Singapore’s second-largest bank would take a minority stake in any virtual-banking joint venture and sees it as a way to tap new customers and markets.
Wednesday 21, August 2019
Oversea-Chinese Banking Corporation (OCBC) is in talks with companies including Singapore Telecommunications about seeking one of the city-state’s planned virtual bank licences, reported Bloomberg.
Banks worldwide face increasing competition from telcos and technology firms that are getting into financial services including payments and lending. But some are partnering, including in Hong Kong where Standard Chartered tied up with PCCW earlier this year to create a virtual bank.
OCBC’s discussions are preliminary ahead of more details on the conditions for the new licence applications which the Monetary Authority of Singapore (MAS) is expected to issue later this month. The eventual choice of partners may change depending on licencing conditions, they added.
Pranav Seth, OCBC’s Head of Digital and Innovation, said, “We are open to forging new partnerships and ventures that allow us to serve new segments and new markets.”
Similarly, Singtel’s Chief Executive Officer Chua Sock Koong said earlier this month that her company is studying the prospects for a virtual licence.
In June, MAS said it plans to issue as many as five new digital bank licences to non-bank firms as part of efforts to strengthen competition in financial services.
The UK and Hong Kong are among major economies that have allowed licences for virtual banks, creating a new generation of rivals for traditional lenders.
The MAS’s initiative adds to the digital units that local lenders have been allowed to set up since 2000. The central bank said it will award up to two licences for new retail banks and as many as three for lenders to small and medium-sized enterprises.
Of the big three domestic lenders, OCBC is the only one that doesn’t have a pure-play digital bank, though it has been using technology to facilitate services such as robo-investment advice and instant online account opening for SMEs. DBS Group Holdings operates a digital bank in India and Indonesia, while United Overseas Bank opened one in Thailand earlier this year.
In Hong Kong, Standard Chartered holds a 65 per cent stake in one of the territory’s new virtual banks, with PCCW, HKT Trust & HKT and Ctrip Financial Management (Hong Kong) Company owning the balance.