Asian Banking & Finance (July-September 2022) by Charlton Media Group

Issue No. 107

DISPLAY TO 30 SEPTEMBER 2022

CHINESE BANKS DOMINATE THE 50 LARGEST APAC BANKS BY ASSETS IN 2022

Asian Banking & Finance

HONG KONG BANKS ENGAGE IN POACHING WAR TO HIRE AND RETAIN TALENT HOW SINGAPORE BANKS ARE CLOSING THE GENDER GAP THAILAND PLAYS CATCH UP TO REACH GLOBAL GREEN FINANCE GOALS ESG, SUSTAINABILITY, AI, NFTS, AND MORE DISCUSSED AT THE ABF SUMMIT 2022

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FROM THE EDITOR PUBLISHER & EDITOR-IN-CHIEF

Tim Charlton

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inancial service institutions are hurtling towards a new frontier in the banking and finance industry. Alternative payments dominate Asia as credit card use dwindles and ‘buy now pay later’ increasingly attracts underserved customers. Standard Chartered Hong Kong sees metaverse as the future of banking.

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Salaries soar as Hong Kong banks engage in a poaching war to hire and retain talent. In Singapore, most banks have exceeded the projected regional average growth of hiring women in executive positions. Chinese banks continued to dominate the 50 biggest banks in Asia in 2022. See the full APAC 50 Largest Banks by Assets list on page 18.

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We chatted with Goh Soon Hong, CEO of Singapore’s newest wholesale digital bank Green Link Digital Bank discussing their strategies to improve MSMEs supply chains. Read the full story on page 12. After successful launches in Thailand and Taiwan, LINE Bank has chosen Indonesia as its third home. Read our exclusive interview with Jihyun Kim, lead of the LINE Bank Indonesia, on page 16.

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We also feature industry experts discussing ESG, sustainability, AI, NFTs, and more at the Asian Banking & Finance Summit 2022. Read the full event coverage on page 36.

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ASIAN BANKING & FINANCE | Q3 2022 1

CONTENTS

RANKINGS CHINESE BIG FOUR LENDERS’ ASSETS EXPAND 10% IN 2022

FIRST 08 Interest rates buoy APAC banks’ margins

09 Investment bank fees in Asia-Pacific fell 9% in H1 2022

BRANCH WATCH 10 OCBC NISP transforms its branch into a ‘financial fitness gym’

INTERVIEW 12 GLDB transforms Singapore MSMEs’ supply chains

14 Citi’s hiring spree sets in motion its $150b AUM goal

16 Why LINE Bank set its sights on Indonesia as its third home in Southeast Asia

Published quarterly by Charlton Media Group Pte Ltd 101 Cecil St. #17-09 Tong Eng Building 2 ASIAN BANKING AND FINANCE | MARCH 2019 Singapore 069533

FINTECH WATCH 20 Why the pen-and-paper era of financial advisory should end

FINANCIAL INSIGHT 22 Hong Kong banks face ‘brain drain’ as talent flees amidst strict travel restrictions

RANKINGS 24 Salaries soar as Hong Kong banks engage in poaching war to hire and retain talent

FINANCIAL INSIGHTS HONG KONG BANKS FACE ‘BRAIN DRAIN’ AS TALENTS FLEE AMIDST STRICT TRAVEL RESTRICTIONS

SECTOR REPORT ALTERNATIVE PAYMENT METHODS DOMINATE ASIA AS CREDIT CARD USE DWINDLES

EVENT COVERAGE 36 Sustainability, ESG, AI, NFTs, and more discussed at the ABF Summit 2022

38 Why lenders believe monitoring tech, loyalty are key to future of industry

39 Need for instant fulfilment fuels incumbent banks’ speedy digital transformation

40 Striking a balance between fraud prevention and less friction

42 Growth in the digital payment

28 Singapore bank rankings reveal new

space is through seamless digital experience

hires increased by 5.8% in 2022

44 Harnessing seamless digital experiences for growth in payments market

46 Integrating ESG to build a profitable and sustainable future in finance For the latest banking news from Asia visit the website

www.asianbankingandfinance.net

ASIAN BANKING & FINANCE | Q3 2022 3

News from asianbankingandfinance.net Daily news from Asia MOST READ

BANKING TECHNOLOGY

Digitalisation vs digitisation: How they differ in transforming banking Digitalisation and digitisation are two terms that are interchanged when talking about the evolution of the banking industry—and this should not be the case, because there is a huge difference between the two, Sanjeev Behl of Citi Asia Pacific said.

CARDS & PAYMENTS

Four in five Singaporean Gen Z have tried to go fully cashless: Visa Over four in five Gen Z Singaporeans have tried going fully cashless during the pandemic, according to Visa’s latest Consumer Payment Attitudes Study. A total of 82% of Gen Z consumers surveyed said that they have attempted going cashless.

4 ASIAN BANKING AND & FINANCE FINANCE | Q3 | Q3 2022 2021

RETAIL BANKING

Lockdowns threaten Chinese banks’ loan quality: analyst Measures curbing the spread of COVID-19 cases raise the asset-quality pressures faced by Chinese banks, Fitch Ratings warned. These have curtailed economic activity, and Fitch has revised China growth forecast for 2022 to 4.3%, from 4.8%.

RETAIL BANKING

Singapore banks report lower earnings in unison All three of Singapore’s biggest banks’ net profits fell 10% in Q1 compared to the same period a year earlier. Compared to the fourth quarter of 2021, the net income at DBS and OCBC surged more than 30% on margin expansion and low credit allowances.

CARDS & PAYMENTS

Alternative payments disrupt Philippines’ e-commerce market Alternative payments are increasingly becoming mainstream in the Philippines, and this could be seen especially in the e-commerce market. Over 30.7% of all e-commerce value in 2021 was via mobile and digital wallets, according to a study by GlobalData.

LENDING & CREDIT

ASEAN banks have a long way to go in decarbonising finance: Moody’s Banks in the Association of Southeast Asian Nations (ASEAN) are making progress, but still face data and transparency hurdles in order to meet their carbon neutrality targets, according to a report by Moody’s Investors Service.

ASIAN BANKING & FINANCE | Q3 2022 5

THOUGHT LEADERSHIP ARTICLE

Scaling productivity in the financial sector with document understanding technologies I.R.I.S. - A Canon Company, lays down how financial institutions can reduce manual work and focus on their core business. By Peter Ortmanns, Sales Director at Asia Pacific, IRIS Products & Technologies

anks are tackling lots of administrative tasks every single day. From opening new accounts to processing loan applications and credit cards, these operations require repetitive manual tasks and document processing. Intelligent Document Processing for Banks The topic of automatic processing of checks and transfers related to document recognition, optical/intelligent character recognition and data extraction was very prominent in the banking sector 25 years ago. After 5-10 years and getting rid of technical limitations for document classification and index capture, digital processing of customer onboarding as well as credit applications came up. AI technologies played an essential role in the extension of use cases. In the meantime, it is even possible to add use cases of automated wealth management, crime prevention for trade-based money laundering, and robotic examination for the letter of credit files. The automatic analysis of the letter of credit letter, for example, is based solely on very tedious document analysis. The Uniform Customs and Practice for Documentary Credits or UCP 600 published by the International Chamber of Commerce requires numerous document types to be distinguished. They are checked for completeness, date of deadlines, and validation of numerous data for correctness and integrity in multiple respects and detail. A bank‘s motivation to introduce such software is quite simple—it’s all about reducing PROCESS COSTS, saving TIME, mitigating RISKS, and instigating BUSINESS DEVELOPMENT. For a bank, it is a challenge to scale the purely manual-driven letter of credit business because the process is resource and knowledge-intensive. Usually, there are four cases of output per day and consultant. The staff needs to have a very solid knowledge of UCP 600 and other international trade regulations and yes, they need to have very good skills in document examination. On top of that, the issuing bank needs to safeguard the service-level agreement for five days after the presentation of the documents by the 6 ASIAN BANKING & FINANCE | Q3 2022

Peter Ortmanns, Sales Director at Asia Pacific, IRIS Products & Technologies

vendor. With regards to the letter of credit market itself, we can recognise that it is heavily under pressure especially due to the pandemic and its impact on trade and the supply chain. Hence, increasing the market share in the letter of credit market isn’t easy for a bank, when sticking to manual processing. In the era of Industry 4.0 in a factory robot-assisted manufacturing is based on the automation of repetitive tasks with regard to a certain workpiece. In offices, digital transformations deal with the workpiece “information”. But with regards to productivity improvement both are managed by the same principles—what today’s banks require is a kind of process logistics that ensures that the right workpiece is processed using the right tools, in the right quantity and quality, at the right time, in the right place, in the right way, and transferred to the right successor. Digital Mailroom and Digital Workplace The Digital Workplace enables banks and other financial institutions to concentrate on their core business and value creation processes by automating repetitive activities

in the background. This is particularly seen in the Digital Mailroom where the automation of documents and information inbound contributes substantially to business development. Companies are being supported to: • Reduce manual errors, processing time, and operating costs; • Increase productivity and transparency; • Improve traceability, accessibility, and auditability; and • Implement hybrid ways of working: in the office, at home and on the road. These can also be applied in other industries that need automated processing of commercial letters such as offers, delivery bills, orders, and invoices. The automated separation, sorting, and typing of incoming documents supports intelligent case management in HR departments, law firms, clinics or claims management at insurance companies through to patent departments of multinational corporations. Such software is also used in national elections, citizen services in public administration, and even with transport and logistics service providers. Every keystroke counts! I.R.I.S. - A Canon Company has been successfully meeting these challenges of digital transformation for 35 years. Over 40 million users worldwide use our intelligent document processing technologies daily. The software scans documents or imports documents from different sources like mobile capture, typifies them, and extracts data automatically. The offering combines the most advanced technologies, including AI-driven text and index recognition and automatic data integrity checks, machine learning-based document classification and, in terms of robotic process automation, learning features that consider on runtime the semantical context of data entered by a user. Every click and keystroke counts and your next step on your digital transformation path is just one email away. Consider IRIS, consider it done.

Every click and keystroke counts and your next step on your digital transformation path is just one email away. Consider IRIS, consider it done.

ASIAN BANKING & FINANCE | Q3 2022 7

FIRST regions,” Fitch noted, adding that securities portfolio losses should be manageable. “More aggressive tightening would also add to assetquality risks, with no more revenue benefits for banks.” Rate increases are sighted to be sharpest in Hong Kong and Singapore, where exchange-rate regimes link local interest rates to the US Fed funds rate. Banks in these two markets are expected to enjoy the highest possibility of net interest margins upsides. Significant monetary policy tightening cycle is also expected in Australia, New Zealand and India, whilst rates are unlikely to change much in China, Japan or Vietnam. “Asset-quality deterioration could eventually outweigh revenue upside, particularly if economies were tipped toward recession,” the Fitch Ratings report warned.

TECH RISKS INTENSIFY AS BANKS RAMP UP DIGITISATION EFFORTS BANKING TECHNOLOGY

he increased digitalisation efforts of Asia Pacific banks is giving rise to technology-related operational risks. Several APAC banks recently suffered technology-related service disruptions in the past year. Notably, Japan’s Mizuho Bank saw a widespread glitch that caused a breakdown in its ATM network in 2021, and disruptions to its corporate banking services in January 2022. Singapore’s DBS bank also suffered a major IT outage in November 2021 that saw customers unable to access their mobile and PayNow accounts; whilst OCBC customers fell victim to an SMS phishing scam that pushed the local financial regulator to enact new guidelines to bolster digital banks’ cybersecurity. In a report, Fitch Ratings believes that tech risks will intensify for banks as stakeholders–including regulators– demand higher standards for efficient, reliable and secure services. “Incidents of technological failure, whether brought about by internal system lapses or external cyberattacks, impose not only direct monetary losses but may also have significant reputational and regulatory consequences for banks,” the ratings agency wrote. Severe impact The impact of technological risks on banks’ credit ratings are likely to be more severe if they recur or persist over a protracted period, or if they reflect broader weaknesses in their non-financial risk management, the ratings agency added. Fitch also warned that these risks may even influence its assessment and lead to downward pressure in banks’ credit profiles. This is especially true for banks with limited rating headroom to withstand additional risks and weaknesses.

8 ASIAN BANKING & FINANCE | Q3 2022

Asset-quality deterioration could eventually outweigh revenue upside

Interest rates buoy APAC banks’ margins RETAIL BANKING

igher interest rates driven by the current monetary policy tightening cycle are expected to lift Asia-Pacific banks’ net interest margins (NIM). However, risks will intensify at the same time depending on the increase in rate and rising inflation. “Should US rate hikes be larger than we expect, this could trigger faster or greater tightening in some APAC markets, as could domestic inflation that proves higher or more persistent than we forecast,” Fitch Ratings said in a special report. Currently, a significant deterioration in asset quality in any APAC banking sector is not expected, though there may be pockets of vulnerability. “This partly reflects our expectations for relatively moderate tightening across APAC, where inflation pressure is generally more subdued than in other

Gavin Gunning

More aggressive tightening would add to asset quality risks

Credit losses rise The probable benefits of interest rates rising on banks’ margins would not be enough to offset losses over the next 18 months. APAC banks’ credit losses are expected to total US$865m in the next 18 months ending in 2023, said S&P Global Ratings credit analyst Gavin Gunning. In 2022 alone, credit losses are forecasted to hit US$425b, with another US$440b in losses in 2023. Gunning noted that economic growth prospects are weaker all around, with inflation rising. Corporate and household leverage is also high, and stress in the property sector is intensifying. China in particular face heightened risk due to its slowing growth. On the upside, the mortgage strikes reported in the country pose a limited direct threat to local banks, as they comprise just 1.3% of banks’ loan book in a downside scenario. Outside of China, Asia-Pacific banks’ balance sheets are overall in good enough shape to buffer headwinds, Gunning said. “Bank capital has strengthened materially since the global financial crisis, and asset quality is sound,” the S&P Global expert added.

FIRST China accounted for 82.5% of APAC bond proceeds worth US$1.7t

Money raised from IPO plunged 41% compared to 2021

Investment bank fees in Asia-Pacific fell 9% in H1 2022 INVESTMENT BANKING

nvestment banking fees in Asia Pacific, excluding Japan, reached an estimated $15b in the first half of 2022, down 9% compared to the first six months of 2021, according to data compiled by Refinitiv. Refinitiv attributed this to the region “witnessing the strongest period [in investment banking activities] last year.” Equity capital markets (ECM) fees fell 42.9% after last year’s best-ever first-half period, for a total of $3.2b.

Money raised from initial public offerings (IPO) plunged 41% compared to 2021, although this was due to last year being the strongest-ever first half period that Refinitiv recorded. In total, APAC still logged US$50.4b to account for 70.5% share of the total IPO raising gathered globally. Notably, Chinese IPOs drove the bulk of the activity, raising US$30.5b; however, this is 49.9 lower than in 2021.

