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4 in 5 Singaporeans prefer online banking
ADOPTION OF E-CNY POSES RISKS TO BANKS
PAYMENTS
e-CNY poses adjustment risks to the banking system
It will reduce their ability to earn interest on cash in transit and test money supply.
Wider adoption of China’s digital renminbi (e-CNY) poses adjustment risks to the banking system, according to a financial analyst.
Digital renminbi is expected to gain broad public acceptance as a digitalised form of legal tender, supported by China’s well-established network infrastructure and wide broadband mobile penetration, according to Yan Li, a Moody’s assistant vice president and analyst.
“Moreover, e-CNY’s offline feature will allow transactions where network coverage and connections are lacking, adding to its robust nature as a transaction medium,” he added.
The adoption of e-CNY will improve operator banks’ competitiveness in the online payment market. The close integration of banks in the e-CNY regime will also encourage its users to stay within banks’ retail payment services, minimising the risk of disintermediation.
Adjustment risks However, banks still face adjustment risks when e-CNY debuts as a more efficient and inclusive form of the monetary base.
“They will have reduced ability to earn interest on cash in transit whilst facing potentially increased volatility in the composition of money supply,” Moody’s said in a report.
The higher technology spending amidst limited fee opportunities will also pressure banks’ profits should e-CNY usage spread to the wider banking system.
“More institutions would then have to make a significant and steady investment to integrate e-CNY functions into their applications. And integrating e-CNY functionalities will test banks’ ability to address related social and governance concerns, such as privacy and cyber risks,” Moody’s also warned.
Despite the preference for online banking, Singaporeans still indicated dissatisfaction with digital services
4 in 5 Singaporeans prefer online banking
ONLINE BANKING
Mobile banking is now the way to go for Singaporeans, with four out of five indicating that they prefer online over in-person interactions when they bank, according to a survey by an American digital consulting company, Publicis Sapient.
Out of the 704 Singaporeans surveyed in June, 50% turn to mobile apps for banking interactions, whilst another 33% rely on bank websites.
Only 12% of respondents stated that going to a branch is their primary mode of communication with their bank. Only 4% concentrate their banking activities at the ATM. This is no surprise as consumers are spending more time online amidst a time of restricted movement and tightened COVID-19 measures worldwide, said Publicis Sapient. Three in four (74%) Singaporean respondents reportedly spent more time online in the past year compared to the COVID-less year prior.
Less than one in ten, or just 9% indicated that they are spending less time online in the past year.
Dissatisfaction
Even with online being their preferred method of banking, respondents still indicated dissatisfaction with the services offered digitally.
Research Publicis Sapient’s Digital Life Index found that dissatisfaction typically occurs when a certain activity is too difficult to navigate or requires too many steps to complete, signalling a need for more seamless digital experiences across channels. “Today’s consumer demands flexibility in how and where they engage financial services to get what they want. Banks that take advantage of this shift will stand to outpace consumers and attract a new generation of customers,” said Emma Scales, managing director APAC at Publicis Sapient.
On the contrary, banks that fail to adapt to the digital age and the rising demand for convenient, fuss-free online experiences risk extinction, Scales warned.
Advisory needs
All is not lost for the physical bank branch, however. The study found that the future of physical bank branches could reside in their ability to serve advisory needs, with nearly half or 47% of respondents preferring to speak with a financial advisor in-person at a bank.
In contrast, only 33% leaned towards an online interaction. Only 13% said that they use mobile banking apps to seek financial advice or chat with an advisor in the past 3 months.
Rife for disruption
The market for digital-first banks is growing in Singapore, with adoption surpassing that of the global average of 44% of all respondents, according to Publicis Sapient.
Nearly one in two or 49% of Singaporean respondents stated that they have a bank account with a digital bank.
Digital Life Index research also found that one in three or 34% of Singapore respondents have already decided to change or are considering changing their banks or financial institutions in the next year.
