DBS Bank (Hong Kong), the local subsidiary of the biggest lender in Singapore and Southeast Asia, is focusing on developing its digital banking platform and redesigning its branches as an increasing number of customers switch to online banking amid the pandemic, according to a senior executive.
The bank closed three branches in Hong Kong last year, bringing the total down to 27, which has allowed the company to save on rent and other costs, Ajay Mathur, head of consumer banking and wealth management at DBS Bank (Hong Kong), said in an exclusive interview with the South China Morning Post.
The bank's mobile phone app accounted for 95 per cent of new credit card customer acquisition while more than one-third of wealth management account openings were through the digital platform last year, Mathur said.
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He, however, added that bank branches still have a role to play, but they will not be for simple transactions such as cash deposits or fund transfers.
"Customers have shifted to use their mobile phones and other digital platforms to handle these transactions instead of going to a branch," he said.
The lender's move to cut down its branch network came as the Covid
-19 pandemic has seen fewer customers going to physical locations while accelerating the demand for digital banking services at the same time. While there is no industry-wide data available in Hong Kong on the number of overall bank branch closures, Chinese lenders on the mainland closed 430 bricks-and-mortar locations in the first three months of this year, mainland media reported citing the China Banking and Insurance Regulatory Commission. Last year, mainland lenders closed 1,300 outlets.
Amid the shift in customer preferences, DBS's redesign of its branches will cater more to wealth management customers' needs, Mathur said. The front areas would be for the bank staff to discuss with customers investment products, mortgage loans, or help them with their succession planning, while pushing the teller counters to the back, he added.
The bank in April introduced a new mobile phone app for customers to handle all their banking, forex and other wealth management products in one go. It has also adopted machine learning and artificial intelligence to offer research analysis and additional information for customers speedily and intelligently.
They can also use the apps to make payments at certain shops or for taxi fares.
"Customers can open wealth management account using their mobile phone within 10 minutes, and they can start trading stocks or buy any fund products in the next minute," he said.
While DBS is keen on developing digital banking, it has no plan to apply for virtual bank licences in either Hong Kong or Singapore. The eight virtual banks in Hong Kong, which started operation last year, already have 580,000 customers and HK$20 billion (US$2.6 billion) in deposits at the end of March, according to data from the Hong Kong Monetary Authority.
"We have reviewed and do not think we need a separate licence. We have already digitalised most of our products and services to provide all types of digital banking services to customers," Mathur said. "Our customers can use digital platforms to invest in stocks and to buy wealth management products," he added, point out that virtual banks in the city do not offer wealth management services as yet.
DBS Bank expanded in Hong Kong via acquisitions of Kwong On Bank in 1998 followed by Dao Hang Bank and its subsidiary Overseas Trust Bank in 2001. In 2003, DBS Bank merged the three Hong Kong lenders into DBS Bank (Hong Kong), which is now the seventh-largest lender in the city in terms of assets.
The Hong Kong unit contributed about 20 per cent of net profit to the group last year, the most after its home market Singapore.
In April, Singapore parent DBS Bank agreed to buy a 13 per cent stake in Shenzhen Rural Commercial Bank Corp for 5.29 billion yuan (US$814 million) to expand further in the Greater Bay Area.
"Hong Kong is an important gateway for DBS to invest in Greater Bay Area to capture future opportunities in the area," Mathur said.