REGIONAL REVIEW

APAC Review 2019Banks of the future

STRATEGIES FOR THE FUTURE DIGITAL TRANSFORMATION FUTURE OF PAYMENTS

ABOUT EFMA

Efma is a great source for curated insights about the industry. Whether we are looking for research on the latest industry innovations or for in-depth case studies, we find them extremely useful for our business. The access we get to exclusive events and meetings helps us strengthen our industry network.

Research keeps bank abreast of the retail banking trends and innovations worldwide. These help Philippine National Bank study and explore potential ideas and models applicable to our strategy focused on safe, aggressive growth. We value the opportunity to learn and discuss important industry issues and developments with our peers in the retail business worldwide through Efma.

Efma provides us access to a platform that brings together local, regional, and global leaders to participate in information-sharing and networking opportunities. As a newly established commercial bank from an emerging market, it is vital for our management team to be exposed to the latest trends, innovations, and best practices impacting the banking industry. As a member of Efma, we are able to enhance our local knowledge by developing a global mindset to help us incorporate different perspectives as we continue to grow.

Fernando Morillo Global Head, Retail Products & Segments, Standard Chartered Bank, Singapore

Wick A. Veloso President and CEO, Philippine National Bank, Philippines

Sorachna Honn CEO, Prince Bank, Cambodia

Efma brings together collaborators from around the globe who are sincere in building alliances to improve lives through the innovative delivery of financial services. The exchange of insights be it via conferences, articles, topical portals, reports, etc., helps improve efficiency at the bank, and ensure a consistent and superior customer experience journey for our clients.

Joel Kornreich Group CEO, Alliance Bank, Malaysia

What our Members say about us

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www.efma.com

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Editorial project leader: Anne-Laure JozanHead of Content Management APAC at Efma alj@efma.com

Production team: Toby Ingleton,Publisher at Tudor Roseand his team Kevin Spangenberg,Copywriter at Efma

Sarah Gold,Copywriter at Efma

Lorette Masson, Graphic Designer at Efma

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Images from www.gettyimages.com

FOREWORD

Vincent Bastid Efma CEO

Banks of the futureThroughout the Asia-Pacific region, banks are developing strategies to take them into the future – to provide experiences that meet the expectations of modern customers and capitalize on the opportunities presented by the newest technologies.

Mobile banking, 24-hour service, and complete security are now taken for granted. Banks in the Asia Pacific region are looking beyond what their customers expect and planning their evolution around the potential of technologies like artificial intelligence, blockchain and big data, and partnerships with dynamic new financial technology firms.

Technological advances have facilitated new business models based around personalization. Utilizing new technology, banking service models are evolving from one-to-many to one-to-one personalized service that can meet the unique needs of all client types.

The future of banking not only promises customers functionality and convenience at levels that we can hardly envision, but also the optimization of efficiency in every aspect of a bank’s operations, from recruitment to processing transactions to unearthing new business.

This Regional Review is split into three primary sections. First, we explore the strategies that are being employed by banks across the region as they prepare themselves for the future. Next, we consider the potential of digital transformation and find out how banks are already reaping the benefits. Then, we focus on the future of payments.

Throughout the publication, leaders from banks in all areas of the Asia Pacific region give us their unique insights and we profile some of the most exciting new developments that their organizations are bringing to the industry. Our thanks go to the Efma members whose generosity in sharing their knowledge and vision has enabled us to deliver a comprehensive overview of the future of banking in the Asia Pacific region.

We hope you find this publication an informative and valuable resource.l

4 APAC Review 2019: Banks of the future

Contents

ABOUT EFMA

STRATEGIES FOR THE FUTURE

02 | Quotes

03 | Foreword

06 | About Efma

08 | China’s banks reckon with agile newcomers

10 | Platform strategy for merged Korean bank

11 | Innovative strategies hit the mark for Kookmin Bank

12 | Innovative and intuitive digital financial services, Amy Lin, CTBC Taiwan

14 | Citi’s digital strategy proves a winner

16 | Blending technology with people power, Anurag Mathur, HSBC Bank Singapore

18 | A people-driven digital strategy for Singapore’s DBS, Paul Cobban, DBS

20 | Innovative growth with a customer focus, John Chong, Maybank

22 | Building a progressive future, Wick Veloso, Philippine National Bank

24 | What’s the secret to being an awardwinning bank? Sanjiv Vohra, Abigail Casanova, Rafael F. Simpao, Jr., Security Bank

26 | Building business with new partnerships, Patchara Samalapa, Kasikornbank

27 | CU NEX Student Application

28 | Banks capitalize on Cambodia’s growth, Han Peng Kwang, Phillip Bank, Lim Aun, Sathapana Bank, and Sorachna Honn, Prince Bank

