, interactive teller machines (ITMs) effectively extend branch hours to 24/7 and let customers do most of the things they might come to a branch for, such as making deposits, cashing checks, authenticating over-thelimit cash withdrawals, and even applying for and receiving credit cards and loans. In remote locations, these machines can function as a “branch-in-a-box.”

Service terminals are simple, inexpensive devices with fewer features than ITMs. They can reside both inside and outside of branches (e.g. in shopping malls) and their main objective is to help less digitally inclined customers feel comfortable with the experience of digital banking.

Video-conference rooms are a dedicated, always open, secure area equipped with video-conference technology and co-browsing software. Whilst most individual customers will gravitate toward ITMs, these rooms mainly serve small and medium-size businesses or individual customers with complex product needs, such as mortgages.

Far from rendering the bank branch obsolete, digital technology holds the key to Asia’s branch of the future. To reap the full value potential, a bank needs to commit fully to the smart-branch model and equip its bankers and branches with tools they need to succeed.

OPINION

NEIL PAREKH

Riding the waves of opportunities: Asia to spur infrastructure growth

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rbanisation, together with population growth, is expected to add another 2.5 billion people to urban areas around the world by 2050, according to a United Nations report launched earlier this year. The potential challenges this will bring will be far-reaching, particularly in Asia and Africa where nearly 90 percent of the increase is set to take place.

It will be vital for strong infrastructure investment in order to respond to things like congestion and housing demand. Such investment will not only bring economic returns, but also provide long-term social benefits. We see three key opportunities for Asia to lead and ease global infrastructure investment shortages.

As the Asian region grows, investment in outdated infrastructure is needed to ensure the economies grow sustainably. A higher demand on transport infrastructure for a more mobilized workforce, better capacity in the provision of water and electricity, as well as quality education and healthcare facilities, are some of the reasons why Asia is set to become the infrastructure hub of the world.

The Asian Development Bank has estimated that ‘Developing Asia’ will need to invest approximately $1.7t per year in infrastructure to support the growth momentum. At the same time, Asia is also riding the wave of opportunity that has risen with sustainability demand and technology advancements.

Research shows there have already been 1,400 renewable energy infrastructure deals in the region since 2008, and clean energy investment is expected to account for 44 percent of the global power capacity spending over the next decade. The Asian region represents nearly half of this investment.

NEIL PAREKH General Manager, Asia National Australia Bank

Banks have a key role in facilitating new projects

challenges to infrastructure investment around the world. However, as investors’ appetite increase in the region, we see increasing opportunities to leverage public-private partnerships.

As of September 2017, the total Asia-focused unlisted infrastructure assets under management is $57b, accounting for 13 percent of global assets under management. The backdrop of funds raising in Asia remains positive, but countries should look into how overseas jurisdictions have successfully encouraged private investment in infrastructure.

For example, in Australia, pension assets will soon exceed those of the banking sector within the portfolios of superannuation funds.

At the same time, we have also seen public-private partnership policies and asset recycling actively pursued by the Federal and State governments to actively increase incentives. In a recent Preqin report, unlisted infrastructure managers cite regulation as one of the top 3 challenges they face investing, so there is clearly more we can do to increase incentives and close the gap in Asia.

The growing need The region’s infrastructure need is more urgent than ever. The good news, however, is that Asian countries are gearing up to launch high quality infrastructure to stimulate growth and to build a strong base for the future.

Singapore, for example, is increasingly seen as the premier Open opportunities infrastructure hub. There are plenty of ambitious projects in We see significant potential for Asia when it comes to infrastructure the pipeline, including the new terminals at Changi Airport, a investment. It is the area with the greatest need, and also a region ‘mega’ terminal at the Port of Singapore, and the MRT upgrade. that is well-equipped with the right expertise.

The country is well-positioned to leverage To make the region a more compelling its strong ecosystem of developers and environment for investors, regulatory and supporting institutions, to set a benchmark in institutional challenges need to be addressed.

Asia, and to lead expertise sharing across the This will be critical to spurring investment and whole region. facilitating mutually beneficial partnerships Banks in the region can in turn play a key between the public and private sectors. role in deepening relationships with various There are real opportunities in Asia for parties—including sponsors, contractors, banks to connect infrastructure businesses with institutional investors and infrastructure investors, which can be through accelerating funds —to facilitate new projects. activities in global infrastructure and providing Historically, and increasingly, government a way for private capital to contribute more budgets have been constrained, posing broadly.

A well-equipped financial services industry 94 ASIAN BANKING AND FINANCE | December 2018

SECURE YOUR SEATS NOW!

OPINION

dr. silvio struebi

Pricing, discounting, and negotiation to maximise profitability

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Dr. Silvio Struebi Partner Simon-Kucher & Partners

ncreased competition and rising costs are forcing private banks globally and in Asia to focus more on profitability and less on volume growth. In an evolving and competitive landscape, innovation will require smart pricing strategies to protect margins, as the effect of pure price adjustment is limited. Maximising profitability all comes down to improving management of individual client conditions through more effective pricing, discounting practices and negotiation approaches.