Debt capital markets surpass 2020 record numbers Debt capital markets (DCM) underwriting fees rose 13% to $7.9b, surpassing the record set during the first half of 2020. DCM fees accounted for 53% of the APAC investment banking fee pool. Fees generated from completed mergers and acquisitions (M&A) hit a four-year high and totalled $1.8b, 10.5% higher than the same period in 2021. This is despite M&A volumes falling 22.2% in 2022 compared to the same period in 2021. Syndicated loan fees also dropped 7.6% and reached $2b. Primary bond offerings from Asia Pacific-domiciled issuers raised US$2t in the first half of 2022, the strongest first half period for the region in forty years. China accounted for 82.5% of Asia Pacific bond proceeds worth US$1.7t; followed by South Korea, with 4.9% or US$99.3b of the market share. Australia rounded up the top three with 4.6% market share, raising US$91.4b.

THE CHARTIST: APAC CARD MARKET TO GROW 13.7% IN 2022

he credit and charge cards market in the Asia Pacific region is slated to grow 13.7% in 2022 on the back of economic recovery, rising consumer disposable income, and the rise of electronic payments, forecasted GlobalData, a payments and analytics firm. The credit and charge card payments value in the Asia-Pacific region registered a compound annual growth rate (CAGR) of 14.3% from $6.5t in 2017 to $12.7t in 2022, according to GlobalData’s Payment Cards Analytics. It is expected to grow further at a CAGR of 9.5% over 2022 to 25 and reach $16.7t in 2025. This is despite the adoption of

credit and charge cards being slower in the Asia-Pacific region compared to the West, noted Nikhil Reddy, senior payments analyst for GlobalData. “This is, however, gradually changing due to rising middleincome population, growing financial awareness, and banks offering lucrative benefits in terms of reward programs and instalment facilities,” Reddy said. APAC countries easing lockdown and travel restrictions will push economic activities and positively contribute to consumer spending and support credit and charge card payments growth.

APAC: Cards Payments Value (US$ trillion), 2017-25f

Source: GlobalData

ASIAN BANKING & FINANCE | Q3 2022 9

BRANCH WATCH: OCBC NISP

Indonesia’s OCBC NISP transforms its branch into a ‘financial fitness gym’

This is the bank’s way to instill the “FinanciallyFit first, CrazyRich later” mindset to the younger generation.

ndonesia’s young generation’s average financial health score is only 37.72 out of 100—far below the score of other countries, such as Singapore with 61, the results of the OCBC NISP research in 2021. This indicates that the Indonesian youth are still lacking in terms of financial health and even financial literacy. OCBC NISP then came up with an idea called Financial Fitness Gym (FFGym). OCBC NISP designed its branch office in Mall Ciputra World, Surabaya, called Nyala OCBC NISP, like a fitness centre. Launched in December 2021, FFGym is intended to train and strengthen the financial muscles of the younger generation. The branch is where everyone can take personal financial management classes and learn about business management available in the ground area; conduct financial fitness check-ups and financial consultations with financial coaches in the consultation area. “The function of the branch is no longer just focused

10 ASIAN BANKING & FINANCE | Q3 2022

The function of the branch is no longer just focused on transactions

on transactions, but also as a place to be able to provide the right understanding of financial management so that customers or visitors can improve their financial understanding (knowledge), improve financial management habits (behaviour), and align the mindset with the right attitude (attitude) so that they can make the right financial decisions,” said Senior Executive Vice President and Head of Retail Loan Business, OCBC NISP, Heriwan Gazali, in an exclusive interview with Asian Banking & Finance. A peek inside FFGym FFGym houses contemporary hidden gems, starting from cuan tunnel with a lucky cat mascot design which is synonymous with luck and money, then the Hustle Hall that features financial activities with technological interactions presented on Samsung Smart Signage and

BRANCH WATCH: OCBC NISP

FFGym is amongst OCBC NISP’s many efforts to remain relevant

Samsung Flip from Samsung Electronics Indonesia, so that the results of the financial gym can be shared with the visitors’ gadgets with guaranteed security. It also provides a Lucky Cat vending machine, merchandise area, and Nyala Coffee, a new menu from First Crack Coffee. So far OCBC NISP has launched it in Surabaya and, soon, in Jakarta. Anyone is welcome without having to be a customer of the bank. Heriwan said that the FFGym was created to disrupt the general public’s view of the rigid atmosphere in banks and to provide an approach to providing an experiential learning and collaborative space so that customers and visitors have the opportunity to explore their financial knowledge in a safe and comfortable environment. “One of the distinguishing values is the existence of financial coaches and trainers who help to support financial aspirations, as well as affordable financial instruments, namely Save 20 (IDR 20,000 Mutual Funds), which can motivate young Indonesians to learn to practice the concept of wealth management,” said Heriwan, adding that the performance of OCBC NISP’s wealth management products in 2021 for mutual funds, bancassurance, and securities products, which overall experienced a 15% increase in income compared to 2020. “Fee-based income from the wealth management business also made a positive contribution, amounting to 25%, which came from mutual fund and bancassurance sales transactions, as well as profits from selling securities to Bank OCBC NISP’s total fee-based income,” he added. Wealth management, according to Heriwan, is the most important information for young people to know today. “Their mindset must be changed to FinanciallyFit first and then CrazyRich,” said Heriwan. Based on research With indicators measured through a survey of 1,027 respondents aged 25 to 35 from Jakarta, Medan, and Surabaya, one of the results of OCBC NISP’s research in the Financial Fitness Index stated that there is still an inappropriate mindset regarding finances and the definition of “rich”. Those who consider wealth as only seen from material possessions, like luxury houses, cars, branded goods, etc., have a lower Financial Fitness score of 36.98. Meanwhile, those who define wealth as referring to investment products, such as mutual funds, stocks, bonds,

Young people are easily tempted by something effortless but with instant results

etc., have a higher Financial Fitness score of 42.64 and can be called healthier. The research also states that the Indonesian people, in general, still have not invested and have no passive income, where the index scores are still at nine and seven out of a maximum score of 100. Apparently, this also applies to people with higher incomes, which means there is a gap between their attitudes and behaviour. Indonesians with incomes above US$2,700 (IDR 40m) have also not maximised their investment behaviour (score 25.6 out of a total of 100) and passive income (score 18 out of a total of 100). In fact, around 30% of people who have an income of $1,000 (IDR 15m) to $2,700 (IDR 40m) still often borrow money; and more than 50% pay credit card bills at the minimum. Apart from investment behaviour not being maximised, it is also not appropriate, OCBC NISP observed. Heriwan highlighted the current condition wherein many are stuck with investment offers whose legality is not yet clear and offers a quick way to get wealth. “Young people are easily tempted by something effortless but with instant results. Not completely wrong, but we want to remind you that high risk—high return applies and everything has consequences. So we build financial literacy for them, such as how to allocate it,” said Heriwan. Staying relevant FFGym is amongst the bank’s many efforts to remain relevant, expressed Heriwan. He sees that the function of banking is not only to provide financial solutions but also to add value for its customers through innovation and comprehensive services. For Heriwan, the financial industry will be required to be more dynamic, in line with changes in consumer behaviour due to the impact of the pandemic. OCBC NISP’s success in turning challenges into opportunities presented by the pandemic itself can be seen in its net profit of $176.8m (IDR 2.5t), up 18% (growth in IDR amount is 20%) year-on-year (YoY) from $149.6m (IDR 2.1t) in 2020. This increase comes after the bank’s net interest income grew by 6% (growth in IDR amount is 7%) YoY to $536.3m (IDR 7.6t) until the end of 2021. Another initiative is the development of a digital service called One Mobile with the capability to grow money and perform daily transactions. The number of transactions made by customers through One Mobile throughout 2021 increased by 17%, transaction value increased by 18% (growth in IDR amount is 20%), and the number of users increased by 19% compared to 2020. The same upward trend is seen with OCBC NISP’s digital service for corporate clients called Velocity. The positive response from corporate customers is reflected in the increase in usage throughout 2021, where the value of transactions through velocity@ocbcnisp grew 61% (growth in IDR amount is 64%), whilst the number of transaction frequencies and users each grew by 20% and 11% compared to 2020. In strengthening the business model, Heriwan sees that it is not enough for banks to rely on interest income, but needs to be supported by non-interest income sources, as well. Therefore, in the future, OCBC NISP will continue to strengthen the bank’s wealth management business, which at the same time is also a value-added service not only for individual customers but also for corporations. ASIAN BANKING & FINANCE | Q3 2022 11

INTERVIEW

GLDB transforms Singapore MSMEs’ supply chains The bank will use AI, blockchain, and big data to support small businesses.

ven the smallest of ripples can transform to be the biggest waves in the ocean–and a similar mindset is driving Green Link Digital Bank (GLDB), Singapore’s newest wholesale digital-only bank, which announced its soft launch in June. “We adopt the Chinese principle of ‘勤为善小、行无止境’ (Be kind. Be diligent. Be persistent.) as our corporate tenet, which translates to the bank’s unyielding commitment to every client, no matter its size, as even the smallest deeds can have rippling implications for the wider ecosystem,” Goh Soon Hong, executive director and CEO of GLDB, told Asian Banking & Finance in an interview. “This is the cornerstone of our corporate values.” Green Link Digital Bank’s name combines its two shareholders, Greenland Group and Linklogis. It is one of the four digital bank license winners from the 29 entities that vied for a license from the Monetary Authority of Singapore (MAS), snagging one of the only two licenses for a wholesale digital bank in the city. “The launch of the digital bank framework is the latest step in Singapore’s banking liberalisation journey that ensures that our banking sector continues to be resilient, competitive, and vibrant. We expect that the digital banks’ strong digital know-how and access to alternative data sources will bring fresh perspectives and innovative propositions that better meet the needs of underserved markets and raise the bar for delivering financial services across the industry,” a MAS spokesperson told Asian Banking & Finance. Servicing MSMEs Goh, a banking veteran with over two decades of experience in the field, said that they aim to service micro, small, and medium-sized enterprises (MSMEs) in the country by combining their parent firms’ experience in servicing MSMEs in China with Linklogis’ latest cuttingedge financial technology. This is echoed during the firm’s announcement of its soft launch, when Song Qun, the founder, chairman, and CEO of Linklogis as well as the vice chairman of Green Link Digital Bank, shared their aim of bringing cuttingedge financial technology and experience in servicing MSMEs in the Lion City. “We will continue to explore the application of advanced technologies such as AI, blockchain, cloud computing, and big data (ABCD) in supply chain finance, incorporate environmental, social, and governance (ESG) factors into our product development and growth strategies, and create a digital banking industry benchmark, contribute to the Singapore market, and

12 ASIAN BANKING & FINANCE | Q3 2022

Goh Soon Hong, executive director and CEO, Green Link Digital Bank (Photo courtesy of GLDB)

It is our hope that we can become a trusted partner for MSMEs

realise sustainable growth,” the Linklogis CEO said. Goh said that they have “a positive outlook” for neobanks to thrive in Singapore, further noting that other markets in the ASEAN region, notably Malaysia, Indonesia, and Thailand, are also now granting digital bank licenses–signalling healthy interest for digital-only banks in the ASEAN region. If anyone has the authority to say this, it would likely be Goh, who has decades of experience working with the SME sector in Singapore. Prior to his role as CEO of Green Link Digital Bank, Goh served as head of Sales & Distribution and country head of Medium Enterprise in SME Banking for DBS Bank. Under his former role, Goh grew the micro-SME and medium SME portfolio of the bank and gained extensive insights into the day-to-day concerns of SMEs in Singapore. Now Goh faces his biggest job to date: leading one of Singapore’s first-ever digital banks. Asian Banking & Finance spoke with Goh to learn more about Green Link Digital Bank. It is common knowledge that Singapore’s banking industry is amongst the most mature in the region. What made the parent firms of GLDB decide to apply for a licence and launch a digital bank in the market?

INTERVIEW Our competitive edge lies in our niche supply chain financing products

unyielding commitment to every client, no matter its size, as even the smallest deeds can have rippling implications for the wider ecosystem. This is the cornerstone to our corporate values. We also hope to bring in Linklogis’ cutting-edge financial technology and experience in serving MSMEs in Singapore. We seek to serve MSMEs with banking and financial services through our supply chain financing and innovative, easy-to-use technological solutions. What solutions do you plan to offer? What other products and services do you plan to roll out that customers look forward to seeing in the future? We offer cash and payments, loans, and supply chain financing. Supply chain financing is a set of funding solutions that help businesses to optimise their working capital. This allows them to extend credit terms to buyers whilst allowing suppliers to be paid early.

GLDB values Singapore’s position in high regard as a fintech hub

The consortium group has experience in helping MSMEs in China meet their financial needs, and already has an established presence in Southeast Asia. We would like to bring this experience to Singapore. The group values Singapore’s position in high regard as a trade centre and a fintech hub to serve the ASEAN region. What are your thoughts on being one of Singapore’s first-ever digital-only banks? Being one of the first digital banks signifies that we can begin our work and support underserved micro, small, and medium-sized enterprises. It is our hope that with this commencement, we can become a trusted partner for MSMEs. We will grow with them, serve them with digital solutions, connect them with partners across Asia, and enable them to embrace supply chain sustainability.

How does GLDB plan to compete with traditional lenders in this regard, or carve out its niche in the market? In other words, what would you say is the bank’s charm point or advantages that will help you stand out in the market? Our competitive edge lies in our niche supply chain financing products which leverage a first-class core banking platform supplier in the IT construction process, and made full use of ABCD+ (referring to artificial intelligence, blockchain, cloud computing, big data) core technologies, in order to ensure high security, strong scalability, and high efficiency. We will also help customers to penetrate emerging markets in Southeast Asia and facilitate trading activities within the Singapore-China trade corridor. Being one of the first digital banks, it signifies that we can begin our work and support underserved micro, small, and medium-sized enterprises. It is our hope that with this commencement, we can become a trusted partner for MSMEs. We will grow with them, serve them with digital solutions, connect them with partners across Asia, and enable them to embrace supply chain sustainability.

