DBS Bank says ‘meh’ to virtual bank licence, will pursue own digital initiatives and branches

DBS Bank, the largest lender in Singapore and Southeast Asia, said it would focus on a number of digital initiatives to enhance its online and mobile banking services while retaining its structure as a traditional bricks-and-mortar institution.

DBS, which has 34 branches in Hong Kong, said there was little to gain from operating a virtual bank platform, which offers mainly retail banking services without physical branches.

“We don’t feel the need to launch a virtual bank,” said Ajay Mathur, head of consumer banking and wealth management at DBS Bank (Hong Kong). “We are making very good progress in terms of introducing a number of digital initiatives.”

In a push to drive financial technology (fintech) development in the Asian financial hub, the Hong Kong Monetary Authority (HKMA) will start issuing licences to operate virtual banking platforms as early as the end of this year or in the first quarter of next year.

More than 50 companies have expressed interest the licence, the HKMA said in May. While fintech firms responded with enthusiasm, among traditional banks only Standard Chartered Bank has so publicly announced it would apply for the licence. The application deadline is August 31.

DBS has invested “tens of millions” of dollars in information technology in recent years, Mathur said. It started allowing small and medium-sized enterprises in Hong Kong to open business accounts remotely with online identity verification and due diligence in 2016. DBS has also rolled out a series of mobile apps with which customers can trade stocks and currencies, access market insights, and send remittances.

The Singaporean bank will launch a new mobile app that allows trading of mutual funds by the end of this year. The bank plans on taking part in an initiative by the HKMA that encourages banks to use big data and consumer behavioural analytics to assess borrowers’ ability to repay loans, instead of collecting paper documents of their income proof as before, Mathur said.

“We will concentrate our manpower on areas where we can achieve rapid growth,” said Alex Cheung, head of institutional banking at DBS. “We will continue to digitalise on the current foundation.”

Virtual banks will need to have at least HK$300 million (US$38 million) in capital, according to rules set by the HKMA. Virtual banks are not permitted to set a minimum account balance, charges fees for low balances, or impose excessively high interest rates.