Examine pricing strategy and organisational structure Asian banks often neglect to properly manage pricing strategy, as their organisational structures don’t tackle this topic systematically.

European institutions typically have dedicated pricing teams to drive group-wide pricing and discounting strategy. However, this is not the case everywhere. Whilst local subsidiaries of large Swiss players have their own pricing teams, regional private banks are mainly just starting to professionalise their pricing.

Every private bank should ask itself whether it is managing pricing in a professional manner. Is the bank using pricing software and refined reports to get the most out of individual client accounts or are discounts simply granted on a trade-by-trade basis? Transparency is crucial for a healthy top-line.

Price for value and clients’ needs The biggest challenge in pricing is being able to charge according to clients’ needs and value added. Price setting in private banking has been more focused on benchmarks and less on client value. As a clear relationship between services delivered and pricing is the core of monetisation, banks need to clearly communicate the value of services to their clients. Hardly any banks does this well, which leaves considerable room for improvement.

Other global industries tend to perform better at pricing value than banks do. For example, companies in the airline industry only invest in improving quality when customer value is involved. They monetise the value added and communicate it properly.

Shift to relationship discounting Unstructured discounts are frequently granted by banks without adequately considering overall revenue margins or total client revenues. Inefficient discounting processes and a dominant priceselling culture give rise to substantial revenue leakage. The industry is currently moving away from product-based logic in favour of relationship discounting logic. This requires a high degree of transparency in terms of client profitability, which is compatible with the Treating Customers Fairly regulation centred on providing justifiable discounts based on objective criteria.

Banks segment clients into groups according to their size or revenue contribution to better align discount policies with overall strategy. A written confirmation of agreed client discounts and 96 ASIAN BANKING AND FINANCE | December 2018

How to price based on clients’ needs and value added?

concessions will become standard practice in APAC in the near future.

Moreover, discounting practices vary between markets. When large global banks roll out their pricing strategies in APAC subsidiaries, they need to adapt to the local context if they want their strategy to be effective. Asian clients are typically more focused on trading fees and interest products, whilst recurring fees are more predominant in Europe. These factors have to be considered when launching new discount tools or policies. Private banking clients have more banking relationships in Europe, which makes it easier for them to compare prices.

Improve negotiation capabilities and redesign compensation schemes Relationship managers’ (RMs) negotiation skills are becoming more essential. As regulations make pricing more transparent and the number of family offices and external asset managers in Asia grows, it has become easier for clients to compare and negotiate fees.

Whereas banks have been involving professional negotiators on the buy side for many years, the RM side is not as well managed.

Unlike clients, who often have an entrepreneurial background, RMs’ core capabilities are not focused on negotiation. Banks must support their front office with professional negotiation training to ultimately increase profitability. Price psychology is an important consideration in RM training. The way an RM ‘nudges’ clients during the interaction process has a significant impact on the outcome.

Lastly, compensation structure is relevant for growing profitability.

RMs have been encouraged to focus on growth in assets or revenues.

There needs to be a clearer link between compensation and profitability, which can be achieved by incorporating more refined compensation schemes.

Price setting with a focus on client value, systematic discount practices and skilful negotiation can make all the difference and

mobile banking initiative of the year - thailand wealth management platform of the year - thailand

TMB Bank’s TMB WOW selected as one of the best loyalty programme platforms

TMB Bank wins in the ABF Awards 2018 in two categories: Mobile Banking Initiative of the Year Thailand for TMB WOW and Wealth Management Platform of the Year - Thailand for TMB Advisory

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a difference, with customer benefits, eceiving the “Mobile Banking Initiative lifestyles, and needs as priorities. of the Year” award from the Asian In recent years, TMB has introduced new Banking & Finance Awards 2018 can and meaningful products and services to be a strong evidence of success for players the market. The bank prides itslef with its in Thailand’s banking sector. No exception products and services, one of which is TMB for TMB, as its TMB WOW, the first loyalty TOUCH mobile application. TMB TOUCH, pogram me of a mobile banking application with its distinctive features, continues to in Thailand, has been recognised with the evolve in giving benefits to award, highlighting fulfill the users’ lifestyle its success in integrating a “We are committed to taking and functional needs.

Mingkwan Pattanawong, gamification model mobile banking application to head of TMB Retail into a mobile another level and offer a fun Marketing said, “We will banking service. user experience.” continue to develop TMB TMB WOW is a TOUCH to make the gamified loyalty app more powerful and useful. We are platform for TMB customers, which aims to committed to taking mobile banking make everyday banking no longer a boring application to another level and offer a fun thing. Winning Thailand’s Mobile Banking user experience. With TMB WOW added, Initiative of the Year award will help it is the first mobile platform in Thailand’s strengthen TMB’s position as Thailand’s banking industry that utilises gamification leading digital bank. in building customer brand TMB WOW was designed to enable engagement and change the customer TMB TOUCH mobile application users perception that making a bank transaction to “Get MORE with TMB” and “Make is tedious. In fact, it is easier, quicker, and THE Difference” as users can earn WOW more enjoyable.” reward points from making transactions Based on “The More you use, The More you and redeem them for gifts or other get WOW” concept, the more customers rewards. This does not only represent the make transactions on TMB TOUCH and philosophy and brand value of TMB, but also the more WOW rewards points they earn. compliments the bank’s efforts in building a Rewards points can be earned from bill digital banking ecosystem. payments, TMB PromptPay registration, TMB has been widely recognised as new account opening, and participations in a game changer in Thailand’s banking other non-financial activities, such as industry. The bank has created new financial viewing new VDO clips and logging into TMB transaction standards in Thailand by making

WOW every day.