What market opportunities does Singapore present for digital banks? Singapore is one of the world’s leading financial and trading hubs, has high digital penetration, and is politically stable. These allow us to capture the transaction flows and promote trade flows [across the region]. Tell us more about Green Link Digital Bank–what’s the story behind choosing the name “Green Link”? “Green Link” came from the name of our shareholders – Greenland Group and Linklogis. Through this, we are hoping to tap onto Greenland Group’s motto and continue the spirit of serving the underserved. We adopt the Chinese principle of “勤为善小、行无止境” (Be kind. Be diligent. Be persistent.) as our corporate tenet, which translates to the bank’s

GLDB aims to bring cutting-edge financial technology and experience in servicing MSMEs in Singapore

ASIAN BANKING & FINANCE | Q3 2022 13

INTERVIEW

Citi’s hiring spree sets in motion its $150b AUM goal The bank looks to hire 1,500 new employees in SG and triple its assets under management.

ho sets bold goals of hiring new staff equal to 20% of the firm’s current headcount, and tripling the client assets being handled, all in just three years? Citigroup, that’s who. The bank’s Singapore arm plans to hire 1,500 more bankers and more than double the number of its wealth management clients by 2025. “Singapore is one of four global Wealth Management Hubs for Citi where we anticipate attractive financial growth and high returns,” Ashmita Acharya, Citibank Singapore Retail Banking Head, told Asian Banking & Finance in an exclusive interview. From 2020 to 2021 alone, the bank saw a 25% growth in its headcount for Citigold and Citigold Private Client Relationship Managers. “We are targeting to grow further in those segments this year, going broader in our talent selection and proactively including non-traditional profiles as part of our workforce expansion strategy,” Acharya added. This is part of Citi’s broader goal for Asia-Pacific: an additional $150b in assets under management (AUM) by 2025 with 2,300 additional hires to support the ongoing growth of Citi’s wealth business in the region. Already, its efforts are bearing fruit, according to data shared by Acharya. “We saw a significant 81% year-on-year Citigold and Citigold Private Client new-to-bank acquisition, given the focused strategy to accelerate client growth as part of the bank’s Win in Wealth strategy,” Acharya said. Citi’s investment AUM also increased by 14% with investment client penetration increasing by 15% year-onyear from 2020. Supporting employees Outside of talent hiring, the bank is also investing in its current employees, as well as infrastructure to better support its wealth proposition. For instance, Citi opened its largest wealth advisory hub globally at 268 Orchard Road in December 2020 and bolstered marketing efforts in 2021 to attract more wealth management customers. For its relationship managers (RM), Acharya said that they provide an onboarding training program to equip them with critical knowledge and skills on Citi’s products, processes, and policies. Notably, the bank has collaborated with the Wharton School of the University of Pennsylvania USA to provide training to its RMs through curated wealth management training programs–available online, remote or virtual, within the campus. Other customised experiential training interventions led to 16 different workshops, 331 sessions, and 1,085 training hours for over 230 employees, Acharya said.

14 ASIAN BANKING & FINANCE | Q3 2022

Ashmita Acharya, Retail Banking Head, Citibank Singapore

It is human nature to want to pursue wealth augmentation

The right platform Building the right digital platform is also another key factor in Citi’s enhancement of its wealth management services. In 2021, the bank announced that it was creating Citi Global Wealth. Intended to be a single, integrated platform serving clients across the wealth continuum, from the affluent segment to ultra-high net worth clients, Citi Global Wealth will allow its retail clients to access more products, researchand content, and leverage the wealth continuum. All this builds up to Citi’s ultimate proposition: a wealth management ecosystem that is customer-centric, with mobile engagement and client satisfaction as the two main thrusts that powers this banking experience. “We work to transform banking by building an ecosystem of strong digital tools such as our Total Wealth Advisor paired with insightful face-to-face wealth advisory that resonates with clients,” Acharya said, adding that on their wealth management platform, they aim to understand clients’ needs and find the right portfolio solutions for them before entrusting them to the right advisor. When asked regarding ongoing volatilities to global markets, Acharya noted that protection and growth of clients’ wealth are crucial to current-day–and future–wealth management services. “It is human nature to want to pursue wealth augmentation whilst downplaying the risk of future financial erosion or loss. Securing and increasing the value of one’s investments must go hand-in-hand,” Acharya said.

ASIAN BANKING & FINANCE | Q3 2022 15

INTERVIEW

Why LINE Bank set its sights on Indonesia as its third home in Southeast Asia After successful launches in Thailand and Taiwan, LINE is going steady in Indonesia.

ndonesia did not approach digital banking with the same fanfare that its neighbours in Southeast Asia did: there were no new digital bank licenses created; no highly publicised selection and culling of a pool of candidates; no grand announcement of licensee winners after months of speculation and anticipation. Instead, the government of Indonesia opted to release digital banking guidelines in mid-2021 that allowed digital banks to either be built from scratch, through acquisitions of digital banks, or through re-organisation of current players into neobanks. Amongst the newest entities to enter the market under the new guidelines is LINE Bank by KEB Bank. The bank was borne out of a collaboration between LINE Financial Asia–an affiliate of Japan and South Korea co-owned company LINE Corporation–and PT Bank KEB Hana Indonesia, a subsidiary of South Korea’s Hana Bank, just a few years after LINE bought a 20% stake at KEB Hana. Just a year after its launch in 2021, the neobank has already set a solid foundation for its Indonesia operations, with 350,000 customers as of March 2022 across the 19,000 islands that make up the country, according to Jihyun Kim, lead of the LINE Bank Indonesia biz team at LINE Financial Plus. Kim said that they plan to break through in the financial market by providing digital banking services that combine the tech expertise of Asia’s leading mobile platform company LINE with the accumulated financial know-how of Hana Bank. Mixing these two will prove to be the future of the banking industry and form a new financial model, he said. “In Indonesia specifically, due to the market’s unique geographical characteristics, we believe bringing banking services to people’s mobile phones will greatly increase availability and convenience for users,” Kim told Asian Banking & Finance in an interview. Indonesia is the third market that LINE Bank debuted in. The digital bank is already active in Thailand, where it has a whopping 3.4 million users as of October 2021; and in Taiwan, where it recently celebrated its one-year anniversary, sharing that it has amassed over 1.4 million customer base in the island. Plans are already underway to make its entrance in Japan. “We have seen disruption in every part of our lives—in how we live and work—including how we pay for items, save, transfer money and get loans. LINE is determined to continue developing our digital financial services for customers in Indonesia by creating a smart financial ecosystem that everyone can carry with them,” LINE Indonesia’s Kim said. Opportunities are rife in Indonesia, where smartphone penetration is high–but due to its fragmented geography, this means that many islands still do not provide traditional banking services. For this reason, it is difficult for Indonesians to use banking services, and the burden of service fees also acts as a barrier to entry for new entrants, Kim said.

16 ASIAN BANKING & FINANCE | Q3 2022

Indonesia is the third market that LINE Bank debuted in (Photo courtesy of LINE Indonesia)

We are determined to continue developing our digital financial services in Indonesia by creating a smart financial ecosystem

This set-up also makes it complicated for individuals and small businesses to secure loans, as traditional banks still require them to go to a bank branch at some point in their onboarding process. Noting these problems, LINE Bank by Hana Bank has offered a mobile account opening and loan service that is fully digital. People can reportedly complete the application, verification, and disbursement of the loan within minutes without having to go to a branch. Customers also won’t be besieged by fees in transferring and withdrawing cash. Apart from this, LINE Bank by Hana Bank currently offers a savings account with an electronic Know Your Customer (eKYC) feature. This makes the onboarding process completely remote. Customers can also receive automatic deposit/withdrawal notifications through LINE messenger. LINE Bank also offers time deposits starting from as little as 1 million rupiah (about US$70), in addition to checking their returns in real-time, Kim said. Expect more lending services in the future, he added, especially as the bank moves to upgrade its financial business in the coming months. “The demand for digital transformation in the banking industry is growing rapidly all around the world. In Indonesia specifically, due to this market’s unique geographical characteristics, vast nation of over 18,000 islands, we believe bringing banking services to people’s mobile phones will greatly increase their availability and convenience,” LINE Indonesia’s Kim concluded.

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ASIAN BANKING & FINANCE | Q3 2022 17

RANKINGS: 50 LARGEST APAC BANKS BY ASSETS

Chinese big four lenders’ assets expand 10% in 2022

Malaysia’s Maybank and Japan’s Mebuki Financial Group fall out of the top 50.

China’s big four banks remained the four largest banks in the Asia Pacific

hinese banks continued to dominate the 50 biggest banks in Asia in 2022, with their total assets even rising during the year–but these lenders may soon have to sacrifice their profits amidst increasing pressure to support the economy. Twenty-two mainland Chinese banks are featured in S&P’s latest list of the 50 largest banks in the region, with combined assets of US$34.526t at the end-2021. This is more than 10% higher than a year ago, according to S&P Global Market Intelligence. China’s big four banks–Industrial & Commercial Bank of China, China Construction Bank, Agricultural Bank of China, and Bank of China–remained the four largest banks in the Asia Pacific. Their assets alone equalled US$19.081t in 2021, a growth of 10.16% from a year ago. Other Chinese banks also saw 18 ASIAN BANKING & FINANCE | Q3 2022

Alicia Garcia Herrero

The tradeoff between profitability and mandate to support economic recovery will become increasingly apparent

phenomenal growth during the year. Notably, the Postal Savings Bank of China surpassed Mizuho Financial Group, Japan’s third biggest bank by assets, to move up to the 8th spot. PSBC’s total assets rose to US$1.98t, compared to Mizuho’s over US$1.95t. The biggest gainer in rank in the top 50 is China Guangfa Bank, climbing to the 31st spot from the 35th spot in the top 50, with its total assets swelling more than 30% year-on-year to US$493.36b, according to S&P data. Despite their rising assets, Chinese banks may soon have to face lowering lending costs in order to help companies and households. China’s economic model meant that the banking sector plays a key role in supporting fiscal stimulus, especially in the governmentled infrastructure spending and keeping companies afloat, a separate report by Natixis noted.

“As the Chinese government urges banks to support economic growth after the zero-COVID related lockdowns, the trade-off between profitability and mandate to support the recovery will become increasingly apparent,” said Natixis’s chief economist for Asia Pacific, Alicia Garcia Herrero. Chinese banks are currently facing two issues: worsening asset quality due to the zero COVID policy, and an environment that makes it harder, especially for smaller banks in China, to raise much-needed capital. Other banks in the top 50 Outside of mainland China and Japan, the biggest bank by assets is the Hong Kong and Shanghai Banking Corporation (HSBC), at 13th place. Outside of East Asia, only one bank made it to the top 20—the Commonwealth Bank of Australia (CBA), the largest bank with over US$836b in total assets to sit at 19th place. Japan’s Fukuoka Financial Group saw the biggest decrease in rankings, slipping to 48th place from 43rd place previously. Two banks fell out of the top 50: Malaysia’s Malayan Bank (Maybank) and Japan’s Mebuki Financial Group. In their place, two banks made it to the list: Australia’s Macquarie Group, at 47th place; and India’s ICICI Bank, which is now the 50th largest bank in Asia by assets. Eight Japanese banks made it to the list, with a combined assets of US$11.71t. Mitsubishi UFJ Financial Group remains the fifth biggest bank in Asia in terms of assets, followed by Sumitomo Mitsui Financial Group at 6th place and Japan Post Bank occupying the 7th spot. The State Bank of India is the highest-ranked bank from India, rising two spots to the 22nd place with total assets of US$694.9b. For South Korea, KB Financial Group is the biggest bank, with US$557.35b in assets. In Singapore, DBS retained its spot at 30th place with US$508.89 in total assets. OCBC moved down two spots to 36th place, whilst UOB remained at 40th place.

RANKINGS: 50 LARGEST APAC BANKS BY ASSETS Current rank^

Previous rank^^

Current vs. previous

Company (ticker-exchange)

Headquarters

Accounting principle

Total assets (US$B)

Industrial & Commercial Bank of China Ltd. (1398-SEHK)

Mainland China

IFRS

5,536.53

China Construction Bank Corp. (939-SEHK)

Mainland China

IFRS

4,762.46

Agricultural Bank of China Ltd. (1288-SEHK)

Mainland China

IFRS

4,575.95

Bank of China Ltd. (3988-SEHK)

Mainland China

IFRS

4,206.53

Mitsubishi UFJ Financial Group Inc. (8306-TSE)

Japan

Japanese GAAP

3,176.84

Sumitomo Mitsui Financial Group Inc. (8316-TSE)

Japan

Japanese GAAP

2,176.94

Japan Post Bank Co. Ltd. (7182-TSE)

Japan

Japanese GAAP

1,998.98

Postal Savings Bank of China Co. Ltd. (1658-SEHK)

Mainland China

IFRS

1,981.53

Mizuho Financial Group Inc. (8411-TSE)

Japan

Japanese GAAP

1,957.87

Bank of Communications Co. Ltd. (3328-SEHK)

Mainland China

IFRS

1,836.38

China Merchants Bank Co. Ltd. (600036-SHSE)

Mainland China

IFRS

1,455.94

Industrial Bank Co. Ltd. (601166-SHSE)

Mainland China

PRC GAAP

1,354.25

The Hongkong and Shanghai Banking Corp. Ltd.

Hong Kong

Hong Kong FRS

1,270.04 1,266.08

China CITIC Bank Corp. Ltd. (998-SEHK)

Mainland China

IFRS

Shanghai Pudong Development Bank Co. Ltd. (600000-SHSE) *

Mainland China

PRC GAAP

1,251.38

China Minsheng Banking Corp. Ltd. (600016-SHSE)

Mainland China

IFRS

1,094.48

China Everbright Bank Co. Ltd. (601818-SHSE)

Mainland China

IFRS

929.08

The Norlnchukln Bank

Japan

Japanese GAAP

927.77

Commonwealth Bank of Australia (CBA-ASX)

Australia

Australian IFRS

836.05

Ping An Bank Co. Ltd. (000001-SZSE)

Mainland China

PRC GAAP

774.70

Australia and New Zealand Banking Group Ltd.(ANZ-ASX)*

Australia

Australian IFRS

709.01

State Bank of India (SBIN-NSEI)

India

lndlan GAAP

694.90

Westpac Banking Corp. (WBC-ASX)*

Australia

Australian IFRS

677.88

National Australia Bank Ltd. (NAB-ASX)*

Australia

Australian IFRS

670.70

Resona Holdings Inc. (8308-TSE)

Japan

Japanese GAAP

662.32

KB Financial Group Inc. (A105560-KOSE)

South Korea

Korean IFRS

557.35

Sumitomo Mitsui Trust Holdings Inc. (8309-TSE)

Japan

Japanese GAAP

553.87

Hua Xia Bank Co. Ltd. (600015-SHSE)*

Mainland China

PRC GAAP

550.75

Shinhan Financial Group Co. Ltd. (A055550-KOSE)

South Korea

Korean IFRS

544.14

DBS Group Holdings Ltd. (D05·SGX)

Singapore

Singapore FRS

508.89

China Guangfa Bank Co. Ltd.**

Mainland China

PRC GAAP

493.36

Bank of Beijing Co. Ltd. (601169-SHSE)*

Mainland China

PRC GAAP

474.36

NongHyup Financial Group Inc.

