SINGAPORE – Singapore’s digital banks will have a hard time making room in the city-state’s saturated market, said Piyush Gupta, CEO of DBS Group, Southeast Asia’s largest lender.
Online-only banks are slated to start operating in Singapore next year, marking the financial center’s largest banking reorganization in two decades.
“It is not so easy for digital banks to make room in Singapore,” said Gupta on Friday at the Reuters Next conference, referring to the 98 percent banking penetration in Singapore and the strong digital product suite of the established companies.
“Even in markets like Brazil and China, you can see that the relative market share, size and growth of the established banking system have not changed much,” he said.
Singapore-based internet platform company Sea Ltd, as well as Southeast Asian ridesharing company Grab’s Venture with Singtel, will commence limited operations from 2022 after receiving full digital banking licenses in December.
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However, Gupta said that Singapore regulator guidelines to ensure newer entrants have a profitable business for the next several years would discourage them from buying market share by suffering huge losses over time.
“No doubt you will have to compete. People will come with aggressive prices and so on. But by and large I think we are relatively well positioned and should be able to hold our own.” he said.
Over the past decade, Gupta has led DBS to invest billions of dollars in modernizing its technology infrastructure while adopting cloud computing and digitizing its services.
DBS generates most of its profits in Singapore and Hong Kong.
Since Gupta took over the helm in 2009, DBS has advanced to the ranks of top asset managers in Asia, acquiring a bank in India and one in China last year, and is into businesses like a digital exchange and a global carbon exchange Searching for new sources of income.
Gupta said the bank’s business momentum is resilient despite the global spread of the Omicron coronavirus variant and troubled markets as investors worry about the impact on economic growth.
“If I look at our loan book and our credit pipeline, they are quite robust and that is true for the whole region, including China, where macro numbers are slowing. But for a player like us, we are seeing relatively good momentum in our business. ” there, ”he said.
“If we look at our pipelines and our business forecast for 2022, I think we’ll see pretty similar dynamics early in the year.”
Last month, DBS outperformed market estimates with net income increasing 31 percent from July through September, aided by growth in fee income and improvements in asset quality.
TECHNICAL DIFFICULTIES
Referring to the technical glitches in DBS ‘online banking service, including the payment app, last month, Gupta apologized to customers, saying they had the right to expect more from the bank.
DBS had discovered a problem with its access control servers.
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“But the good news is that everything was secure behind the front door. Nothing was touched, so our data was fine, there was no cyber hack and our payments went well,” said Gupta.
“So we’re going to do a full review of the end-to-end process. And then we’ll get some insight and insight into what we can do better in the future.”
Gupta, 61, said he has no plans to retire anytime soon. He was with Citigroup for 27 years before joining DBS.
“Many of my colleagues, certainly in the USA, set the benchmark at 70. So I still have a lot of time and there is nothing that is imminent.”