After completing these transactions and activities, customers will earn WOW points to redeem for gifts and rewards with ease, ranging from discounts on food & beverage, travel, shopping, and beauty at participating partners that meet customer lifestyles. Checking WOW rewards points balance, self-selecting rewards or transferring WOW points to others can be done effortlessly anytime.

Moreover, the monthly “WoW Friday” provides customers with monthly Friday surprises that customers can spend fewer points to redeem rewards or get extra rewards points back. These make TMB WOW one of the most rewarding and satisfactory mobile loyalty programmes.

As a result, 92% of TMB TOUCH’s active users already registered to the program.

User participation in the WOW has risen to 134%, which is a record-breaking figure, thanks to WOW Friday activities. More than 85 million WOW rewards points have been earned and the number keeps rising.

Everyone can grow wealth TMB Advisory is a new wealth management service platform which has been designed to serve all customers and not just the billionaires, because everyone just needs proper advice on financial planning and investment. TMB is the “first Thai bank” that introduced this unique investment platform that comprises 3 elements, which are (1) Open Architecture (OA), (2) Asset Allocation Service, and (3) Advisory Channels.

With TMB Advisory service in place, during the past year, we have seen a generous growth of 27% in AUM or 3 times of the market growth rate. The number of new mutual fund customers also jumped by 20%.

CONTACT Company name: TMB Bank Public Company Limited Address: 3000 Phahonyothin Rd., Chomphon, Chatuchak, Bangkok 10900 Phone number: +66 2 299 1558 Fax Number: +66 2 242 3114 Website: www.tmbbank.com

ASIAN BANKING AND FINANCE | December 2018 97

OPINION

gavin gunning Why risks remain for Asia’s top banks

GAVIN GUNNING Senior Director & Sector Lead Financial Services, S&P Global Ratings

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sia’s banks have been in a sweet spot this year: operating performances, asset quality, and capital are all relatively stable, and macroeconomic conditions continue to be favorable. But some threats loom.

One concern is that risks may accelerate following a protracted period of high leverage and low interest rates. Indeed, risks emanating from the U.S. are increasing in the context of the ongoing China-U.S. trade dispute and rising interest rates and spreads, and a possible turn in the U.S. credit cycle.

Key risks affecting the Asian region overall include those associated with trade interruption and geopolitical tensions, asset price volatility and liquidity pullback, and China’s debt overhang.

Not surprisingly, risks and vulnerabilities affecting Asia’s financial institutions overlap with these top regional risks. The more prominent key risks that threaten financial institutions include high private-sector indebtedness (including in China, Hong Kong, Australia, Korea, Singapore, Malaysia, and Thailand); elevated property prices (including in China, Hong Kong, Australia, and New Zealand), and rising U.S. interest rates, and the potential spillover effect on banks from currency volatility.

Turning U.S. credit cycle may hurt A turn in the U.S. credit cycle, which may affect asset prices and liquidity, may have spillover effects, especially on Asia’s emerging markets. In the interim, however, some of Asia’s emerging-market banking systems are progressively improving their financial strength, albeit from a high-risk starting point in many cases by global standards.

Still, high debt levels and asset prices across the region, and lesscertain bond markets, are a backdrop for the potential emergence of a lower probability, but high-impact, negative scenario on Asian banks. A sharp correction in asset prices, particularly if associated with a pullback in market liquidity, would likely lead to a revision of our base case and cause negative ratings momentum.

Government support remains intact, for now It’s not all doom and gloom for Asia’s banks. Many Asian countries will likely retain the flexibility of the government bailout option as a primary support mechanism, in the short to medium term. Hence, we believe extraordinary support for many systemically important private sector banks in Asia is most

98 ASIAN BANKING AND FINANCE | December 2018

Asian banks’ asset prices and liquidity may be affected

likely to be forthcoming from governments in a banking crisis.

Government support is a key rating factor for Asia banks.

Any transition by Asian governments to bank resolution and crisis management frameworks that imply a lower likelihood of government support—as occurred last year in Hong Kong—may trigger bank downgrades.

Steady profitability and capitalisation prospects Profitability and capitalisation should remain relatively stable during the second half of 2018 across most of the region. Favorable economic conditions during the first half kept overall profitability trends for Asia’s major banks steady.

However, net interest margins continue to be under competitive pressures in many countries, and we would expect this trend to continue in the second half of 2018. Further, slightly lower economic growth for fiscal 2018 compared with fiscal 2017 in some key markets should temper banks’ profitability, albeit Asian growth overall continues to be robust by global standards.