South Korea

Korean IFRS

425.58

Hana Financial Group Inc. (A086790·KOSE)

South Korea

Korean IFRS

421.81

Bank of Shanghai Co. Ltd. (601229-SHSE)*

Mainland China

PRC GAAP

411.53

Oversea-Chinese Banking Corp. Ltd. (039-SGX)

Singapore

Singapore FRS

402.16

Bank of Jlangsu Co. Ltd. (600919-SHSE)*

Mainland China

PRC GAAP

400.75

Woori Financial Group Inc. (A316140-KOSE)

South Korea

Korean IFRS

375.42

China Zheshang Bank Co. Ltd. (2016-SEHK)

Mainland China

IFRS

359.97 340.70

United Overseas Bank Ltd. (U11-SGX)

Singapore

Singapore FRS

Industrial Bank of Korea (A024110-KOSE)

South Korea

Korean IFRS

334.19

Standard Chartered Bank (Hong Kong) Ltd.**

Hong Kong

Hong Kong FRS

315.37

Bank of Ningbo Co. Ltd. (002142-SZSE)*

Mainland China

PRC GAAP

296.02

HDFC Bank Ltd. (HDFCBANK-NSEI)

India

lndlan GAAP

267.12

Bank of Nanjing Co. Ltd.(601009-SHSE)*

Mainland China

PRC GAAP

265.24

CTBC Financial Holding Co. Ltd. (2891-TWSE)

Taiwan

Taiwanese FRS

255.60

Macquarie Group Ltd. (MQG-ASX)*

Australia

Australian IFRS

252.48

Fukuoka Financial Group Inc. (8354-TSE)

Japan

Japanese GAAP

251.72

China Bohal Bank Co. Ltd. (9668-SEHK)

Mainland China

IFRS

249.14

ICICI Bank Ltd. (ICICIBANK-NSEI)

India

lndlan GAAP

225.87

Data accessed April 14, 2022. NC = no change Banks and institutions with significant lending business are ranked by total assets for the most recent period available. Only one institution per corporate structure is included. Rankings account for completed and pending S&P-covered bank deals on a best-efforts basis. Deals, where the assets sold are in excess of $300 million or the deal value is in excess of $200 million, have been adjusted using the most recent available assets of the target company or the deal announcement/completion assets where available. The rankings have been created on a best- efforts basis and exclude development banks and entities that act as central banks/banking associations/supervisors for banking groups. Data is reported in native currencies and converted to U.S. dollars using end-of-period exchange rates. Total assets are as of Dec. 31, 2021, unless stated otherwise. ^ Pro forma for mergers as of March 31, 2022. ^^ Based on previous rankings published on April 20, 2021. * Data is as of Sept. 30, 2021. ** Data is as of June 30, 2021. Source: S&P Global Market Intelligence ASIAN BANKING & FINANCE | Q3 2022 19

FINTECH WATCH

Traditional methods lack the accuracy to cater to a client’s needs

Why the pen-and-paper era of financial advisory should end

Singapore-based fintech firm believes that traditional methods lack the accuracy to capture clients’ financial needs.

oalsMapper, a Singaporebased fintech software-asa-service firm, said that the pen-and-paper era for financial advisors and financial consultants should be over and done with as traditional methods lack the accuracy to cater to a client’s needs. This was based on the experience of GoalsMapper co-founder Dato’ Wayne Chen. Fourteen years ago, Wayne was an independent financial advisor. During those times when he was offering his services to clients, he found it difficult to prepare materials that would accurately capture a client’s financial snapshot and instead found himself using and relying on a standardised presentation and script. “Due to the lack of clarity of a client’s situation, the product that I recommend to them during a meeting might not be the best fit for them. What I have observed is that I will require more meetings with a client before getting the right solutions to them as I will require more time on the side to 20 ASIAN BANKING & FINANCE | Q3 2022

Dato’ Wayne Chen

prepare calculations and materials in order to help clients visualise the possibilities in the solutions,” Wayne explained during a quick chat with Asian Banking & Finance. He quickly identified the problem: a lack of real-time digital tools. This was the spark that motivated him to build GoalsMapper.

There is an urgent need to close the financial literacy gap for normal everyday people and the financial advisors

The GoalsMapper platform To address the traditional problems of financial advisors, the Singaporebased fintech firm created three important products namely GM Planner, GM Brand, and GM Connect to help financial advisors support more than 80,000 lives. The GM Planner is a financial planning tool with goals and scenarios projections via interactive charts that allow clients to stress test and visualise their portfolios. This means financial advisors can create a simulation of how clients can achieve their financial goals. “GM Planner allows financial advisors and institutions to personalise financial advisory,

taking into consideration the client’s goals and different life scenarios,” GoalsMapper’s Wayne explained. Meanwhile, GM Brand was created to help the image of the financial advisor. It helps them create personalised websites in just a few clicks. Wayne added that GM Brand was tailor-fitted for financial advisors to help them enhance their brand and image. The last product, GM Connect, helps financial advisors maintain communication with their clients. It helps automate postsales engagements like premium reminders and policy reviews. GM Connect is essentially a customer relationship management platform that stores notes of appointments with clients, helps financial advisors remind clients about premium dates, and stay in communication with clients. An interesting product they created was the recently launched GM Rewards. This product was created through the focus group GoalsMapper has created to get more ideas from platform users on how to improve their product. GoalsMapper found out that a lot of financial advisors have difficulty giving tokens of appreciation to clients, especially on occasions. This is especially true for financial advisors who have 100 to 300 clients. “We came up with GM Rewards, where financial advisors can easily give gifts to their clients. The feature allows financial advisors to collate their gifting orders, customise it for clients, and coordinate delivery as well,” Wayne explained. Expansion Every year, since its inception, GoalsMapper expanded its reach from Malaysia, Thailand, and the Philippines. Most recently, it landed in Indonesia. Wayne said they see a lot of potential for its Indonesian expansion because of its low insurance penetration rate at 3.23% and a financial literacy rate of 15.8% in the underserved market. “There is an urgent need to close the financial literacy gap for normal everyday people and the financial advisors. We see a potential 600,000 financial advisors that the platform could support,” Wayne added.

ASIAN BANKING & FINANCE | Q3 2022 21

FINANCIAL INSIGHTS: HONG KONG

Hong Kong banks face ‘brain drain’ as talent flees amidst strict travel restrictions

More expats may leave with their families when the school year ends mid-2022.

ong Kong is losing some of its attractions for expatriates and even local talent amidst stringent travel restrictions that workers find challenging. More bankers based in Hong Kong have reportedly shown an interest in moving out or have already gone to other cities, recruitment firms told Asian Banking & Finance. Whilst it is a stretch to call it an “exodus”, a lot of expat bankers are reportedly reaching their breaking point, said John Mullally, regional director - Southern China & Hong Kong Financial Services at Robert Walters. “There are definitely more people leaving than bankers coming in,” Mullaly told Asian Banking & Finance. “That is a result of almost two and a half years of people not being able to freely travel in and out of Hong Kong.” “I’ve been here for 12 years, and I have never seen this level of departures,” he said, adding that this is “the biggest departure I’ve seen.” Olga Yung, managing director at Michael Page, also noted the rise of interest from workers in Hong Kong to work elsewhere. “We have seen candidates in Hong Kong having an

interest in exploring Singapore as an option, because of the current travel restrictions in Hong Kong,” Yung said. To Singapore? With Hong Kong’s reputation amongst expats souring, eyes have turned to the other financial centre in the region: Singapore. Reports swirl around a possible flight to the Lion City, which, unlike Hong Kong, has reopened travel to several countries around the globe. There have been cases of big moves happening “more so than usual,” as per Robert Walters’ Mullally. Most notably, banks such as Citigroup and Bank of America have reportedly moved some roles to Singapore and other markets. But it’s not as much as media reports have led everyone to believe, he said. “The fact is that [just because] a certain amount of senior executives within financial services have moved from Hong Kong to Singapore, doesn’t mean that everybody is going to do that,” Mullally said, adding that it’s not as much as media reports have led everyone to believe. In fact, some of the movement out of the city may reportedly only be temporary, according to Yung.

With Hong Kong’s reputation amongst expats souring, eyes have turned to Singapore

22 ASIAN BANKING & FINANCE | Q3 2022

From a lifestyle perspective, Singapore would be seen as a more attractive place to be now

“Their employers either accommodate remote working for a period of time so they can go home and see their families or allow them to work from another location for the next review period,” Yung said. However, even the recruitment firms mull that some moves could be permanent. Employers’ long-term decisions whether to stay or move out would ultimately depend on when and how fast the travel restrictions in Hong Kong are lifted. “If it gets to a point where there are really a lot of functions being moved out of Hong Kong to other locations, then of course it’s going to have a longer-term impact on Hong Kong,” Yung said, adding that so far, Michael Page has not observed such an occurrence yet. Talent shortage still an issue Despite these challenges, demand for banking talent in Hong Kong has remained relatively stable and hiring remains active. “Employers have already made plans to hire this year, either to replace headcounts spurred by the great reshuffling or to grow their teams to capitalise on the increasing number of market opportunities,” said Rouella Landicho, senior director of Banking and Financial Services, Randstad Hong Kong. “Retail banks, private wealth, and corporate banks are hiring relationship managers to grow and expand their customer portfolios. Similarly, the workforce size in family offices and private banks is expected to grow this year to serve the growing affluence,” Landicho said. Compliance and risk roles also count amongst the most in demand roles by banks–but are the hardest to fill due to the scarcity of available talent, Yung said, adding that all mid to back positions are in demand, including settlements, payment, credit loans, and client onboarding. Landicho echoed this sentiment.

FINANCIAL INSIGHTS: HONG KONG

John Mullally

Banks are reportedly finding it harder to fill in senior positions Olga Yung

“With the borders closed for two years, expatriates have grown weary of the city’s strict travel restrictions. As other countries moved on to reduce or eliminate their safety measures, many senior executive expats have chosen to return home,” she said. Whilst most workers who moved out are expected to return once the city lifts the restrictions, there is a possibility that some may seek job

opportunities in other financial hubs instead, Landicho warned. On the upside, this flight has created an opportunity for the local workforce and fresh blood to enter the growing industry in Hong Kong. However, banks are also reportedly finding it harder to fill in senior positions, which often go to experienced bankers from age-old financial hubs like London or New York.

Rouella Landicho

Travel bubbles, better salaries So how to solve the shortage? Setting up a travel bubble is one. “To alleviate the pressure, regulators can collaborate with companies and the government to set up travel bubbles with other financial hubs to facilitate talent mobility and attract new talent to come work in Hong Kong,” Randstad’s Landicho said. Better salary packages are of course an obvious answer, with Mullally, in particular, highlighting the importance of taking expat families’ into consideration. “One of the things that banks could do is allow them [employees] to take a paid sabbatical or a longer, unpaid sabbatical and give them the job security,” Mullally said, adding, “Allow them to spend some time working from their home country, or from a country where their family is based, because that’s what’s really hurting people here, the uncertainty of when they will get to see their extended family.

ASIAN BANKING & FINANCE | Q3 2022 23

BANK RANKINGS: HONG KONG

HSBC remained the bank with most employees in the city (Photo from HSBC)

Salaries soar as Hong Kong banks engage in poaching war to hire and retain talent HSBC saw its headcount fall to 20,500 in just two years as part of its restructuring.

ong Kong banks are shelling out large sums of money to hire and retain muchneeded staff amidst a shrinking talent pool. This, coupled with tough competition from their peers, has pushed up offers and counter offers to their highest rate in a decade, recruitment agents told Asian Banking & Finance. The city’s banking industry suffered its biggest decline in bankers since Asian Banking & Finance began compiling numbers in 2013. In just a single year, the total headcount declined by 9,181 across the 17 banks included in the annual bank rankings, or 10.33% lower than their combined headcounts in the previous rankings. Hong Kong Shanghai and Banking Corporation (HSBC) contributed to the bulk of the decrease, cutting 8,500 employment roles in its Hong 24 ASIAN BANKING & FINANCE | Q3 2022

There is no external or new talent coming into the market from overseas for the last two years or so

Kong office over the past two years. That is equal to nearly a third of the bank’s Hong Kong headcount in 2020, or 92% of the total decline across the 17 banks. This is the smallest that HSBC’s staff size has ever been in the history of Asian Banking & Finance’s bank rankings. HSBC had earlier unveiled plans to cut a total of 35,000 jobs across its global operations as part of a restructuring that was announced last February 2020. Bank of China (Hong Kong) maintained its 12,000-strong headcount but lost almost 400 staff in the fiscal year 2021. Four banks hired more bankers and staff over the year. Three of them with parents outside of Hong Kong and China: DBS Bank, Citibank, and OCBC Wing Hang. DBS Bank (Hong Kong) reported the biggest rise, with 452 new hires

during 2021. Citibank followed, with 300 new hires. The majority of these new hires are to support the bank’s growing wealth management business, a Citibank spokesperson told Asian Banking & Finance. Another 90 people move to work in Citibank’s Hong Kong business from other cities. OCBC Wing Hang also added 67 new banking professionals to its Hong Kong staff. The only Hong Kong-based bank to grow its headcount during 2021 is Tai Sang Bank, which now has 36 staff compared to 30 in 2022. Meanwhile, Standard Chartered kept its staff at approximately 6,000, the bank told Asian Banking & Finance. CIMB Wing Lung Bank and China Construction Bank also saw their staff remain around the same size number of employees from 2020 and 2021.

BANK RANKINGS: HONG KONG More bankers are expected to exit the city amidst ongoing strict travel restrictions that still require at least one week of quarantine upon entering Hong Kong. This is an issue for the city’s banks, which clamour for much-needed talent as they scale up operations for new business lines. “[There is] no external or new talent coming into the market from overseas for the last two years or so. That creates a different set of challenges than what we saw in 2020,” John Mullally, regional director for Southern China & Hong Kong Financial Services at Robert Walters, explained to Asian Banking & Finance. More banking and finance professionals may be tempted to switch jobs. Professionals with indemand skills and experience will see up to a 35% jump in salary when they change employers this year, according to Rouella Landicho, associate director of banking and financial services at Randstad Hong Kong. Senior roles, such as directors, assistant directors, and vice presidents, are especially sought. “This talent demand has been fueled by the expat exodus as well as significant business restructuring within the banking industry due to high-profile acquisitions over the past couple of years,” Landicho said. Money will not solve all problems The current hiring landscape in the banking and finance industry has also caused base salaries to shoot up between 4.5% and 10% to retain current employees. Robert Walters’ Mullally observed that there are bankers who are now being paid at the top percentile despite their expertise and experience not matching the role they are tasked to do. “Financial services firms are kind of throwing money at the problem in order to get people in, and also to retain them because the rate of counter offers and buybacks now is at the highest I’ve seen in the last 10 years,” Robert Walters’ Mullally said. “That just shows a degree of–for the lack of a better term–desperation that current employers have now because they’re operating with very

little fat, and they really need these people in the seats in order for the business to be operating effectively,” the expert added. The best way to retain talent is not just adding more zeros to bankers’ salaries, but offering better work-life balance and even hybrid working situations, said Olga Yung, managing director at Michael Page, who observed that banking professionals are keener to learn the working arrangements of their prospective employers. “Companies that have clear policies in place where they support it and allow [remote working or flexi-work arrangements are] very attractive to candidates,” Yung said. Companies that support international mobility or the chance to work overseas are also a huge sell for employees. “A lot more candidates are considering, ‘Am I going to stay permanently in one location? Or do I want the option that I could move somewhere else down the line?’ Having these options, which may not necessarily materialise immediately, is often appealing for them,” Yung said.

John Mullally

Olga Yung

Rouella Landicho

Hybrid working Whilst the biggest banks in Hong Kong have resumed working back in the office, many are currently exploring or have opted to adopt hybrid working environments. Standard Chartered Hong Kong has welcomed close to 60% of its colleagues back to the office beginning April. But hybrid working is not off the charts yet, with the bank’s “Future Workplace, Now” work strategy, wherein their staff reportedly have the freedom to choose to work either from home or the office if that fulfills the job requirement and regulatory expectation, a spokesperson told Asian Banking & Finance. Citi Hong Kong is close to having 90% of the staff working back in their office as of May 2022. They have also enacted their own long-term flexible work model: “How We Work.” Under this, every role at Citi will have one of three designations – Hybrid, Remote, or Resident. The majority will reportedly be designated as hybrid workers, with the expectation of working in the office at least three days per week, a Citi representative said.

