Singapore’s DBS not fazed by entry of digital banks, boss Piyush Gupta says
- Singapore recently awarded licences to a Singtel-Grab joint entity, e-commerce firm Sea, China’s Ant Group, and a consortium comprising Greenland Financial Holding Group
- While the new banks have advanced digital capabilities, none of them have a ‘monopoly on technology’, said Gupta at the Singapore Fintech Festival
Singapore’s DBS, Southeast Asia’s biggest lender, has a “healthy respect for all forms of competition” and is unfazed by the entry of four new digital-only banks, chief executive Piyush Gupta said on Monday.
Speaking during a panel session at the Singapore Fintech Festival, Gupta said while the new entrants had good technology and were likely to have built large customer bases from their respective non-banking businesses, none of the players had a “monopoly on technology”.
On the contrary, the new banks will have to compete with the likes of DBS, which has invested and built up its digital capabilities in recent years.
“It’s not as if Google, Amazon [or] Ant can get technology which DBS can’t,” Gupta said when asked about his reaction to the city state’s award of its first four digital banking licences on Friday.
“We’ve been dabbling and leveraging the same technology now for several years,” Gupta said, adding that with DBS’s 7,500 engineers making up the firm’s single largest workforce, it considered itself a “tech company offering financial services”.
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Gupta, who was speaking alongside Standard Chartered Bank chief executive Bill Winters, and Calvin Choi, the chief executive and chairman of the Hong Kong-based investment holding company AMTD Group, said the Singapore bank was already offering a wide range of services, from remittances to wealth management and investment.
There was “really nothing much that is available out there that DBS does not provide in a very competitive, and often world-class kind of manner”, said Gupta, who has headed DBS since 2009.
Standard Chartered, which has a majority stake in Mox Bank – one of the recipients of eight digital banking licences issued in Hong Kong – said the venture’s edge was the involvement of telecoms group HKT and Trip.com, which gave it “full reach to the Hong Kong population, probably two times over”.
Winters said he felt “no pressure at all” from the new entrants in Singapore, adding that he “saw a ton of opportunity” in digital banking.
In Hong Kong, he said there were signs that Mox Bank would be able to carve out a niche despite the city’s competitive landscape for digital banking, though he did not provide details.
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As for AMTD, the Hong Kong-based firm that put in a proposal for a digital bank licence in Singapore but was not awarded one, the Southeast Asian country would remain its “one-stop digital hub”, said Choi.
The company’s fintech arm AMTD Digital is in the process of building its global headquarters in the island republic.
Also featuring in the discussion between the three banking heavyweights was the future of digital currencies.
Winters said the roll-out of digital currencies was “absolutely inevitable”, adding that he saw a role for both state-backed and non-central bank-sponsored digital currencies.
The digital coin will be backed one-for-one by the US dollar, according to an unnamed source involved in the project, the British newspaper reported.
Winters said the “really interesting development” in the digital currency space would be the creation of units that do not simply replicate fiat currency but are “intended to capture either a superset or a subset”, such as being used for trading in the voluntary corporate market.
“That sort of blockchain-based … infrastructure [would] give the users, buyers and sellers of that currency confidence that the projects that they’re effectively financing behind that are verified,” the Standard Chartered chief said.
Gupta, meanwhile, suggested the industry would be better off if only central banks issued such currencies.
He raised the challenges that jurisdictions could face in managing their respective monetary policies if a third party owned the territory’s currency.
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Another problem, the DBS chief said, was the issue of anti-money-laundering and identifying and verifying customers, with the entire system open to be “misused at scale” if there was no preventive architecture in place.
But if a central bank were to issue the digital currency, the benefits of an enhanced settlement system could be reaped without these risks, Gupta said.
“You get the benefits without throwing the baby out with the bathwater … so I do think you will find, over the next few years, that some kind of a network stitched together, but with central bank digital currencies at the core, could become a reality,” he said.
Singapore’s Fintech Festival, currently in its fifth year, is one of the world’s largest state-backed conferences.
Speaking earlier on Monday, the republic’s deputy prime minister and finance minister Heng Swee Keat described the event – being held in the midst of the Covid-19 pandemic in virtual format with panels scheduled around the clock – as a “good example of our response to the pandemic”.