Banks can withstand moderate weakening in asset quality Similarly, asset-quality trends are likely to remain relatively stable across most of the top banks in Asia. Many can weather some diminution in asset quality without affecting the ratings.

Still, asset quality will be a more likely driver of bank credit quality in the Asian banking sector over the next six-to-18 months compared with most other rating factors. In recent times, nonperforming asset (NPA) trends have been stable or slightly improving in some developed markets.

Meanwhile, NPA trends slightly deteriorated in some markets, most notably India. Asia’s emerging market banks, in particular, may be more vulnerable to asset quality deterioration over the next six-to-18 months due to the knock-on effect from a tightening in the U.S. credit cycle and volatility impacting domestic currencies.

Digital Banking Initiative of the Year - India International Trade Finance Bank of the Year - India Intl Technology & Operations Bank of the Year - India

How Standard Chartered India is commited to customer excellence through innovation feel valued and understood.”

Tinwalla noted the importance for financial institutions like the bank to understand that digital is now the new language of customer experience and that customer expectations will correspondingly align with this trend—for banking services to be easier, faster, more consistent, and reliable on the back of smart digital interfaces. “Through digitalisation, we seek to deliver superior value and a user-friendly experience to our clients whilst equipping our frontline agents with digital insights and incorporating cutting-edge technology into our processes,” he explained.

Zuzar Tinwalla, chief information officer, Standard Chartered India

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he three awards that Standard Chartered India won during Asian Banking & Finance’s Retail Banking Awards 2018 reaffirm the bank’s continuous efforts to incorporate technology in its digitalisation strategy, reflecting its relentless commitment to provide creative and innovative products and services to its clients in India. These awards include the International Trade Finance Bank of the Year - India, the International Technology & Operations Bank of the Year - India, and the Digital Banking Initiative of the Year - India.

Zuzar Tinwalla, Standard Chartered India’s chief information officer, emphasised the importance of using technology in putting more meaning in the bank’s interactions with its clients.

“Standard Chartered Bank’s aspiration is to be the digital bank with a human touch, where the banking experience and human interactions are made more meaningful by digitalisation and innovation,” he said. “We aim to use digitalisation to enable a holistic, seamless experience where our customers

and saved 8,000 man-hours annually, whilst providing users with intelligent cues and timely insights for decision making as well as tailor-fit solutions to respond better to customer needs.

Standard Chartered India also bagged the Trade Finance Bank of the Year - India award through a host of solutions to mainly help enterprises and businesses in the country to perform their operations more smoothly. Some of these initiatives include end-to-end export document solution for a large automobile company under export finance; a supplier finance programme for an agricultural company under supply chain finance; a distributor finance programme to aid sales of a local manufacturer; and a payables financing through vendor prepay solution to strengthen a client’s supply chain and support its working capital needs.

Unparalleled initiatives Standard Chartered India’s Real Time Onboarding gave it the Digital Banking Initiative of the Year - India title. The initiative is a strategic programme enabling end-to-end, real-time and paperless Unending efforts onboarding for new clients, along with Tinwalla explained that Standard Chartered instant activation of accounts and services, India is continuing its efforts to reach out as well as instant product fulfilment. to different industries and sectors to figure The programme helps improve out how to incorporate technologies and customer experience on transactions innovations already available in the wide that traditionally takes multiple days to array of financial and banking products and be completed and inundated with paper services that they provide to their clients. requirements into “We actively reach an “empowering, out to the fintech “Standard Chartered Bank’s community to scout seamless, digital, aspiration is to be the digital for the high-quality and real-time experience”, solutions and bank with a human touch, including customer where the banking experience have implemented onboarding that collaborative projects and human interactions are only takes about around risk warning made more meaningful by 10-15 minutes. systems, data digitalisation and innovation.” analytics, and customer Other pioneering aspects of the onboarding,” he said. initiative include being the first to offer “Additionally, we continually relook all instant digital account through an iPad in our existing processes to drive better India, as well as first to offer a full-fledged responsiveness, efficiency, and productivity account on the bank’s Internet Banking whilst adopting an agile method of working Channels. to create #simplefasterbetter way to work.”

Winning the bank the Technology & CONTACT Operations Bank of the Year - India award Company name: is its comprehensive efforts to incorporate Standard Chartered India data analytics, algorithms, and other Address: technological tools to improve business Standard Chartered Bank, Crescenzo, C-38/39, operations. One solution is the creation of G-Block, Bandra Kurla Complex, Mumbai-400 an Early Warning Risk Identification system 051, India to help identify signals on a portfolio before Website: it turns into a non-performing asset. This https://www.sc.com/in/ has helped strengthen the bank’s strategies

ASIAN BANKING AND FINANCE | December 2018 99

OPINION

olsen & fritz-morgenthal

How banks can prepare for the worst

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n recent years, the financial pages have been filled with examples of the many ways that operational risks can spin out of control: Traders make huge, unauthorised bets; sales people set up accounts without the consent of their customers; managers rig market benchmarks; internal systems and processes break down; computer systems fail; customer data is breached and compromised.