OCBC Wing Hang is one of the few banks listed who grew its headcount (OCBC Wing Hang Bank Building. Photo by Tomaysmiel)

ASIAN BANKING & FINANCE | Q3 2022 25

BANK RANKINGS: HONG KONG 2022 RANKING

BANK

Number of Employees 2022*

Number of Employees 2021

2021 RANKING

CEO OR COUNTRY HEAD

HONG KONG AND SHANGHAI BANKING CORPORATION

20,500+

29,000

Luanne Lim

BANK OF CHINA (HONG KONG)

12,165

12,557

Sun Yu

HANG SENG BANK LIMITED

7,629

7,881

Diana Cesar

STANDARD CHARTERED BANK

6,000

Mary Huen

THE BANK OF EAST ASIA, LIMITED

5,057

5,576

Adrian LI Man-kiu and Brian LI Man-bun

CITI HONG KONG

4,600

4,300

Angel Ng

DBS BANK (HONG KONG) Limited

4,452

4,000

Sebastian Paredes

DAH SING BANK

3,014

3,079

Hon-Hing Wong (Derek Wong)

INDUSTRIAL AND COMMERCIAL BANK OF CHINA (ASIA)

3,003

3,097

Wu Long

CHINA CONSTRUCTION BANK (ASIA) CORPORATION

2,500

Jun Zhang

OCBC WING HANG BANK

2,171

2,104

Ivy Au-Yeung

CHINA CITIC BANK INTERNATIONAL

2,000**

2,000

Bi Mingqiang

SHANGHAI COMMERCIAL BANK

1,872

1,896

David Sek-chi KWOK

CMB WING LUNG BANK

1,751

Hong Bo

CHONG HING BANK

1,700+

1,758

Jianxin Zong

PUBLIC BANK

1,260

1,362

Tan Yoke Kong

TAI SANG BANK

Cheung Yau Shing

TOTAL

79,710

88,891

* As of December 31, 2021 ** Figures retained from 2021 rankings

26 ASIAN BANKING & FINANCE | Q3 2022

ASIAN BANKING & FINANCE | Q3 2022 27

RANKINGS: SINGAPORE BANKS

Singapore bank rankings reveal new hires increased by 5.8% in 2022

The banks’ rankings saw some slight shuffle as some banks reported lower numbers.

workforce within HSBC. They come up with initiatives to support a genderequal environment,” Brandon said. He also said that banks should share best practices with each other. “This is not a commercially sensitive topic and is something that the whole industry should be focused on improving.” Dean Tong, head of Group Human Resources at UOB, said at the end of 2021 women comprised 55.6% of the newly hired employees across the group. In Singapore, its workforce comprised 61.5% of women, with 36.3% in senior roles.

By 2030, women in senior leadership will grow to 20.5%

ingapore banks continue to bolster their rosters in terms of new hires in 2022, registering a 5.8% increase in Asian Banking & Finance’s annual bank rankings compared to a year before. The rankings, which rates banks in terms of the number of employees, saw some moderate to great increases in the number of hires this year whilst some banks opted to keep employee numbers the same. Meanwhile, a number of banks saw slight dips in employee numbers causing them to slip from their previous place. DBS continues to hold the top spot with 12,585 employees, an increase of 4.9% from 2021. Standard Chartered and UOB maintained the number of employees at 10,000 and 9,000, placing third and fourth respectively. The Hongkong and Shanghai Banking Corporation Limited (HSBC) had a slight dip in its employee count from 3,300 to 3,242 ranking sixth. CIMB bank had a notable dip of 25.2% in its number of employees from 1,237 in 2021 to 925 this year, falling from ninth to 11th place. During interviews conducted for its annual bank rankings, Asian Banking & Finance found that top Singaporean 28 ASIAN BANKING & FINANCE | Q3 2022

This is not a commercially sensitive topic and is something that the whole industry should be focused on improving

banks are exceeding the projected regional average growth of hiring women in executive positions. Deloitte’s Within Reach series predicted that by 2030, women in senior leadership, specifically C-suite, will grow to 20.5%, a moderate increase from 18.5% in 2021. In DBS’ 2021 sustainability report, 54.3% of their Singapore staff are women. In all of its branches, DBS’ female staff comprises around 49.2% of its workforce. Brandon Coate, Head of Human Resources at HSBC Singapore revealed that the bank has one woman in a senior position for every 14 women employed in an entry to midlevel position. According to Brandon, gender diversity forms a key part of ensuring an inclusive, dynamic, and open culture in the workplace. “What we’ve done at HSBC Singapore is to introduce a more flexible and hybrid way of working as part of our Future of Work approach. We also have Employee Resource Groups (ERG) that advocate various causes the bank supports. Our ERG champions the recruitment, development, advancement, and engagement of a gender-balanced

Closing the gender gap Dean believes that men and women bring different ideas, perspectives, and skill sets to the table. This setup drives innovative thinking and effective problem-solving for the organisation. To foster a diverse and in clusive workforce, it is imperative that organisations focus on building a workplace that values every individual and motivates them. According to Dean, this starts through their holistic talent recruitment and performance framework that measures and rewards all UOB employees based on their competencies and adherence to the company’s values. “Through our leadership acceleration programme, we prepare our high-performing colleagues to take on executive roles in UOB by providing them with intensive learning experiences through crosscountry assignments, leadership coaching, and executive education. Many of our colleagues across both genders who participated in these programmes have gone on to become leaders at the bank and in their fields,” Dean explained. Standard Chartered is also one of Singapore’s top banks that exceeded Deloitte’s forecast. In 2021, 48% of Standard Chartered’s overall hires were women, with 37% in senior roles. In the first half of 2022, 42% of overall hired employees were women, 37% in senior positions.

RANKINGS: SINGAPORE BANKS

Brandon Coate

Market trends suggest that 2022 will see a continuation of demand for Wealth Management, Insurance, and IT roles in Singapore

“We have focused on providing opportunities for our people to upskill and reskill into areas [that are futureforward]. This targeted approach to skill-building is conducted with an eye on gender balance, such that more women can be reskilled into areas with growing demand,” Standard Chartered said. This has led Standard Chartered to redeploy its people into the job roles of the future, such as Data Translators, Cyber Security Analysts, and Cloud Security Engineers. “The programmes empower them to learn and practice in a safe environment, as well as gain greater exposure to the job, enabling our female colleagues to feel more ready to take the leap into roles traditionally dominated by men. For example, we launched a Universal Bankers and Cyber acceleration programme globally in 2021, which has supported 270 women in fulfilling their career aspirations in branch management, client relationship management and cyber roles,” Standard Chartered said. The banks interviewed said that clear targets, reskilling and upskilling initiatives, and leadership programmes are just some of the few ways they are closing the gender gap in their workplace and industry. Gender pay gap Aside from the low penetration of women in senior roles, another gender-related concern that must be addressed is the pay gap between men and women employees. HSBC’s Brandon suggested that companies should avoid

asking candidates to provide salary information when hiring. This way, the pay would be based on the applicant’s competencies and skills. Standard Chartered took a more proactive approach, like voluntarily and publicly disclosing their gender pay gap statistics for all their regional hubs through their annual Gender Pay Gap Report. “Combined with our efforts to improve the female talent pipeline, as well as to upskill and reskill talent, we believe such initiatives will improve business ownership and accountability, thereby supporting more women in the workplace. This will help more qualified women reach senior roles and other traditionally male-dominated business areas, improve the overall balance in male/ female representation and, the current pay gap,” Standard Chartered said. “We think what’s important is for us to acknowledge that there are biases around us and we need to call them out and find the best way to resolve the obstacles,” Brandon added.

Dean Tong

Charlotte Thng

What’s important is to acknowledge that there are biases around us and we need to call them out

Digital talents in demand Standard Chartered foresees that demand in technology, innovation, digital banking, application support, and cloud engineering, as well as in consumer and private banking space, will continue. “There was also demand across our global support functions, dominated by roles in Finance, Change Management, and Financial Crime Compliance Advisory. This year, we foresee demand to continue in the same areas as 2021,” said Standard Chartered’s Charlotte Thng, head of Human Resources, Singapore, Australia, and ASEAN Markets. HSBC’s Brandon said: “Market trends suggest that 2022 will see a continuation of demand for Wealth Management, Insurance, and IT roles in Singapore. Initial forecasting suggests that recruitment demand in Singapore is set to increase by over 20% in 2022 compared to 2021.” UOB said that they are currently building their talent pipeline in selected areas such as technology and data, compliance, wealth, and commercial banking. “In April, we launched a Technology Development Programme designed to groom a future generation of technology specialists through a 12-month on-the-job and structured training programme, focusing on areas such as software development, cybersecurity, infrastructure and platforms. Under this programme, we plan to hire 100 talents including fresh graduates without prior technology experience or professionals with less than three years of work experience in the industry,” UOB’s Dean said. These in-demand positions are open to candidates with equal opportunity, regardless of their gender, the banks assured.

Reskilling and upskilling initiatives, and leadership programmes are some ways that banks are closing the gender gap in the industry

ASIAN BANKING & FINANCE | Q3 2022 29

RANKINGS: SINGAPORE BANKS 2022 RANKING

BANK

Number of Employees 2022*

Number of Employees 2021

2021 RANKING

CEO OR COUNTRY HEAD

DBS

12,585

12,000

Shee Tse Koon

OVERSEA-CHINESE BANKING CORP

11,461

10,032

Helen Wong

STANDARD CHARTERED BANK

10,000

Patrick Lee

UNITED OVERSEAS BANK

9,000

Wee Ee Cheong

CITI SINGAPORE

8,500

Amol Gupte

HONG KONG AND SHANGHAI BANKING CORPORATION

3,242

3,300

Kee Joo Wong

BNP PARIBAS

2,200**

2,200

Joris Maria A. Dierckx*

MAYBANK SINGAPORE

2,000

Dr. John Lee

CREDIT AGRICOLE CORPORATE AND INVESTMENT BANK

1,900

-***

Jean-Pierre Michalowski

BANK OF CHINA

955**

955

Cheng Jun*

CIMB BANK

925

1,237

Victor Lee

MIZUHO BANK

>700

Guan Yeow Kwang*

RHB Singapore

651

639

Danny Quah

STATE BANK OF INDIA

124**

124

Jamneshwar Pamidimukkala*

ICICI BANK

90**

Sachin Kumar*

BANK OF INDIA

77**

UCO BANK

42**

TOTAL

64,452

60,896****

*info derived from MAS website **info retained from 2021 rankings ***no data ****numbers did not include Credit Agricole

30 ASIAN BANKING & FINANCE | Q3 2022

Geetha Nagarajan*

Gourab Chatterjee*

CASE STUDY: STANDARD CHARTERED

Standard Chartered Hong Kong sees metaverse as future of banking

Banks can make use of AR/VR to offer more personalised services from the safety of clients’ homes.

Alex Manson

Michael Abbott

SCB Hong Kong is the first bank to acquire virtual land at The Sandbox’s Mega City (Photo: A still from SCB’s announcement video)

ould the next frontier of banking services lie in the metaverse? For Standard Chartered Bank (SCB) Hong Kong, it just might be. The bank, through its investment arm, SC Ventures, recently purchased virtual land in The Sandbox—a blockchain-based virtual world aiming to build a vast metaverse that allows users to create and monetise their own distinct virtual worlds and unique video game experiences. In particular, Standard Chartered Bank Hong Kong bought a piece of land in the Mega City district, touted as a culture hub based on and inspired by Hong Kong talents. This makes Standard Chartered Bank Hong Kong the first bank to acquire virtual land or property at The Sandbox’s Mega City. “The metaverse is all about the next phase in the internet’s evolution, bringing new possibilities and unique experiences through

the use of immersive technologies,” Alex Manson, head of SC Ventures by Standard Chartered, told Asian Banking & Finance. “Our involvement in the metaverse allows us to reimagine our relationship with existing and potential clients.” “We chose The Sandbox as they are one of the leaders in this space and have impressed us both with their vision and their execution,” Standard Chartered’s Manson said. “The idea of being an anchor in a virtual community focused on Hong Kong partners excites us, as we are historically one of the note-issuing banks and an anchor in the physical Hong Kong community.” In particular, SCBHK said that it plans to use the space to explore co-creation opportunities in the metaverse, with the goal of experimenting and building new experiences for clients, as well as bringing the local sports and art communities into the metaverse.

Jess Murray

In the metaverse, banks could deliver advice and build relationships at a time when banking has become commoditised

What is Metaverse? If your mind is beset with visions of a 360-degree full virtual reality living akin to that seen in the sci-fi film Ready Player One when thinking of metaverse, you are not exactly that far off. The metaverse aims for a world in which its users can participate in or even inhabit “a persistent shared experience that spans the spectrum of our real-world to a fully virtual world and in between,” as defined by the professional services company, Accenture. For banks, this provides the opportunity to deliver even more personalised banking journeys without clients having to leave the safety of their homes. Standard Chartered has yet to disclose its exact plans for its newly bought virtual land. But it is likely that the bank will explore offering personalised banking services through virtual reality and augmented reality. “In the metaverse, banks could deliver advice and build relationships at a time when banking has become commoditised and drained of emotional salience. The metaverse could put humanity back into the conversation in ways that would simply not be possible in app alerts or text messages,” Accenture’s senior managing director and global banking lead Michael Abbott, and managing director & banking & capital markets lead for North America Jess Murray wrote in a recent report. Ignoring the metaverse is a big opportunity missed for banks: Goldman Sachs and Morgan Stanley have both estimated that the metaverse economy could be worth as much as $8t by 2030. Other opportunities arising from the metaverse include the creation of new payments rails that power transactions in the virtual world, and the invention of new products and services–for example securing, insuring, and lending against digital assets like digital currencies. ASIAN BANKING & FINANCE | Q3 2022 31

SECTOR REPORT: CARDS & PAYMENTS

Alternative payment methods dominate Asia as credit card use dwindles

BNPL may not be the plastic killer everyone touts it to be, but it’s attracting underserved customers.

to signing up for a credit card. This ease-of-use element in payments extends not just for the consumers, but also for the merchants. “It’s enabling sales growth, enabling higher conversion rates for purchase at checkout, and production in otherwise abandoned online shopping carts,” Pandit said. “Smaller merchants have always traditionally been very cash-heavy, [but] they have had to adopt digital payments. They’ve seen the use case, the simplicity, and the safety that comes with the use of digital payments. We expect this trend to continue,” Pandit said. Whilst still occupying a smaller fraction of the market, BNPL transaction value is expected to double its share to 1.8% by 2025, or US$78b of the e-commerce market to become one of the leading alternative payment methods outside of mobile wallets and card payments, FIS’ study found. BNPL transaction value is expected to double its share to US$78b by 2025

redit card companies have room to sweat. Despite its current status as the socalled fintech disruptor, buy now, pay later (BNPL) alone is unlikely to overtake credit card use over the next few years. But neither are credit card firms off the hook, with more consumers in the Asia Pacific region expected to ditch the plastic in favour of other alternative credit payment options. Digital wallets now completely dominate the e-commerce space in APAC, making up 68.5% of the segment’s transaction value in APAC compared to only 12.8% of the share of credit and charge cards, according to data from financial technology service provider FIS’ 2022 edition of the Global Payments Report. Card payments’ share is expected to further decline to 11% by 2025, whilst e-wallets are projected to expand to 72% of the total transaction value in three years. 32 ASIAN BANKING & FINANCE | Q3 2022

