The city state of Singapore already punches above its size as a banking hub – and now it wants to do the same as a fintech centre.
Fintech investment in Singapore quadrupled year on year in the first half of 2019, with digital payments and remittance enterprises leading that by a significant margin. The nation’s central bank is now paving the way for more fintechs to enter and compete in Singapore, creating new legislation through its payment services act - and awarding licences for five digital ‘non banks’ to trade from next year, albeit under set criteria.
While the arrival of virtual banks will naturally alter the current banking ecosystem, the reaction of experts in terms of how disruptive their presence will be to leading incumbents has so far been quite low key.
Despite its digital only providers coming to Singapore later than other leading markets, the fact is that a number of its established (and dominant) banks have already made strong headway in terms of digitalisation. DBS Group has been ranked as one of the world’s best banks by euromoney for the last three years, and scooped its digital award last year for the pervasive digitalisation of its business. Citi in Asia earned the same accolade this July, and also in 2017. DBS and United Overseas Bank (UOB) have also rolled out standalone digital banks ahead of others and Standard Chartered has launched a one-stop digital platform for its customers to trade fx in real time.
However, it’s not the time for complacency either. Despite authorities like Moody’s claiming that the biggest banks can withstand the threat of the digital players, providing meaningful points of differentiation will be key. Soon both incumbents and fintechs will offer ‘convenience and a seamless customer experience’ through digital capabilities, however a still polarised retail banking market will mean that more game-changing points of difference will be needed for incumbents to continue to deliver digital innovation that sets them apart.
Here are some musings on how banks can consider doing so.
1. Invest in premium offerings
It’s broadly accepted that with their lead products and services being more payments and transfers-driven that virtual banks will not be targeting those customers with the higher deposit value, including high net worth individuals (HNWs). As such incumbents with premier account offerings have an excellent opportunity to leverage an already polarised market to innovate further and create real points of difference and impact using technology.
While the focus for external digitalisation for leading legacy banks has covered varied, yet still largely ‘transactional’ products and services, like account aggregation, payments, currency exchange and even fx trading as mentioned above – there’s an opportunity to extend innovation into ancillary areas – such as account and card-based rewards – that elevate your brand and ‘remind’ the highest value customers of your value.
Platforms can help banks innovate in these non-core, yet often exclusive and high perceived value, offerings, such as loyalty-based rewards – and even generate revenue from it. Furthermore cloud-based ‘plug and play’ technology enables seamless integration and the ability to scale at high pace, yet low cost.
2. Create a more emotional customer connection
According to research firm Forrester’s Singapore 2019 Customer Experience Index the overall quality of customer experience (CX) in Singapore has remained flat at 55 points out of 100 since 2018. Despite plentiful digital offerings the report found that brands in Singapore disappoint customers in three areas of CX:
- Effectiveness: The experience delivers value to customers.
- Ease: It’s not difficult to get value from the experience.
- Emotion: Customers feel good about their experience.
On average, only 39% of customers found their experiences emotionally positive.
There is a clear opportunity for banks to deepen the emotional connection and relevance they have with customers by enabling experiences that enhance their lives, and create ‘surprise and delight’ moments – especially for a market renowned for higher disposable incomes and subsequent conspicuous consumer base. It’s just one reason we created an exclusive platform that would help banks connect their affluent customers to a travel-led perk that they all want but can’t always get – an upgrade. And it’s a key reason why Singapore is one of our first launch markets for our app.
3. Leverage fintech partnerships to enhance your customer data, and inform future products and segmentation
With the advent of new fintech capability in Singapore’s banking market, it is time, perhaps more than ever, to explore beyond transaction-banking. Some digitised service solutions may make customers’ lives easier, but do they actually make them better?
Piyush Gupta, CEO of DBS Group has talked previously about their digital journey and the vision to ‘re-imagine’ banking and the customer journey that has driven it.
Platform thinking is the key to unlocking the most appropriate fintech solutions to build something unique to competitors’ offerings. The future is increasingly ‘digital first’, it has to put humans at the heart of an AI future, and it must enable teams to leverage platform-based data in order to transform their customer experience.
As we prepare to launch our app in the coming weeks, we look forward to the small part our platform will play in delivering a re-imagined experience in banking, to help our clients both retain and attract their most valued customers.