The consequences of these operational mishaps can be catastrophic—resulting in millions, and sometimes billions, of dollars in financial losses; fines and other regulatory sanctions; customer defections; management shakeups; shareholder discontent; and significant, if not irreparable, damage to a bank’s reputation.

From 2011 to 2016, major banks suffered nearly $210b in losses from operational risk. Most of these stemmed from preventable mistakes made when employees and systems interacted with clients, flaws in the way transactions were processed, or outright fraud.

Overall, banks have made some progress managing operational risks, but there is much room for improvement. Losses from operational risks at major banks worldwide have fallen from a peak of 6.2% of gross income in 2011 to 1.6% in 2016, according to ORX. By taking steps to reduce those losses further, banks can have a direct and measurable impact on their bottom lines. Improving the 2016 loss ratio by 20%, for example, would be equivalent to a 32-basispoint increase in net profit margins.

Banks, in short, have every incentive to contain operational risk.

Yet, they often find it hard to do. Compared with financial risk (which includes the risk that creditors will default on their loans and that assets will fluctuate in value), operational risk is more complex and more challenging to monitor, control, and manage.

Many banks have a tough time understanding and measuring the interconnected factors that contribute to operational risk, including human behavior, organisational processes and IT systems. They find it challenging to create cultural, governance and management structures that can systematically control these risks. Instead of taking a deeply integrated, proactive and long-term approach to operational risk management (ORM), they end up managing operational risk with reactive, short-term measures.

Banks that take a comprehensive approach to ORM recognise four broad areas that need attention. The first is people. Even in a digital age, employees (and the customers with whom they interact) can cause substantial damage when they do things wrong, either by accident or on purpose. Problems can arise from a combination of factors, including intentional and illegal violations of policies and rules, sloppy execution, lack of knowledge and training, and unclear and sometimes contradictory procedures.

The second area is IT. Systems can be hacked and breached; data can be corrupted or stolen. The risks banks face extend to the thirdparty IT providers that so many banks now rely on for cloud-based storage and other services. Systems can slow down or crash, leaving customers unable to access ATMs or mobile apps.

100 ASIAN BANKING AND FINANCE | December 2018

THOMAS OLSEN Partner Bain & Company

SEBASTIAN FRITZ-MORGENTHAL Principal Bain & Company

Improved operational risk management has helped major banks cut their losses in recent years

Source: ORX; Bain & Company

The third area is less tangible than the first two, but no less important: organisational culture. By setting aggressive sales targets and rewarding employees for how well they meet them, bank management can encourage, and, in some cases, explicitly condone inappropriate risk taking. Such activity, when exposed, can lead to management changes, shareholder losses and regulatory fines.

The fourth area that vexes ORM planners is regulation. Since the global financial crisis, regulators have increased the number and complexity of rules banks must follow. Banks operating in multiple jurisdictions can face overlapping, inconsistent, and conflicting regulatory regimes. Lapses can be expensive and embarrassing, triggering regulatory sanctions and customer defections.

The key to effective ORM is training people to anticipate what could go wrong, especially when a business unit is about to do something new, such as introduce a product, change a customer interface, alter the way employees are compensated, or outsource part or all of a core business process.

As banks increasingly use agile teams to innovate, they can make sure that ORM experts are part of the effort. One European bank, for example, has ORM staffers as integral members of the agile teams on its innovation campus, where the bank develops and tests new business practices and offerings. Another European bank has built up a dedicated cyber risk team that simulates realistic cyberattack scenarios and takes action to prevent them from happening.

Leading banks now use technology to supplement, and sometimes replace, audits. Using advanced analytics and machine learning, they leverage their tremendous trove of data to screen the entire bank’s operations continuously and automatically. They use insights from this ongoing surveillance to quickly develop and adapt Key Risk Indicators that serve as early warning signs of potential problems.

Banks that are integrated and proactive about the way they manage organisational risk can realise real financial benefits and, more important, help prevent the kind of catastrophe that can have consequences for years to come.

Domestic Retail Bank of the year - Philippines Domestic Project Finance Bank of the Year - Philippines

BPI named the Philippines’ Retail Bank of the Year and Project Finance Bank of the Year

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he Bank of the Philippine Islands (BPI) continues to exceed expectations with topnotch customer-centric solutions for its growing clientele. The bank’s rich 167-year legacy in the Philippines has firmly established it as one of the most trusted banks across diverse client groups not only in the country, but in the Southeast Asian region as well. From retail to wholesale banking and project finance, BPI has taken the lead in innovation as it bags the Philippines Retail Bank of the Year and Philippines Project Finance Bank of the Year awards at the Asian Banking & Finance Awards 2018.

“Our retail banking initiatives involve digitalising further the manner in which our clients access us. It’s about providing more convenience and enhancing the quality of the overall banking experience,” said Cezar Consing, BPI president and CEO. “Our wholesale banking initiatives are geared towards developing tailor-made solutions for sophisticated clients. At the end of the day, it’s about helping them achieve important corporate objectives,” he added.

Cezar Consing, BPI president & CEO

in total loans for affordable housing, and facilitated 611,130 client placements. It also recorded 290,743 insurance accounts in the same year.