Cash is gradually declining. The use of cash continues to go down year on year

BNPL currently makes up barely 1% of the total e-commerce transaction value in the region. But the service has the potential to attract consumers seeking to ditch the plastic or have trouble accessing a credit card, said Kanv Pandit, group managing director and head of sales, Asia Pacific, for FIS. “There has been a latent demand for an alternative to credit cards,” Pandit told Asian Banking & Finance in an interview, adding that there are two primary reasons driving BNPL. “Number one, credit cards address a very narrow segment of the addressable market, like customers who were seeking financing options. The second is customers are seeking flexibility and simplicity.” Pandit notes that simplicity is a big reason why BNPL has become attractive, as it is easier for consumers to sign up at point of purchase and get their financing needs using this service as compared

Mobile wallets as clear victors Beyond BNPL and cards, a third party is slated to become the new normal for payments: mobile wallets. E-wallets now dominate both the transaction values of e-commerce and POS payments in Asia, although the latter was heavily driven by China’s e-wallet use. The Red Dragon made up 54% of the total POS transaction value in APAC, driven by QR code payments linked to the dominant mobile wallets, Alipay and WeChat Pay. Outside of China, mobile wallet use is on the rise but not yet quite as dominant. In Vietnam, Thailand, and Indonesia, for example, cash on delivery continues to be the standard for e-commerce transactions, according to Pandit. “But preferences are starting to change. There is greater choice and availability of e-wallets and the ease of purchase, that’s slowly being realised by customers who start to adopt it,” Pandit said. “Then you have markets like the Philippines,

SECTOR REPORT: CARDS & PAYMENTS APAC is a vibrant market on the adoption of alternative payment methods and digital wallets

Simplicity is a big reason why BNPL has become attractive to customers

where again, because of the effort and the push led by fintech, like GCash, we’re seeing a surge in the use of digital wallets.” FIS is also seeing very encouraging digital wallet growth in other Asian countries such as Taiwan, Hong Kong, and Singapore—a trend that’s projected to continue to grow through 2025, Pandit added. “APAC really is a very vibrant market on the adoption of alternative payment methods and digital wallets. Truly, it’s been remarkable. And we’re forecasting that to continue to be the case for the next two to three years,” he said. Other alternative forms of payments expected to rise include real-time payments, whose share of transactions of POS payments is poised to grow in the coming years. Thanks to policy and regulator support in Asian markets. “We’ve got 13 countries across APAC that either have quality, wellestablished use, or are studying the growing use, of real-time payment schemes,” Pandit said. Today, China and India already top the world in terms of daily real-time payment transactions globally. India in particular edged past China in this regard with over 70 million real-time payments made daily, almost double that of China’s 43 million daily real-time payment transactions, according to FIS’ data. Out with the old, in with the new But what about the mode of payment that started it all: cash? “Cash is gradually declining. As far as a percentage of payment methods, the use of cash continues

to go down year on year,” Pandit said, adding that the portion of cash used as a percentage of point of sale transaction value is projected to fall from 16% in 2021 to a mere at 8% by 2025. “But we’re not expecting the absolute death of cash anytime soon. There is that one final element: the fact that digital electronic payments are not going to be always available to everyone in the society. So governments still have to ensure that there is access to financial services. Cash serves that purpose.” ATM networks will continue to be a relevant channel for years to come even in mature digital payments markets such as Japan, Pandit added. The future: CBDCs, Cloud Of emerging possible modes of payment, Pandit expressed excitement for the development of central bank digital currencies (CBDC), which according to him, will impact the trajectory of payments as we know it. Pandit said that we would likely see CBDC used in use cases for the efficient transfer of money or money movement on a cross border level, especially when it comes down to institutional settlement. Already, central banks in China, Singapore, and India have taken a leading role in actively investigating the use of CBDC, or are actually working with the industry to test pilots on how CBDC can be used in financial transactions. Regulation of currency moving digitally will also be better under CBDC-use. “That addresses problems of tax evasion that in

turn addresses problems for money laundering, which even today is very difficult for regulators to fix,” Pandit said. The FIS expert added that it will help drive down the cost per industry of payments and take away inefficiencies. Cloud is expected to also play a core role not just in payments but in mobile banking in general, with its potential to reduce costs whilst making digital payments faster and future-proof. “Banks have operated on legacy cores that have been built over many, many decades, and these are very monolithic systems. They are built on legacy technologies and using legacy languages, which is very difficult to support today, because those skill sets are disappearing,” Pandit said. “So they can’t support emerging trends, technologies, and agility. They can’t support, for instance, many of the innovations that we spoke about [like] BNPL and digital wallets. Banks have to put in a lot of effort to get those products out,’ the FIS expert added. Seeing that banks are interested in moving to lighter core systems, FIS, for their part, teamed up with Microsoft to offer their FIS Modern Banking Platform on the Microsoft Azure Banking platform, to help banks design, build, and employ new banking products and services that are cloud-native–especially for firms who are still bogged down by legacy systems.

Kanv Pandit, Group Managing Director and Head of Sales, Asia Pacific, FIS (Photo courtesy of www.frontier-enterprise.com/author/kanv-pandit/)

ASIAN BANKING & FINANCE | Q3 2022 33

COUNTRY REPORT: THAILAND

Public expectations for net-zero financing intensifies

Thailand plays catch up with global green finance goals Banks are calling for legislators to impose carbon tax, a quota on corporations, and a common taxonomy of ESG financing goals.

isks are rising as public expectations for net-zero financing intensifies, and most Southeast Asian banking markets are still playing catch up to meet the growing demands. Thailand is no exception despite steady progress in this area. As early as 2014, Thailand has made public its intention for more green energy in order to address climate change, with reduction targets eventually set at 20% by 2030. In 2021, Prime Minister Prayut Chan-o-cha pledged to achieve net-zero goals by 2065. More recently, the government is considering a draft of the new National Plan for Economic and Social Development through 2027. But according to climate experts and scientists, Thailand’s emissions reduction targets remain critically insufficient. The Climate Action Tracker (CAT)–formed by Berlinbased Climate Analytics, non-profit NewClimate Institute, and the think tank Institute for Essential Services Reform–said that Thailand’s goals 34 ASIAN BANKING & FINANCE | Q3 2022

Poonsit Wongthawatchai

One of the key hurdles is that Thailand still has no legislation on emissions

does not take into account postCOVID economic trends. The lack of clear mitigation policies, as well as ongoing structural impediments, make it hard for banks across ASEAN markets and especially in Thailand to make surefire steps to decarbonise finance, local bank executives told Asian Banking & Finance. “One of the key hurdles for Thailand is that, if you just look from an environmental perspective to address [the] climate change issue, Thailand still has no legislation on carbon emission or greenhouse gas emission,” noted Poonsit Wongthawatchai, executive vice president and head of environmental, social, and governance (ESG) division at Bank of Ayudhya (Krungsri). “The government has not set a quota allowance for greenhouse gas emission. Thailand still has a voluntary system.” Initiatives are currently on a voluntary basis, such as the

T-VER (Thailand Voluntary Emission Reduction Program) by the Thailand Greenhouse Gas Management Organization (TGO), which encourages the voluntary reduction of greenhouse gases. Jason Lee, sustainability lead at CIMB Thai, noted that whilst the government has formed committees and signed agreements pushing ESG initiatives, there is a need to strengthen currently existing sustainability regulations. “Current policies need to be ramped-up or expanded, more resources mobilised, and new policy instruments introduced,” Lee said. For example, Lee said that stakeholders should look at whether emissions pricing is in place or if existing emissions pricing is too low; whether support for green investments is insufficient when compared with the scale of decarbonisation efforts required; and whether pollution activities are insufficiently regulated. Krungsri’s Wongthawatchai also highlighted the need to impose a carbon tax and a set quota on corporations to better drive adoption of sustainable activities in the country, banking included. Structural impediments But even with the right legislation, countries could still find it challenging to push for net zero– especially when energy demand is involved. This includes inadequate grid capacity in terms of renewable energy development, Lee said. “Policies to create positive effects and the development of renewable energy sources as VAT rebates, fiscal subsidies, tax incentives for innovation, price controls, land allocation policies, demand commitments and compulsory allocation, can all be impeded by limited grid capacity,” Lee said. In some cases, the lack of grid connections could lead to renewable energy produced going to waste, Lee warned. Meanwhile, many countries still heavily rely on fossil fuels. Another structural impediment is the lack of a common set of standards and definitions on ESG financing and banking.

COUNTRY REPORT: THAILAND We need the taxonomy in terms of the ESG financing activity, transaction, and qualification

Thailand’s reduction targets remain critically insufficient

“One thing is really clear: we need the taxonomy in terms of the ESG financing activity, transaction, and qualification,” Krungsri’s Wongthawatchai said. “This is something that we actually need for us to have a common set of standards and definitions.” Transitioning to green finance Wongthawatchai believes that transitioning finance also offers banks significant financial and business opportunities going forward. “There will be a financing gap for those industries that want to transform, to restructure their businesses from brown to green,” he explained. Thailand’s car manufacturing industry, for example, is rife for a shake-up. In fact, the electric vehicle or EV production industry in Thailand has expressed interest in accessing more green loans, according to Wongthawatchai. This is in line with the government’s own goal, which is that 30% of all cars produced in Thailand will be electric vehicles by 2030. “This is also a good idea for Thailand’s future, as car manufacturing industry is one of the key industries of Thailand. We are an auto manufacturing hub, and car manufacturers from Japan, the United States, and Europe all come here in Thailand. The car manufacturing industry has contributed significantly to our export income for the past two or three decades,” Wongthawatchai said. “That’s also a key milestone that

will help further drive automobile manufacturing in Thailand and the production and distribution of sales of electric vehicles going forward,” the Krungsri expert added. Banks take the lead Taxonomy or none, banks in Thailand are already moving forward with their own ESG-related financing services in order to meet the rising demand from companies and individuals to access financial products and services that have positive environmental and social impacts. Bank of Ayudhya has been making waves in this field since 2018, when the market technically first kicked off, when the country issued its first sustainability-linked bond and eventually loan–and the bank actually played a role in this issuance. It is also reportedly the first Thai bank to develop an ESG council. They also have adopted a carbon emissions reduction plan,

and an ESG risk management policy that was just recently approved by its board this 2022. Today, Bank of Ayudhya has a 12 billion baht lending portfolio that they are looking to grow, Wongthawatchai shared. Shifting to green products Outside of loans, wealth management customers have a clear shift of preference for green and sustainable products, Wongthawatchai observed. “Right now, about one-third of our wealth management business are actually in what we call the impact investment or ESG qualified investment. This segment is quite sophisticated in terms of their investment analysis and decision making process. I believe they also see a very clear correlation in terms of their investment returns correlated to the ESG score of a specific company or a specific industry,” he noted. CIMB Thailand aligns with its parent company CIMB Group’s sustainability commitments, such as setting Net-Zero targets, phasing out from the coal sector by 2040, having “No Deforestation, No Peat and No Exploitation (NDPE)” commitments, upholding human rights, and mobilizing over US$6.7b (RM30b) towards sustainable finance by 2024. “This includes wholesale and corporate financing, bonds and capital raising, wealth products, and products that enable inclusion such as sustainable home financing and other products catered for low income groups” Lee said.

Banks in Thailand are already moving forward with their own ESG-financing services

ASIAN BANKING & FINANCE | Q3 2022 35

EVENT COVERAGE: ABF SUMMIT 2022

Sustainability, ESG, AI, NFTs, and more discussed at the ABF Summit 2022

Attendees heard from the industry’s finest experts and bank executives on where the future is headed.

inancial service institutions (FSIs) are hurtling towards a new frontier in the financial industry, navigating drastic changes in regulations and customer demand, new sustainability-related risks, and intensifying competition. And in order to thrive, FSIs must learn to embrace the new, from emerging technologies that enable more personalised customer experiences to collaborating with the disruptors. These are just some of the key insights that hundreds of attendees learned from the recently concluded Asian Banking & Finance Summit 2022. The three-day event, held from 15-17 June, gathered the region’s top banking executives and market experts to share how to thrive in the current financial space. DAY 1 Boston Consulting Group’s Managing Director Tushar Agarwal kicked off the summit with a keynote address exploring the evolving space of cryptocurrency and decentralised finance (DeFi). Agarwal notes that financial stakeholders have every right to be skeptical of crypto and DeFi due to risks on reputation and monetary

36 ASIAN BANKING & FINANCE | Q3 2022

Benjamin Tan

Wolfram Hedrich

True loyalty is achieved when a customer feels emotionally connected to the brand

risks involved. However, with the right factors, crypto and DeFi present great opportunities for banks to better service their future consumers—which “literally live in a different world” from what banks are familiar with—and existing consumers, who remained underserved by current services. It can also help lower costs. “Blockchain technologies have already proven that there are various ways to reduce KYC costs, and also implement a lot of work that happens in the back office to actually reduce significant amount of cost and leading banks are investing significant amount of money, behind the space,” Agarwal said. CIMB Singapore’s Head of Commercial Banking, Benjamin Tan, followed with a speaking session on sustainability, setting CIMB as an example of how one of the ASEAN’s biggest banks. CIMB has over 33,000 employees and 18 million customers in the region. “We have launched our GCP or green social sustainable impact products and services framework. Since then we have dispersed over 10 billion ringgit offerings with a target of 30 billion ringgit in sustainable

financing by 2030,” Tan shared adding that CIMB is establishing ways to help small and medium-sized businesses become more sustainable. True customer loyalty Collinson’s Daniel Cantorna, Vice President, Data, Insights and Technology, Asia Pacific, discussed how FIs can establish customer loyalty, calling for FIs to step beyond the historically transactional loyalty tactics—rewards points and discounts—that nowadays is only driving consumer apathy and concerns regarding data security. “True loyalty is achieved when a customer feels emotionally connected to the brand,” Cantorna noted. “We need to ensure that we are providing a value exchange over time. And this enables us to build rich customer profiles and create in turn better, more relevant experiences.” Elisha Harrington, Senior Director of Innovation Office, APJ at ServiceNow discussed the sustainable finance transformations of banks, financial companies, and insurance firms. “In essence, adhering to an ESG framework means your future proofing your business,” Harrington said. “That’s what we mean about business resilience. And the future of financial services will absolutely revolve around how sustainable finance is rolling out through markets and how you can capitalise from a revenue perspective on these new opportunities.” Harrington, Agarwal, and Cantorna join the first panel discussion with Frederic Tardy, Chief Strategy and Customer Officer for Home Credit, one of the region’s leading buy now pay later (BNPL) providers. Ernst & Young Advisory’s Wolfram Hedrich, Partner, Financial Services Consulting followed with a speaking session on net zero in the financial sector. He advised banks to leverage their credit departments and engage their front office early on, and ensure that