31 | CTBC Bank builds presence across southeast Asia, Chiang Yao Chong, CTBC Bank Singapore

33 | The hectic road to digital banking, George Beatty, Efma

33 | Commonwealth Bank of Australia creates benefits finder application

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DIGITAL TRANSFORMATION

FUTURE OF PAYMENTS

34 | LINE and Mizuho team up to launch online bank

36 | Winning hearts with technology, Deniz Güven, virtual bank by Standard Chartered Bank Hong Kong

37 | OCBC Bank launches digital business dashboard for SME customers

38 | Engaging the digital generation, Dr Dennis Khoo, TMRW digital group (UOB)

40 | The SCB transformation journey, Christian Roland, Siam Commercial Bank

42 | BRI: digital transformation in Indonesia, Indra Utoyo, Bank Rakyat Indonesia

44 | Empowering sustainable business, Edwin Bautista, UnionBank of the Philippines

46 | Implementing high impact bank transformation projects, Samir Gupta, CIMB Bank

47 | Staying ahead of the curve, Stuart Beaumont, Standard Chartered

48 | Krungsri thinks digital first in Thailand, Dan Harsono, Krungsri Bank

49 | Krungsri Digital Homeloan merges the mortgage and homebuying journeys

50 | Bangkok Bank attributes its success to innovation and collaboration, Prassanee Ouiyamaphan, Bangkok Bank

52 | Prince Bank: the dawn of digital banking in Cambodia, Sorachna Honn, Prince Bank

54 | Versatility and innovation to produce strong results, Joel Kornreich, Alliance Bank

56 | Growing a customer-focused bank, Jacqueline S. Fernandez, East West Banking Corporation

58 | Most Innovative Branch Offering: MSpace at Maybank in Singapore

59 | Crypto-salaries legalized in New Zealand

60 | Developing tomorrow’s payment systems, Mei Mitsuo, Jibun Bank (MUFG Group)

62 | Transforming transaction banking, Armand Wahyudi Hartono, Bank Central Asia

64 | Bank + FinTech love story, Ryan Kim, Standard Chartered Bank, and Guy Talmi, PayKey

65 | Visa Platinum Credit card Relaunch by HSBC Bank Singapore

65 | Facial recognition payment in China

66 | KEB Hana Bank Develops Global Loyalty Network

66 | China cryptocurrency pioneers

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ABOUT EFMA

A global networkA non-profit organization governed by leading banks and insurance companies, Efma is YOUR key to connect with a global ecosystem, get inspired and be heard!

By becoming a member of Efma, retail financial services organizations from across the world

gain access to a number of exclusive benefits and networking opportunities:

See all membership benefits on: www.efma.com/joinefma

ConnectConnect with a reliable network from all continents, via international and local conferences, exclusive top level meetings & private introductions

LearnLearn the latest trends and use exclusive resources to benchmark your institution & improve strategies. Unlimited use for all employees

InnovateInnovate and continually get inspired by more than 3,360 banking innovations and 1,150 insurance innovations, as well as hundreds of high-performing fintechs on our portals

EngageEngage your customers, prospects, partners by gaining visibility and credibility within the ecosystem

3,300 Member brands

130 countries

EFMA-PRINCE BANK RETAIL BANKING FORUM

EFMA-ACCENTURE APAC BANKING AWARDS

Banking the next generation: a seamless digital experiencePhnom Penh20 June 2019

On 20 June 2019, Prince Bank co-hosted Efma’s inaugural Cambodian edition of the Retail Banking Forum in Phnom Penh. Held at the Raffles Hotel Le Royal, the event brought together leaders of the financial sector in Asia as well as inspiring speakers to share ideas and experiences around the theme “Banking the Next Generation: a Seamless Digital Experience”.

Banking as a living businessSingapore6-7 November 2019

The second edition of this event is taking place at the Efma Retail Banking Summit Asia. Innovations are awarded as Best in APAC in their category among which Digital Marketing, Offering Innovation, Phygital Distribution, CSR or Workforce Experience.

Efma is also taking specific actions in APAC to maximize networking opportunities among industriy leaders and reward innovation.

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A regional playerBesides access to a global network and in-depth case studies gathered from all over the world, Efma members from APAC have access to additional benefits:

Annual meeting: Retail Banking Summit Asia

The 5th edition of this flagship event in Asia will focus on the key priorities and most pressing challenges faced by the banking industry in the region. Like previous editions, this year’s event will bring together the most successful banks and companies in the retail financial services ecosystem from Asia and across the world. More on www.efma.com/asia19

The 2018 edition was a success, this year we expect even better results:

Bi-annual briefings on your premises

Exclusively created for the heads of your key departments, these briefings take place twice a year and keep you updated on the latest international developments in technology, process, security and marketing, among others.