With the aim to widen its reach and achieve financial inclusion, the bank has conducted 2,985 financial management trainings and visited 541 schools, educating Retail leader “Our retail banking initiatives teachers, students In an effort to involve digitalising further the and parents on useful support rapid financial knowledge manner in which our clients growth, enable skills. access us. Our wholesale banking andBPI more convenient Direct initiatives are geared towards and efficient BanKo, the bank’s banking for clients, developing tailor-made solutions microfinance arm, has and increase expanded its footprint for sophisticated clients.” financial inclusion, from nine branches in BPI has embarked 2016 to 103 branches on a long-term digitalisation journey that in 2017. This growth enabled BPI to release will enhance its extensive network of more than $10.2m (PHP559m) worth of ATMs, CAMs (Cash Acceptance Machines), loans to over 10,000 customers. online facility, and mobile app. The bank’s digitalisation efforts also aim to enable the Project finance branches for more meaningful interactions BPI also continues to catch the attention that address the financial needs of clients. of big borrowers in the wholesale banking BPI’s 8.4 million-strong retail clientele space. In 2017, through its investment arm has continued to enjoy the bank’s promise BPI Capital Corporation together with DBS of financial inclusion and wellness, as the Bank Ltd. (DBS), BPI headed a team of banks bank caters to individuals from the high netin Star Energy Geothermal’s successful worth to microfinance segments as well as acquisition of Chevron Group’s Indonesian overseas Filipinos. geothermal assets through a $1.25b In 2017, the bank recorded 8.2 million secured term loan facility. savings accounts for various retail This was the largest renewable energy products, released $228.3m (PHP12.2b) deal in Asia Pacific in 2017. Chevron Group’s

assets were two long-standing power generation operations in West Java whose gross power generation installed capacity is one of the world’s largest geothermal portfolios.

According to BPI, the cross-border deal adopted a project finance-cash flow-backed structuring. The mandated lead arrangers ensured the appropriate ring-fencing of all the assets to allow a comfortable debt-servicing ability throughout the loan’s tenor. The bank added that the deal was structured such that the refinancing risk will be largely eliminated by select lenders.

Overall, BPI prides itself in being a financial institution that creates shared value for its stakeholders by working actively to promote financial education, poverty reduction, food and agriculture, and environmental protection, amongst others.

CONTACT Company name: Bank of the Philippine Islands (BPI) Address: 6768 Ayala Avenue, Makati City, Philippines 1226 Phone number: (+632) 845 9690 Website: http://bpiexpressonline.com/

ASIAN BANKING AND FINANCE | December 2018 101

OPINION

Rana Kapoor

Asia to lead the 21st century through financial inclusion and data-driven banking

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ith over $3.8b invested in Asia’s fintech ecosystem in 2017 and the emergence of a bouquet of services such as insurtech, Internet of Things (IoT) in wealth management, consumer-centric targeted services, amongst others, the region is well-poised to emerge as the leader of next generation fintech applications. Asia is also home to one of the largest peer-topeer (P2P) lending, crowd funding, and e-commerce markets which complement its growing fintech base.

Extensive consumer awareness combined with the banking and financial industry’s massive technology adoption has led Asian giants like India and China to invest, adopt, and scale fintech innovations, much before their global counterparts. As Asia continues to show strong signs of economic growth, driven by robust technology adoption, rapid urbanisation as well as an emerging middle class, the region is at the vanguard of a financial transformation which will redefine how financial services are delivered and consumed.

A region of growth Firstly, Asia is home to two of the world’s biggest financial centers out of the global ‘Big 4’—Hong Kong, Singapore, London, and New York—and is one the leading regions in fintech adoption rates. The ‘Fintech Adoption Index 2017’ by EY shows that 69% of individuals in China and 52% in India have used basic fintech applications, whereas only 33% of US citizens have utilised technology in banking.

Moreover, the world’s leading banks have recognised the strategic importance of the Asian region as an emerging financial hub from both a fintech and traditional banking opportunity.

Secondly, the Asian region accounts for over 4.5 billion people and around 1 billion do not have access to formal banking services.

A majority of them reside within India, providing Fintech startups and financial service companies alike with an opportunity to focus on last-mile financial inclusivity. Recent government policies particularly in India have given a huge boost to greater digital adoption and the online payment ecosystem, rapidly overcoming attitude inertia. Rising smartphone and mobile internet penetration levels within countries like India and China will also facilitate ease of digital connectivity and doing business from a fintech perspective.

Thirdly, Asia is one of the largest hubs with regards to High Net Worth Individual (HNI) population, global remittances, and wealth creation. The APAC region has over 5 million HNIs amassing wealth over $18t with a major part of them residing in India, China, and Japan. Further, India and China recorded one of the highest global remittance inflows in 2017 at values of $69b and $64b respectively.

As Asia emerges as a region for the rich, it is of strategic importance for global and domestic financial organisations to ride this wave of high-paced growth through low cost, customer-centric innovation.

Coupled with a large pool of young engineers trained in technology, the opportunity is ripe to integrate big data, AI, machine learning into meaningful financial solutions and products.

