Is death loom­ing for bank branches?

Singapore Business Review - - CONTENTS -

With the use of mo­bile bank­ing in Sin­ga­pore eas­ily over­tak­ing phys­i­cal branch in­ter­ac­tions by 15% in the past year, there is some ques­tion whether do­ing fi­nan­cial trans­ac­tion in branches still re­mains rel­e­vant for a pop­u­la­tion that has got­ten used to liv­ing their life in front of a screen.

Nearly eight in 10 Sin­ga­pore­ans are con­sid­er­ing open­ing an ac­count with branch­less banks, ac­cord­ing to a sur­vey by man­age­ment con­sul­tancy firm Mck­in­sey. Of this num­ber, more than a third (35%) are will­ing to trans­fer their ac­count as­sets into a dig­i­tal wal­let.

In re­cent months, DBS un­veiled a chat­bot, POSB di­gibank Vir­tual As­sis­tant, al­low­ing cus­tomers to per­form trans­ac­tions via Face­book Mes­sen­ger. Not to be left be­hind, OCBC rolled out an al­go­rithm­based robo-ad­vi­sory ser­vice for its wealth man­age­ment arm whilst UOB launched con­tact­less ATMS.

“In Sin­ga­pore, the role played by and the sup­port given by our govern­ment as well as bod­ies such as the Mone­tary Au­thor­ity of Sin­ga­pore (MAS) and the As­so­ci­a­tion of Banks in Sin­ga­pore (ABS) to the banks is a clear strength,” said Kok Yong Ho, Fi­nan­cial Ser­vices In­dus­try Leader at Deloitte South­east Asia. How­ever, the on­go­ing mi­gra­tion of fi­nan­cial ser­vices to mo­bile begs the ques­tion of whether branch bank­ing still re­mains rel­e­vant.

“Why even have branches and pay rent and staff costs to ser­vice the branches when bank­ing can be car­ried out on­line or on mo­bile de­vices?” ac­cord­ing to Choon

Fah Ong, CEO of Ed­mund Tie & Com­pany. “With the con­ve­nience of mo­bile bank­ing any­time, any­where, cus­tomers are mov­ing to­wards mo­bile bank­ing. So banks adapt to the trend and save costs at the same time, mak­ing them more nim­ble and cost ef­fi­cient.”

Al­though the im­pact on the prop­erty mar­ket could be hard to ac­cu­rately mea­sure as bank branches sel­dom oc­cupy stand­alone build­ings due to their lo­ca­tion in shop­ping malls or of­fice build­ings, banks could save around $10,000 to $70,000 monthly which is the go­ing rent for a typ­i­cal bank branch, ac­cord­ing to Hut­tons Asia. Ong, how­ever, is of the be­lief that the trend will be much more felt in the prop­erty mar­ket in the long term. “The re­duc­tion in bank­ing space is part of the global trend af­fect­ing the way we live, work and play – en­abled by tech­nol­ogy. Over­all, there will be lower de­mand for of­fice space as tech­nol­ogy en­ables us to work any where, any time, and not just from of­fices.” On his part, Deloitte’s Ho sug­gests that the mi­gra­tion of bank­ing ser­vices to on­line is more an evo­lu­tion than an ex­tinc­tion of bank­ing as we know it.

Banks could save around $10,000 to $70,000 monthly which is the go­ing rent for a typ­i­cal bank branch.

Why go to the branch when you can trans­act on­line?

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