Advisory services

Using a wide range of quality insights and market research from world renowned consultancies/IT firms along with our community’s innovation portals, Efma’s experts bring with them an extensive knowledge of industry best practices and case studies in their chosen domain.

More on www.efma.com/eas

See all Efma members on www.efma.com/members

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China’s banks reckon with agile newcomersMajor global banks in China are facing unprecedented challenges as the country embraces the digital economy. We look at the strategies they are adopting to stay relevant in the face of intensifying competition.

Chinese banks are facing concurrent challenges: declining income contribution from traditional

lending businesses and greater competition for deposits. These challenges are aggravated by aggressive expansion by internet finance companies into the world of financial services.Banks have been working to address these challenges by improving their readiness to engage in direct banking. In China, direct banking has seen considerable growth in recent years due to the pressure to transform traditional business models to stay profitable. According to a Citi report on Neobanks, the 2013 launch by Bank of Beijing of the first-ever Chinese direct bank jointly with ING Bank was just the start. By the end of 2016, 113 direct banks had been set up. More than 85% of them were founded by rural financial institutions and city commercial banks.The sector faces several major challenges with regard to the models of direct banking available. One of these is the fact that most direct banks lack independence, operating as subsidiaries of commercial banks and being dependent on these bank’s existing e-banking channels. Customers have also shown a preference for face-to-face account

opening. Finally, the stringent regulatory environment means that services and products provided by direct banks are largely restricted to deposits, money market funds, fund transfers, and payments.The first independently-operated Chinese direct bank, aiBank, was established in 2017 in a joint venture by China CITIC Bank and Internet giant Baidu. The bank offers a comprehensive financial platform including consumer/small business operating loans, wealth management products, and payment services. In addition to its own app, customers can access aiBank’s products via its mini program on both the Baidu and WeChat apps. According to China Daily, aiBank’s total assets reached RMB34.2 billion ($5.1bn) and its total app users exceeded 10 million by October 2018. aiBank’s management has attributed its early success to a combination of factors including the strengths of its parent companies along with its strong focus on technology.

Tech giants challenge banks The world’s biggest banks came under threat from technological advancements in China in 2019 as technology groups Tencent and Alibaba won

STRATEGIES FOR THE FUTURE

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approval to launch digital banks in Hong Kong. Other organizations moving into this space include online insurer ZhongAn Online and flight search company Ctrip. The new licenses will affect the business of big local traditional banking players such as HSBC and Standard Chartered, and the shockwaves are likely to reach banks in London and New York in due course. The Hong Kong Monetary Authority granted eight banking licenses in 2019, a sign of many more to come. Along with Tencent and Alibaba, Xiaomi, the world’s fourth-largest smartphone maker, and Ping An, the world’s largest insurer, acquired the licenses.James Lloyd, Head of Fintech at EY in Hong Kong, told media that Hong Kong was a “proving ground” for challenges to banking operations. “It’s not hard to imagine that several of these players have local, regional and even global ambitions,” he said.Lloyd remarked: “We’ve obviously seen a large number of challenger banks and bank-like fintechs emerge in the UK in recent years, many of them targeting the same subsets of customers. The difference here is how well-capitalized the backers of most of these Hong Kong new entrants are.”Technology companies are particularly interested in capturing traditional banks’ business in personal finance and payments, which carry the prospect of valuable customer spending data. In this regard, Barclays Chief Executive Jes Staley has warned that banks need to defend themselves against encroachment from tech companies such as Amazon, Google and Apple. So far, the big banks’ fight back has focused on lobbying financial regulators to hold tech companies to the same data protection, cyber security and capital standards as banks. The new players’ expertise and technology comprise a threat to existing institutions, said Ian Brown, Hong Kong managing partner at Capco Digital in Hong Kong. He added that the incumbents would have to up their game to compete.While Standard Chartered has applied for a digital banking license of its own, HSBC has not done so, choosing instead to expand its existing digital platforms. Karen Man, a partner at Baker McKenzie in Hong Kong, said: “This is going to be a whole new phase in Hong Kong for accessible banking services.”