EVENT COVERAGE: ABF SUMMIT 2022 As digitalisation becomes a more crucial strategy than ever before, there is greater pressure to collaborate, Baxter said. Failure to work collaboratively is proving a barrier to progress, she warned. Robin Amlot

The crypto market is expected to be a US$32b worth market by 2027

they are getting quality data in order to have the right resources when doing reasonability checks. “Net zero banks will be required to calculate baseline emissions and target setting on a regular annual basis. And so you need to think through the existing infrastructure, and what is needed to support ongoing calculations, reporting and disclosure requirements in the future,” Hedrich concluded. NFT art One topic taking the art and online wold by storm, both in good and bad ways, are non-fungible tokens (NFTs). Cathy Casas, First Vice President, Head of Blockchain and API Business Group, UnionBank, led a speaking session on the risks and opportunities involved in banks exploring the NFT and crypto space. Casas noted the business opportunity in NFTs and more widely the crypto market, the latter expected to be a US$32b worth market by 2027. Amdist all this, the threat of the COVID-19 virus continues to hover over the horizon, with any possible resurgence promising negative impacts on banks’ recoveries and future plans. This is why Vinay Dixit, Regional Business Director Abbott, Singapore, discussed the importance of regular testing for banking industry in his speaking session. Day 1 closed with a timely panel discussion on how FSIs can navigate the new era of consumer banking, moderated by EY Asia-Pacific EPacific Banking and Capital Markets Leader Andrew Gilder. He was joined by Brian Hui, HSBC’s Head of Customer Propositions and Marketing, Wealth and Personal Banking (WPB); Dick Ho, Bank of China Hong Kong’s Deputy General Manager, Personal

Banking & Wealth; and Ashmita Acharya, Retail Banking Head, Citi. DAY 2 The second day focused on banks, beginning with a keynote address by Bain & Company Associate Partner Anders Jensen-Waud, who discussed how banks can seize the banking-as-aservice (BaaS) opportunity in Asia. Jensen-Waud identified four key factors to consider in launching a BaaS platform: strategy, commercial model, governance, and technology. First, he said to identify the customers you want to win over and listen, and then determine the right partners that banks want to work with—whether to keep old partners or find a new one; second, how to make a profit; third, ensure that they are compliant with local regulations; and finally, Jensen-Waud told banks to ask whether they are providing a good platform and customer journeys. Merlyn Tsai, Head of Consumer Banking & Digital of CIMB Singapore, followed with a speaking session on how to break through the traditional lending business. Tsai said that banks must immolate friction and make their lending processes faster as customers nowadays have a short attention span and would want to access funds as soon as possible. As simple as allowing customers to “save” their half-filled digital application forms can make a difference, according to Tsai. Software company Sitecore’s CX and Digital Experience Leader Jacqueline Baxter followed with a discussion urging financial service institutions (FSIs) to move past siloed working in order to adapt to the changing consumer behaviors molded by the self-serve digital landscape.

Andy Parker

Steven Wong Weng Leong

Alexander Kling

The beauty of a digital platform is it brings everything together reasonably, seamlessly, and easily

The beauty of digital banking Jensen-Waud was joined by Jessica Lam, Group Chief Strategy Officer of WeLab in a panel discussion on digital banking. “The beauty of a digital platform is it brings everything together: reasonably, seamlessly, and easily,” Lam said, adding that one way to create a successful digital platform is a larger product supermarket, so you have everything in one place. Four speaking sessions kicked off the second part of the summit. Silvio Struebi, Partner, Banking Lead APAC, and Revenue & Commercial Strategy Expert for Simon-Kucher & Partners, explored what set apart the digital banks that drove profits versus those that failed to scale the market. Aurexia’s Director for Singapore, Sebastian L. Sohn, followed with a timely overview of the development and regulatory expectations related to ESG for banks in Asia; and Robin Amlot, Managing Editor of IBS Intelligence, followed with a speaking session on the hottest trends in the fintech & banking space in APAC. The final speaking session for the day was delivered by Innosight Partner Andy Parker. He discussed how FIs can navigate disruptions in the industry better. Parker noted the high growth of new competitors in the banking industry, spearheaded by fintech firms, which continue to attract billions of dollars in venture investing. Banks, then, must take the longterm view to set up their future, such as launching digital-only banks—which could mean sinking millions if not billions to rake in the profits in the future. Closing the second day is a panel discussion. Struebi was joined by Steven Wong Weng Leong, C-suite Banking & Financial Services Executive for China Construction Bank (Malaysia); and Alexander Kling, Director, Financial Services Consulting, E&Y Advisory. Struebi, Wong, and Kling answered questions on wealth management and how they built successful digital bank platforms. ASIAN BANKING & FINANCE | Q3 2022 37

EVENT COVERAGE: ABF SUMMIT 2022

Why lenders believe monitoring tech, loyalty are key to future of industry Experts discuss what FSIs are up to in their quest to future-proof their businesses.

echnology is very much one of, if not the most influential factor rapidly transforming the banking and financial services industry, with decentralised finance and buy now pay later (BNPL) being key focus areas, according to the analysts and market leaders taking part in the first panel of the Asian Banking & Finance Summit 2022. Monitoring controls are amongst the biggest focuses of banks today, with lenders using technology to check lending procedures and policies, observed Elisha Harrington, Senior Director, Innovation Office, APJ for software company ServiceNow. This helps not just to speed up the process, but more so to reduce the overhead and administrative burden on individual teams of the lenders. “We can check against policies and procedures to ensure that a lot of that lending procedures is done correctly, and prevent a lot of pitfalls that may or may not result in regulatory fines down the track for missed settlement periods,” Harrington told attendees as an example of what type of technologies lenders are currently implementing. “We’re also seeing more of a focus on a complete, simplified and seamless experience for both the banker, the agents, brokers, and also the customers involved.” 38 ASIAN BANKING & FINANCE | Q3 2022

services they expect from their banks—versus the 2 in 3 (66%) that already expect it. “Often this does come down to varying things, depending on the type of bank that it is in. The services in the larger multinational banks are usually [bogged] by legacy technology, creating silos where experience varies depending on where you are, where you’re interacting with the bank, which products you’re buying from them,” Cantorna said. This leads to varied customer experiences, sometimes good, sometimes bad. And that can affect loyalty, Cantorna warned, adding, “Getting that consistency across the bigger organisations is really critical.” We’re seeing more of a focus on a complete, simplified and seamless experience for the banker, agents, brokers, and customers

Upgrading internal processes Similar to Harrington, Tushar Agarwal, managing director and Partner of the Boston Consulting Group, noted that lenders are upgrading their internal banking processes in order to implement different channels in which loans could come into the bank. “People are thinking not just of the backend process and reengineering, but also now thinking about new channels that they are now tapping into and how they make the lending journey a lot more seamless,” Agarwal said. In order to achieve seamless lending journey, one of the key elements banks are asked to focus on is the user interface of their platforms, according to Daniel Cantorna, Vice President, Data, Insights and Technology, Asia Pacific, at Collinson. Beyond that, Cantorna said that it’s important for banks to focus on keeping customers rather than just onboarding new once. Frictionless services and personalisation will be key to doing so. For the former, Cantorna said that Collinson has observed over 1,400 banks globally are working to lessen friction in their lending processes. But for the latter, customers notedly remain unsatisfied, with only 1 in 3 (34%) indicating that they are getting the personalised

New services Apart from internal process and UX, FSIs are also exploring new revenue streams in the form of new types of lending services—with BNPL being amongst the hottest. Over 20 million new people yearly are estimated to access financing and credit through the internet, according to Frederic Tardy, Chief Strategy and Customer Officer for Home Credit, one of the region’s leading BNPL providers. And with banks in Asia likely to focus on the prime segment, fintechs like Home Credit have a great opportunity to make waves with the middle segment, especially for their rising interest in BNPL services. As for the rising interest rates, Tardy said that this likely will not affect BNPL, but he does expect the rise of online shopping to benefit the BNPL market. These are prominent in segments including telcos, mobile devices, and even car manufacturing, he said. Interest free products will continue, [and even] retailers and manufacturers are also contributing to pay the cost of the interest [in order to] continue offering BNPL products, Tardy added. Another space that FSIs could explore is the growing decentralised finance space.

EVENT COVERAGE: ABF SUMMIT 2022

Need for instant fulfilment fuels incumbent banks’ speedy digital transformation Increased digital-savviness of customers will spur rise of megabanks, experts say.

xpect more digital banking features to be rolled out and possibly even the rise of megabanks amidst an increasingly digital-savvy banking and finance sector that seeks instant fulfilment, senior executives of three of Asia’s top banks told attendees of ABF Summit 2022 Day 1 closing panel moderated by Andrew Gilder, Asia-Pacific Banking and Capital Markets Leader; Global Corporate, Commercial and SME (CCSB) Banking Consulting Leader, Ernst & Young. Brian Hui, HSBC MD and Head of Customer Propositions and Marketing, Wealth and Personal Banking (WPB), revealed that HSBC rolled out over 200 new digital features in its mobile app just last year in its quest to make digital banking as convenient as possible for its customers stuck at home. “Literally one digital feature being delivered per working day,” Hui told attendees of the panel on June 15. “I will say, it’s less about the platform, because if we’re talking about infrastructure. It’s still the same platform, but with [a] much more hyper personalised design,” Hui said. “What is more important is how we make it agile during this situation.” Instant fulfilment As customers become more technologically inclined, so does their appetite for faster services and more options, all three of the panel speakers agreed. This is because banking becomes less confined to the finance space, but starts to extend to other industries that involve technology, such as mobile games and e-commerce–where digital natives have become used to fast processing times and instant gratification. Take payments, for example. “Paying is no longer compared to [other] banks. Payments [is] compared to many different industries. And that creates a huge impact because the customer and the expectation from different industry different apps are basically the same.

And what I see in the new normal is a minimum expectation that the consumer will have instant fulfilment,” noted Dick Ho, Deputy General Manager, Personal Banking & Wealth Management Bank of China (Hong Kong) Limited. The need for instant fulfilment is complicated by the fact that, as a highly regulated market, banking processes tend to take more time than online shopping’s cart out and deliver now options.The question of security also comes into play. Ashmita Acharya, Retail Banking Head, Citi Singapore, noted this challenge, especially given the recent surge of fraud and scams in Singapore’s banking sector. “I think between ABS [Association of Banks in Singapore] and MAS [the local regulator], there’s been a huge amount of focus in keeping offline safe. And that’s something that is becoming top of mind. So it’s a balance between going to a completely digital payment ecosystem and keeping the client safe, keeping the ecosystem safe,” Acharya said. The more, the merrier Citi’s Acharya also pointed out banking customers’ need to have access to more services–also the inspiration behind HSBC rolling out hundreds of new features in their platform, as HSBC’s Hui earlier noted. “Clients want more options, more

Paying is no longer compared to other banks. Payments is compared to many different industries

accessibility. They want better pricing, whether commission free roboadvisory. They want greater access to education opportunities, investment markets, or to financial instruments, across all segments,” Acharya said. HSBC’s Hui agreed. “What they want is more choices, faster speed, lower price. Strategically we always ask ourselves, what exactly is the thing that is not going to change, and hence, the business model itself will sustain,” he said, commenting on how banks plan to ride out the rise in digitisation and the dawn of neobank disruptors. For Citi’s Acharya, there is room for all banks to thrive in the new digital norm. “The entrants who are coming in are going to make us incumbents be better and smarter, because we do have the information, we do have the ability to offer up a much more broader proposition than some of these new virtual entrants, because they’re very targeted, they’re going from one of the slivers, either as SME banking, or they’re going in for payments, or they’re going in for a very deposit-taking strategy or lending,” she said. Megabank or fintech Asked about the future of banking, Ho, Acharya, and Hui all noted that it will be more digital and techembedded than now. For the full event coverage, go to https://asianbankingandfinance.net/ ASIAN BANKING & FINANCE | Q3 2022 39

EVENT COVERAGE: GBG

Striking a balance between fraud prevention and less friction

Banks’ push for more innovation is necessary but raises risks they are not ready for, experts warn.

n an age of increasingly sophisticated fraud attacks, how does one balance fraud prevention without adding to customer friction? Asian Banking & Finance, in partnership with software leader GBG, sought to answer this question in its recently held webinar “More Security For Less Friction: Wielding Data Against Fraud” held on 25 May. GBG Asia’s Head of Solutions Stephen Su kicked off the proceedings with an overview of the financial fraud landscape in the region and how GBG has moved to combat these risks when building financial platforms for their clients. Su recalls a conversation with his daughter that embodies this dilemma. “One of the interesting questions that my daughter, a Gen Z, asked me the other day, is the fact that on Instagram you can predict all of my likes and posts based on my behaviour. Why can’t banks provide me suggestions on financial products, which are of benefit, of interest to me, given that they know a lot more information about me?” Su told the near one hundred attendees who tuned in to the event. Su said that such expectations from customers have pushed banks to roll out innovative solutions quicker in order to compete with big fintech players–at times, without considering the full extent of risks they will face. He cites buy now pay later as an example. “Often with that, it’s fraught with risk. We’ve seen some buy now pay later products from some financial institutions having to roll back and relaunch the product, due to, number one, the high risk of fraud, as well as high customer rejection rates,” he said. Su and the webinar panelists all echoed the same thing: data is key. Back to the foundations Anders Jensen-Waud, Associate Partner of Consulting Firm Bain & Co., provides the why: the right antirisk technology can actually lead to less customer attrition. A survey by Bain & Co. of 10,000 customers globally 40 ASIAN BANKING & FINANCE | Q3 2022

As you keep evolving technology, what is important is your design and your foundational elements in how you’ve set it up

named the three most important customer “episodes”: the onboarding process, the acting on a suspected fraud alert, and then also disputing a fee or transaction. All three require strong fraud management controls and require really strong identity management and KYC check functionality, Jensen-Waud noted. “The banks that actually do those things well have up to 15 percentage point (ppt) higher customer advocacy or net promoter score than those that don’t. So investments here can really move the dial on customer advocacy and tune in those customers for more products,” Jensen-Waud said. “They are more likely to recommend you to another one to another bank, and they also stay for longer than those that have a lower embedded Net Promoter Score.” With fraud activities increasingly becoming sophisticated, banks are forced to play catchup–a reality that is more detrimental to financial firms when building up their antifraud systems, according to Lucose Eralil, Head, Enterprise Technology and Operations (ETO), Security Bank Philippines. Eralil said that it will be impossible to stop fraud from increasingly becoming sophisticated.