102 ASIAN BANKING AND FINANCE | December 2018

Rana Kapoor Managing Director & CEO YES BANK

Asia’s banking industry is continuously undergoing a transformation

Lastly, the advent of fintech innovations has led to enhanced regulation, stringent capital adequacy, and risk management standards in order to fight digital fraud and default risk, especially in Asia. At the heart of finance and banking, especially those solutions powered by technology lies digital trust and responsive & stable regulatory and policy interventions. We have benefitted tremendously as a nation from the recent visionary changes, devising a clear system to fight fraud risk, especially as the banks are beginning to cater to the unbanked.

In conclusion By 2030, the contours of the banking and finance industry will witness a rapid transformation by leveraging knowledge-led, innovative reforms, entrepreneurial models based on rapid technology adoption and organisational change through specialised collaborations. There will be new and innovative collaborations to service even the bottom of the pyramid, to reach out to the last man standing through traditional as well as new age collaborations, engaging with NBFCs, fintech companies, and startups. The industry will face and surmount multiple challenges in delivering seamless payments, both for retail and the MSME segments. There is a fair possibility that the norm of ‘business as usual’, will be augmented through specialised technology and may even be run in gig partnerships with other fintech companies.

It will be the Asian markets, which will lead the financial world and in turn chart out the global growth story. It is not surprising that the 21st century is also widely known as the Century of Asia. As PwC in its report predicts that by 2050, China and India will become the world’s leading economies based on purchasing power parity (PPP), it automatically also implies that these countries will become the most sought after investment destinations. Offering investors the best value addition along with access to a growing market in a competitive and digital ecosystem, empowered and governed by world class technology in the banking and financial sector.

Service Innovation of the Year - Thailand Branch Innovation of the Year - Silver

Aboard Siam Commercial Bank’s digitally integrated client onboarding process

Juristic Onboarding project team

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because previous onboarding procedures iam Commercial Bank (SCB) was had suffered from unnecessary complexity, established by the Royal Charter on broken trust, redundant intermediaries, and January 30, 1906 as the first ever limited access for some users.

Thai bank. With more than 110 years in the There are four pillars in the Digital Juristic business, it provides financial services and Onboarding plan. First, the customer has developed deep expertise to serve its experience must deliver anytime-anywhere customers’ needs. access that is seamless across channels, As a universal bank, it serves individual with an intuitive, exemplary interface and and corporate customers by offering document and data reusability. This is exceptional deposit, payment, lending, and made possible with SCB’s banking product advisory services. With a vision to serve as solution, accessible by both desktop “The Most Admired Bank,” it has established and mobile devices, with a single sign-on a multi-year transformation roadmap to system across devices. This shortens the enhance long-term competitiveness.

SLA (service level agreement) process SCB constantly tries to identify new from several days to around 30 minutes, paths and design new tools to give its and through a “once clients the best and done” approach, financial solutions.

“To rapidly deliver the data can now be Thus, it is always in digital disruptive customer pre-populated and search for innovative experience, SCB incorporated documents reused. services to reduce The second priority complexity and the power of technology, is process efficiency, improve customer process, and people with standardisation experience. It believes simultaneously.” by default. This is that a customer’s first met through a single impression is priceless platform connecting the process from for a positive future relationship. end to end and the use of standardisation across segments.

Seamless initiative Third, using cognitive technology, the Traditionally focusing on individual process ensures system traceability and the customers,SCB would like to also offer a systematic capturing of data and process seamless cooperate experience. This is completeness. Finally, risk management now possible with the bank’s Digital Juristic is not sacrificed, as system-driven checks Onboarding initiative, part of the $100m provide clear end-to-end accountability. it has invested in digital transformation The design is fully digitally connected to for the future. It embarked on this project

more than 80 other financial systems, which helps pre-populate data, whilst at the same time meeting the highest security standards.

Altogether, this results in the ability to conduct a Know Your Customer check in only five minutes—from confirming the ultimate beneficial owner of the account to a digitised KYC risk-level score. In turn, this means a new account can be opened in just minutes.

For clients, this digital business account opening process vastly improved their experience. The advanced digital KYC system removes the struggle of gathering and signing multiple documents. Now we can open a business account within minutes on a single tablet device with the only requirement being the customer’s ID card. With the ID card, all the other necessary documents and information are being retrieved through multiple channels for thorough KYC due diligence and instant account opening.

To rapidly deliver the digital disruptive customer experience, SCB incorporated the power of technology, process, and people simultaneously. It moved from multiple point solutions to a perfectly integrated journey, from traditional project management to agile approach delivery and from departmental silos to the joint team in digital garage.

As a result, SCB has created this solution for helping new business clients to open accounts. The bank puts its customers first and always aims to deliver an exceptional customer experience.

Siam Commercial Bank will always continue to enhance its applications to support every Commercial Products Onboarding. At the end of the day, Business Banking with SCB will be ready at the customer’s fingertips.