Bank works on tech resilienceThe big players in China’s financial services sector are taking action to improve their resilience in the face of the new challenges. China’s CITIC Bank announced recently that it had accelerated the transformation of its retail banking business, leading to strong growth in the first half of 2019. Mobile banking had a significant role to play in the bank’s success, with the number of monthly active users of CITIC’s mobile banking service rising 34.4 percent year-on-year. Xie Zhibin, China CITIC Bank vice president, said: “The bank continues to restructure various facets of its business and the contributions of retail banking and non-interest businesses to the bank have further improved. By deepening a transformation of our retail banking business and increasing relevant investments in the next three to four years, we aim to achieve a 50 percent increase in the contribution of retail banking to our bank’s operating income. We also hope that retail banking’s contribution to the bank’s profit will grow by 40-45 percent.“ Fang Heying, president of China CITIC Bank president, said the booming financial technology industry would give strong support to commercial banks to empower their clients and partners. He also commented on new opportunities for banks arising from China’s strategic deployment in key geographical areas, as well as its industrial transformation and development. l

The full content of this report is exclusively reserved for Efma member institutions. If you wish to know more about gaining full access to exclusive content, as well as other benefits, go to www.efma.com/joinefma or contact membership@efma.com

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STRATEGIES FOR THE FUTURE

Platform strategy for merged Korean bankKEB Hana Bank is one of Korea’s biggest financial players, following the merger of Korea Exchange Bank and Hana Bank. But even an institution of this size is keeping an eye on the boom in fintech start-ups.

With growing numbers of people switching to fintech platforms for their banking and

investment activities, banks need to invest in order to keep ahead of these trends. Speaking recently, Hana Financial Group Chairman Kim Jung-tae said banks should bear in mind the problems large companies can face if they are unprepared for change: “Fintech and internet-only banks may be small at the moment. But if we continue underestimating their influence and potential, we face a similar fate to that of Nokia and Kodak.”Digital transformation and globalization are the focus as KEB Hana Bank addresses the changing market. “We seek to change our identity from a

commercial bank to an information-based entity, a fundamentally different mindset from our competitors that mostly consider transformation as a tool to help their business objectives,” KEB Hana Bank CEO Ji Sung-kyoo told media at a press conference during his inauguration in the role of CEO in 2019. The Bank’s Vision 2540 program is focused on increasing the net income derived from overseas profit to 40 per cent by 2025, from its current level of 13 per cent. To achieve this, Ji said that the bank would target business expansion in Southeast Asia. “The domestic market has become nearly saturated, with the competition among industry players only seeking to poach customers from one another.

The full content of this report is exclusively reserved for Efma member institutions. If you wish to know more about gaining full access to exclusive content, as well as other benefits, go to www.efma.com/joinefma or contact membership@efma.com

Enabling connection& inspiring innovation

EVENTS

Efma l 10 Boulevard Haussmann l 75009 Paris l France l Tel:+33 1 47 42 52 72 l Fax:+33 1 47 42 56 76 l info@efma.com l www.efma.com

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SME Banking Summit4 - 5 JUNE 2020 Milanwww.efma.com/sme20

World Retail Banking Summit 10 - 11 FEBRUARY 2020 Dubai www.efma.com/wrbs20

Retail Banking Summit in Lebanon1 JULY 2020 Beirut

www.efma.com/lebanon20

Learning Expedition in Dubai & Abu Dhabi12 - 13 FEBRUARY 2020 www.efma.com/LEme20

Bank + Fintech 21 - 23 APRIL 2020 Berlinwww.efma.com/bankfintech20

Learning Expedition in Singapore5 - 6 NOVEMBER 2020www.efma.com/LEsingapore20

Innovation Summit19 - 20 OCTOBER 2020 Madridwww.efma.com/innovation20

48th Efma Congress: Banking Transformation22 - 23 OCTOBER 2020 Madridwww.efma.com/congress20

Insurance Summit4 - 5 JUNE 2020 Milan

www.efma.com/insurance20

Retail Banking Summit in Asia3 - 4 NOVEMBER 2020 Singaporewww.efma.com/asia20

APAC Review 2019 Banks of the future

November 2019

Efma | 10 Blvd Haussmann | 75009 Paris | France | Tel: +33 1 47 425272 | Fax: +33 1 4742 56 76 | info@efma.com | www.efma.comNIF/TVA: FR 41 784 856 239 | N° SIREN: 784 856 239 | Code APE: 6619b

A global non-profit organization, established in 1971 by banks and insurance companies, Efma facilitates networking between decision-makers. It provides quality insights to help banks and insurance companies make the right decisions to foster innovation and drive their transformation. Over 3,300 brands in 130 countries are Efma members.

Headquartered in Paris. Offices in London, Brussels, Andorra, Stockholm, Bratislava, Dubai, Milan, Montreal, Istanbul, Tokyo, Beijing and Singapore. Learn more at www.efma.com