“You can’t stop that: the sophistication with which these players play, they keep evolving. You can put in controls, you can put in specific aspects and how you actually control the journey. But you’ll be surprised how fast they adapt, how fast they kind of relate to it, and how fast they actually start doing work on it.” Financial institutions should look back to their foundation and ensure that the anti-fraud settings they are adopting fit the core of their digital foundation, according to Eralil. “As you keep evolving technology, what is very important is your design and your foundational elements in how you’ve set it up. Because [when you] plug and play, as you kind of keep swapping out new aspects of technology evolution that come in, if your foundational design is not capable enough to handle as changes come in, then what you have is you have potential breaches that can be exploited,” Eralil said. GBG’s Su has a similar back-tothe-core answer when it comes to combating fraud, emphasising the origination part of the process. For the full event coverage, go to https://asianbankingandfinance.net/

ASIAN BANKING & FINANCE | Q3 2022 41

EVENT COVERAGE: OUTSEER

Growth in the digital payment space is through seamless digital experience Outseer leads discussions on what is driving the growth of digital payments and what customers expect from them in the latest roundtable discussion with Asian Banking & Finance.

magine getting a sudden urge to buy food from a street vendor, but realising that you do not have cash. The vendor then pulls out a point of sale machine where you can easily swipe your card to pay for your goods. This is soon to be the norm for the payment space, “Innovating in the payments category must balance security, convenience, and choice for consumers. Outseer has made investments to safeguard all consumers however they want to shop, and to enable the ecosystem to serve this mission”. Outseer’s Leader in Payments Security, Asia Pacific and Japan, Ramesh Nagarajan, told his audience. In a roundtable discussion— titled “Driving Digital Payments Growths Through Seamless Digital Experiences” and hosted by Asian Banking & Finance in collaboration with Outseer, an RSA company— Ramesh explained that a plethora of digital payment channels such as mobile apps, platforms, and payment terminals would be prevalent and financial firms should take note.

42 ASIAN BANKING & FINANCE | Q3 2022

Ramesh Nagarajan

Abhishek Kapoor

Anything on digital is always the toughest to balance the experience side with security, especially for banks

According to Statista, 2.15 billion people participated in e-commerce in Asia back in 2020, a number that is only bound to grow to a staggering 3.13 billion by 2050. For HSBC’s Abhishek Kapoor, Senior Vice President and Regional Lead of Global Liquidity and Cash Management, the major industries were already changing their business protocols and strategies and their way of working even before the pandemic. Abhishek gave disruptive technologies, such as blockchain and tokenisation, as an example. “In such a crowded market, many consumers are finding it harder and harder to differentiate between financial firms or tell which products and services are actually right for their needs. They may not even be focused on the products or services at all, but rather on who can deliver superior and mind you far superior client experience from within that huge crowd of players,” Abhishek said. After talking about a seamless client experience, a question was put before the table: how do financial firms attain the balance between seamless and secured?

Balancing experience and security According to Standard Chartered’s Executive Director and H ead of Digital Services and Open Banking, Gary Lau, this is the toughest thing to balance in digital payments. “It’s probably not just payments, but anything on digital is always the toughest to balance the experience side with security, especially for banks,” Gary said. Gary said this is a constant challenge for financial firms like them. Because one thing they want to avoid doing is limiting what kind of transactions clients can do online. It is how they can protect their customers without the need to introduce additional steps that may well end up being a hassle. This is when technology comes into play. “A few examples would be how we use biometrics, and device binding, which happens seamlessly with the customer. They don’t need to remember their passwords, but it is secure for them to make that payment,” Gary said. This is especially vital as according to Outseer, scams and fraudulent transactions in the digital and mobile channels increased by 68% in the last year, with a 49% increase in rogue mobile apps or apps designed to steal private information from customers. Building on what Gary said, Ramesh agreed that technology itself could be a key to fighting scams and fraudulent transactions. As an example, Ramesh said Outseer has been very successful with using its artificial intelligence and machine learning technology to help its customers protect their clients. In the last year alone Outseer has stopped 95% of fraudulent transactions with only 5% intervention. He summed up what Gary said in just five words: “Stop fraud, not customers.”

ASIAN BANKING & FINANCE | Q3 2022 43

EVENT COVERAGE: OUTSEER

Harnessing seamless digital experiences for growth in payments market Payments sector needs to strike a balance between convenience and security.

midst a changing payments landscape, many are seeing technology trends play out to drive growth in the market. These trends have been the result of shifting consumer patterns, adaptation from the impacts of the recent public health crisis, and a strong push from the regulatory framework. The growth of the payments space also signifies the prevalence of digital payment channels such as mobile apps, platforms, and payment terminals that financial firms should watch out for over the years amidst changing behaviours and business models. Whilst these changes are certainly going to be embraced, industry players also have to be aware as early as now of the challenges that come with such shifts. Similar to other industries that are starting to incorporate the digital into their operations, the payments category should strike a balance amongst security, convenience, and choice for consumers. To further explore what this means for the industry, as well as the future of the payments space in an evolving digital landscape, Asian Banking and Finance hosted a virtual roundtable event in partnership with tech company Outseer. Entitled “Secure and Frictionless Fintech Journey,” the roundtable discussion looked into the drivers of growth in the digital payments space and what customers can expect from them. Increasing security measures Outseer’s Leader in Payments Security, Asia Pacific and Japan Ramesh Nagarajan, who is amongst the speakers in the event, highlighted that whilst the new platforms are growing, cyber criminals are actually using the same techniques that genuine banks and financial institutions are using to attack their customers confidence and trust as a result of payments moving online. “Fraudsters are essentially using the same stolen data acquisitions to actually create stolen credit card

44 ASIAN BANKING & FINANCE | Q3 2022

Fraudsters are using the same stolen data acquisitions to create synthetic identities

information and they actually use that information to create synthetic identities. “As consumer buying behaviour has shifted to a digitalfirst experience, newer payment models and transaction methods continue to proliferate. Digital businesses must prioritise strong and effective fraud prevention measures to protect their brand and their customers.” Nagarajan said. He added that as the “bad guys” work together to undermine consumer confidence and the whole trust in the financial well being, the “good guys” also need to work together to combat fraud. John Wong, Hang Seng Bank Managing Director and Head of Global Liquidity and Cash Management, also followed through on this and mentioned how their bank utilises risk identification and detection framework to prevent these issues from occurring. He mentioned that in this process, their bank starts to look into and from the individual customer perspective, into the industry they are operating in, then the historical trends and patterns they are adopting, and into the bigger picture. He also said that they are also learning data analytics to view their risk prevention and detection model. Wong added that whilst there are lots of investigations being done in the process, they have been

deploying AI from behind to help them identify fraudulent patterns. “Equally, from the network perspective, we also perform trials and there were assessment model by which to look into the hardware that the customer, they bought the IP address transmitting with us and also what the transaction origination and the pattern is something in direct to customer bases or the user behaviour,” he said. HSBC’s Senior Vice President and Regional Lead of Global Liquidity and Cash Management Abhishek Kapoor, emphasised that whilst organisations can plan many steps ahead, the technology is moving so fast that it provides fraudsters and cyber attack proponents the ability to move faster especially in a large organisation. He added that companies need to focus on protection as the current technologies make it far more difficult to deliver towards prevention plans. “However, we are actually far more adept at handling every situation, that maybe, a year ago or a couple of years ago, I believe the financial services industry is taking the war on fraud very seriously, and protecting the interests of not only ourselves but even our customers is growth trajectories,” he added. For the full event coverage, go to https://asianbankingandfinance.net/

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ASIAN BANKING & FINANCE | Q3 2022 45

EVENT COVERAGE: SERVICENOW

Integrating ESG to build a profitable and sustainable future in finance More transparent, more objective, more standardised.

he world is far-off meeting goals set for carbon emissions, pushing everyone to move faster towards a greener, more environmentally considerate path, including financial services institutions (FSIs). These challenges and strategies that needed to be taken were discussed at the “Building a Sustainable Future for Financial Organisations with ESG” virtual roundtable held by Asian Banking & Finance and ServiceNow on the 10th of May 2022 and 20th May of 2022 for ASEAN and Hong Kong, respectively. Environmental, Social and Governance (ESG) investing and analysis expected to shape policy and business over the next decade. Regulated industries, particularly financial services, are in the spotlight and have been adjusting their strategies and practices to have more positive ESG outcomes. More than just “complying” to regulations and corporate expectations, an ESG strategy allows FSIs to put themselves at a “competitive” edge given that consumers are taking advantage of sustainable backed lending portfolios. “From the top of the organisation, through to the day to day operations, we’re seeing FSIs transition their portfolios and make strategic business commitments by 2030 and beyond to Environmental, Social and Governance (ESG) initiatives,” 46 ASIAN BANKING & FINANCE | Q3 2022

We’re seeing FSIs transition their portfolios and make strategic business commitments to ESG initiatives

said ServiceNow’s Senior Director of Innovation Office for Asia-Pacific and Japan Elisha Harrington. According to Harrington, activating ESG requires a unified and collective approach in the industry, not just from a single entity, as the pressure is put on financial institutions to come out with sustainable finance and overcome the challenges of speed and scale in their activation. Many banks are also assigning a quality score to ESG related exposures, and issuance of green loans amongst other efforts being done by the financial sector. A way of addressing transition risks, as well as other risks related to ESG, is a proper assessment that can be successfully carried out by the collection of real-time data, as Harrington presents that a lot of the data collection challenges come back to understanding the total emissions, assessing the current position and comparing the state of play to where the organisation needs to get to, when it comes to ESG. Harrington said the financial services sector is also looking into other information types to provide better analysis of ESG risks such as geospatial data as demonstrated in spatial finance practice. When it comes to responding to customer inquiries about ESG impact, there are many teams involved in the process from customer service sales,

marketing, product, ESG teams, and technology teams. “When they’re calling up the bank, or calling up the insurance company, and they’re inquiring, ‘what is the bank offering?’ from new financial incentives, new instruments, they want to engage, they want to be also handheld through this journey,” added ServiceNow’s Harrington. Aside from assessing profitability to assess loan and credit assessment, banks must look beyond by collecting ESG data and assess climate, data from satellite information, IoT sensor information, lots of different sources so that they can start to assess sustainability in banking. Net-zero initiatives Net-zero initiatives for companies are one major field in ESG initiatives that FSIs are beginning to increasingly cater to, as banks start to link sustainability and design into loans as well as implement internal emissions tracking platforms to achieve net-zero carbon emissions. Many companies have announced their goal to transition into a net-zero model by 2050, with an acceleration of interest in sustainable finance from the announcement that 450 banks, insurers and asset managers across 45 companies, accounting for 130 trillion in assets. “There is growing expectation and regulation across the region for organisations to not only know about your ESG impacts but to prove you are addressing them and moving to decarbonise,” says Gwyneth Fries, Expert Senior Manager for Sustainability at Bain & Company, when pointing out that Hong Kong, Indonesia, Malaysia, Philippines, Thailand, Singapore and Vietnam have become signatories with the UN Sustainable Stock Exchange on including ESG reporting as a requirement for listing. For the full event coverage, go to https://asianbankingandfinance.net/

PERSONAL LOAN CONSUMER DURABLE LOAN

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OPINION

UMAIR HAMEED

Will your next wealth relationship manager be a machine?

echnology-based investment solutions can crunch numbers faster than any human, are less prone to emotion-driven decisions and they never sleep. And in many cases, they don’t charge as much as their human competition. There are many advantages to using tech to guide investment decisions. But robo-advisors (like human asset managers) rarely beat the market, and one recent study found that experienced investors delivered better returns than an algorithm in a head-to-head contest. Besides, financial advice often goes beyond maximising market returns. It also includes tax and estate planning, and other individual needs that require a human touch. So, the short answer is no. Relationship Managers (RM) in the finance industry are unlikely to be replaced by machines any time soon. What will happen, however, is that RMs will use data analytics, artificial intelligence (AI) and customised insights to work at massively increased efficiency, and with greater insight into your finances than ever before. The wealth management opportunity for banks is massive, but they need to invest in better technology infrastructure to truly capitalise on the opportunity, and more importantly, to help their RMs add value for investors and create unique client experiences.

UMAIR HAMEED Financial Services Lead, Singapore - Microsoft

Investing is undergoing a dramatic change Demand for RM services is increasing. Asia is the epicenter of global wealth, with the highest number of millionaires of any region in the world and the largest share of global assets. The region’s wealth is continuing to grow, and we’re also about to witness the greatest generational transfer of wealth ever, as millennials and gen-xers inherit from their boomer parents over the coming decade. Credit Suisse estimates that nearly $8.6 trillion worth of wealth will be transferred between generations between now and 2029, although many families haven’t planned adequately. Investor demographics are changing in other ways too. Women are also investing more than ever before, and Asia is the fastest growth market. In fact, Asian women will add more than US$1 trillion per year to their total wealth over the next four years. Customer preferences are also shifting, with 75% of wealth owners hoping to create a positive impact through their investments, and the share of impact investment doubling from 20% in 2020 to 41% in 2021. Asia is also a region that firmly embraces technology. This means there’s new competition for advisory services that don’t require any human intervention at all.

48 ASIAN BANKING & FINANCE | Q3 2022

A younger generation is becoming more comfortable with risk, often bypassing wealth relationship managers altogether and using low-fee platforms like Endowus, Syfe and StashAway in Asia. Digital-first financial services institutions (FSIs) are offering lower cost paths to investment. Roboadvisors which typically gather information about clients during the onboarding process, and then automatically invest based on that data – are also growing in popularity. RMs remain a favored choice for investors with significant assets (typically $500K or more starting with the mass affluents segment). Banks need to justify the cost of RMs with strong results and happy clients. And technology is one way they might do this. Technology is changing wealth management New technology always brings with it concerns about job security - but investment-tech is far more likely to change and enhance an RM’s job than eliminate it. The impact will be a bit like the initial effect of ATMs on bank tellers. As ATMs appeared, bank tellers did not vanish – but their job roles changed and evolved. They took on more complicated and advisory-led tasks such as loans and account openings, whilst automated machines handled dayto-day transactions. We predict a similar shift when it comes to RMs. Banks want to p rovide better services for less, but RMs already typically serve hundreds of clients each. Digital solutions could be the answer. Typically, wealth relationship managers will have all the features of a robo-advisory at their disposal. For example, an algorithm could automatically rebalance a client’s portfolio to account for market conditions. But new technology could help relationship managers greatly increase their productivity, whilst providing hyper-personalised guidance to their clients. Experience and expertise matters Ultimately, new technology will enable RMs to focus on the things that really matter. There are many areas where expertise can add enormous value, especially if a client has complex needs and wants integrated advice that ties together tax issues, estate planning as well as saving for education and retirement, amongst other things. If technology can handle simpler problems, then RMs can spend more time dedicated to tasks where they’re needed most, and bring in experts into client conversations with remote advisory any time that makes for happier clients with investments that best suits their needs and purpose.

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Asian Banking & Finance (July-September 2022)

Articles inside

Harnessing seamless digital experiences for growth in payments market

Why lenders believe monitoring tech, loyalty are key to future of industry

Growth in the digital payment space is through seamless digital experience

Need for instant fulfilment fuels incumbent banks’ speedy digital transformation

Striking a balance between fraud prevention and less friction

Sustainability, ESG, AI, NFTs, and more discussed at the ABF Summit 2022

Singapore bank rankings reveal new hires increased by 5.8% in 2022

OCBC NISP transforms its branch into

Hong Kong banks face ‘brain drain’ as talent flees amidst strict travel restrictions

Investment bank fees in Asia-Pacific fell 9% in H1 2022

Why the pen-and-paper era of financial advisory should end

Citi’s hiring spree sets in motion its $150b AUM goal

Interest rates buoy APAC banks’ margins

GLDB transforms Singapore MSMEs’ supply chains