CONTACT Company name: Siam Commercial Bank Address: Siam Commercial Bank, 9 Ratchadapisek Rd., Jatujak, Bangkok 10900 Thailand Phone number: +66(0) 02 544 1000 Email: customer_service@scb.co.th Website: www.scb.co.th

ASIAN BANKING AND FINANCE | December 2018 103

OPINION

radish singh The future of financial crime compliance

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he global financial services industry including Asia is being plagued with the pervasive nature of financial crime and the ever-changing typology of threats. These threats include money laundering, tax evasion, bribery and corruption, and fraud— and financial institutions are grappling to find the right balance to ensure that their compliance programmes can adapt and respond.

The unintended consequences of regulatory expectations on financial crime compliance and low tolerance for failure by regulators have resulted in, inter alia, voluminous and manual processes prone to human error. Many financial institutions typically have large compliance and operations teams to monitor and identify regulatory risks, and track regulatory changes to stay compliant.

Dealing with the ever-changing typology of threats and the increasing regulatory expectations has resulted in growing frustrations over legacy and lengthy compliance processes leading to the use of narrow point technology solutions.

Even so, the battle for compliance is waning. Despite cumulative billion dollar expenditures across the industry to improve the state of compliance—either by having more human resources or through the utilisation of new technologies and systems—these actions may not adequately meet future demands to keep a financial institution’s compliance programme defensible and a step ahead of sophisticated criminals. In other words, having a larger team is not a silver bullet for effective compliance.

Achieving seamless compliance What then is the way forward? There must be a conscious shift in the compliance operating model to move from checkbox compliance to “seamless compliance.”

Across the financial crime risk management framework, there are many areas in the value-chain where technological innovations such as Robotic Process Automation (“RPA”), data analytics and cognitive intelligence can be applied. Equally important, financial institutions also require a seamless innovation strategy across the compliance framework, the control environment, and the customer life cycle.

With digital disruption, technological revolution, open APIs, and emerging typologies, there is arguably a widening gap between where a financial institution’s financial crime compliance programme is, versus where it needs to be. Not surprisingly, it is about reducing the chasm and leveraging these new technologies to build a compliance programme to safeguard systems and ensure no bad actors or criminals can exploit the system.

For instance, there is great value in automation. Rarely is this about the trending debate of robots or machines taking over, but rather, it is about applying automation where fitting to reduce the mundane and repetitive tasks. Many financial institutions have large customer databases that have to be checked under stringent “Know Your Customer” and “ongoing monitoring” rules, and these checks are mostly done by large teams through manual processes.

104 ASIAN BANKING AND FINANCE | December 2018

RADISH SINGH Financial Crime Compliance Leader Deloitte Southeast Asia

A shift in the compliance operating model is needed

With RPA, financial institutions can design rules-based systems that mimic human behaviour to automate repeatable processes and achieve greater consistency in outcomes, accelerate the time taken to onboard customers, and potentially reduce operating costs. In the case of risk management, enhancing RPA with artificial intelligence and machine learning has immense potential to make compliance a more meaningful exercise.

Ultimately, compliance teams and employees ought to perform higher value work, such as analysing the outcomes and quality to ensure policies and procedures are substantial, and even perform issues resolution. This way, compliance professionals can focus on the risks that matter to attain greater risk management maturity. A cogent strategy around innovation in financial crime compliance is the key to building an effective model to remain relevant to ever emerging threats, an evolving landscape, and changing typologies.

Further steps Cooperation is vital between and amongst regulators, enforcement agencies, and financial institutions to tackle financial crime.

Regulators and enforcement agencies have greater and far-reaching capabilities, whereas financial institutions have a limited view of their clients and transactions. Thus, more momentum in international cooperation to better manage financial crime needs to happen.

This cooperation can come in the form of an enhanced technology infrastructure for monitoring, information sharing and reporting between regulators, enforcement agencies and financial institutions.

The financial services industry needs to start thinking now what the future of financial crime compliance will be, to ensure that it keeps up with the changes and effectively combat financial crime.

More importantly, seamless compliance will also move the industry toward value creation. Using tools, technology and a reimagined financial crime compliance framework, industry players can leapfrog in delivery and accelerate the insights for financial institutions to become more competitive.

2019

Banking Forum

MNL | JKT | KL | BKK | YGN Asian Banking & Finance is proud event to welcome you to the for the banking and finance industry.

The Retail Banking Forum is happening in the first half of 2018. The trailblazing event will gather over 200 banking and finance leaders across Southeast Asia to discuss pertinent issues and what’s hot in the industry.

The event will take place in Manila on February 28, Jakarta on March 20, Kuala Lumpur on April 25, Bangkok on May 29, and Yangon on June 1.

Presented by:

For speaking opportunities: If you are interested in participating as a speaker, panelist, or delegate, do contact our event organiser Andrea at andrea@charltonmediamail.com +65 3158 1386 ext 212

For sponsorship opportunities: If you are a vendor or partner to the banking industry and wish to sponsor/speak, please contact Rochelle at rochelle@charltonmediamail.com +65 3158 1386 ext 220

To learn more, visit http://asianbankingandfinance.net/event/2018-asian-banking-finance-retail-banking-summit.