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BANKS have trained their focus on wealth management and retirement planning for the masses, and the shift to digital is propelling growth in these newer areas of banking.
And because the use of technology creates digital trails, this shift is also keeping banks on the right side of the new, tighter rules for sale of banking products, the heads of consumer banking in three local lenders have said.
The banks' new focus comes, in part, as growth in mortgage lending has slowed, dragged by the government's cooling measures in the property market. And banks are today more exposed to this cooled-down market - and less diversified than before: housing loans now make up about three-quarters of loans to individuals, up from 65 per cent a decade ago.
Dennis Khoo, head of personal financial services for Singapore at UOB, noted that the deposits market has also matured.
"So income generation tilts towards unsecured lending and the wealth space. But unsecured lending has its limits, because in general, Asians do not use revolving credit as much.
"So it's a very limited market, and the government is looking to control that further," he said, referring to the new rules to curb over-leveraging through credit cards and unsecured loans.
"Therefore, we have had to reinvent our wealth-management business."
UOB, the leader in the sale of unit trusts in Singapore, has introduced a product aimed at catering to Singaporeans' retirement needs. Funds though a suite of products known as Income Builder have exceeded S$1 billion since it was launched last July. Today, 70 to 80 per cent of the bank's investment sales in the mass market come through it, said Mr Khoo.
Most of these funds are managed such that when their volatility goes above a threshold, the managers sell down a part of the portfolio to reduce the volatility. They are what Mr Khoo classifies as "moderate risk, moderate return".
"The mutual fund industry has reached a stage in which we now have funds that are volatility-controlled," he added.
"When we looked at the market last year, we felt that the mass market customer probably wasn't investing in the ideal way we felt he should, to provide for himself.
"Someone who has a lot more money in the affluent space could say: 'I'll take one quarter of it, and I'm happy if I lose half of that, but I have the opportunity to make three, four, five times the amount. If I lose that money, I'm not impoverished'. This doesn't apply to the mass market."
Meanwhile, DBS is going big on artificial intelligence (AI), using it to churn out investment recommendations for clients.
The bank will soon test its IBM system, known as Watson, on its premier-banking clients - those with at least S$350,000 in deposits or investments with the bank, said Jeremy Soo, its head of consumer banking. Data from its wealth-management clients - what the bank brands as its Treasures segment - will be fed to the system so that it churns out investment recommendations for such clients.
"Watson is a baby now, but without information, it will never grow," said Mr Soo.
He added that being a computer, Watson works without the usual biases and emotions that relationship managers may have in advising clients: "I have my own emotions to deal with. Watson has no emotion… and provides you with a secondary view."
He added that as relationship managers go digital - equipped with AI, selling products on the go - they, and the bank, are also being protected through the digital process. With the new fair-dealing requirements in place, banks have to ensure that their sales people do not pounce too eagerly to sell inappropriate products to investors.
"In the past, when it was all paper-based, you couldn't really tell. Now, the relationship manager cannot skip the steps. There's an audit trail that's digital," said Mr Soo. "Because of the use of tablets, the illustration becomes very clear and succinct."
OCBC's head of consumer financial services in Singapore Dennis Tan, made a similar point. "If it's paper-based, it's prone to error. That's going to mean a lot of potential penalty or misunderstanding with customers. That keeps our guys safe.
"It also protects consumers. So whatever we need to showcase to customers, we showcase. Whatever we aren't supposed to will not even be displayed. So I take that away from the sales person, and we manage it from a programmed basis."
OCBC has moved to digitise its bancassurance sales, given its partnership with its subsidiary, Great Eastern. It remains the only bank here with an insurance unit; the other two work with separate insurance companies to sell bancassurance products under their wealth-management charge.
The bank has also tightened terms on its savings product, its OCBC 360 account, so that the interest rate paid on savings of up to S$60,000 is tied to the purchase of investment products. The maximum interest of 3.25 per cent per annum on the 360 account remains top of the market.
Mr Tan said the 360 account challenges the conventional notion of a bank rewarding clients for depositing more money: "As long as consumers change their behaviour a little bit and do a few things, and have that relationship with the bank, the bank rewards them. So it's a very different paradigm from what we've seen for decades."
He added that the 360 account has created a "total view of the customer". In the past, the bank did not "sync" a client's current and savings accounts with his credit card use, so it got only a "very siloed" view of each customer.
"Here, we are attempting, from a bank's perspective, to pull everything together, and have a total view of the customer."
OCBC will continue to keep its minimum deposit to qualify for premier banking at S$200,000, even though its two competitors have raised it to S$350,000, said Mr Tan.
"There are no plans to raise that. It's a matter of how we organise ourselves, so we can continue to serve (customers) well. If it's about efficiency, if it's about cost of business, then it's the prerogative of your organisation to organise yourself to continue to provide that kind of value," he said.
"To me, the S$200,000 to S$350,000 - it's a very big jump.
"In the late 80s, the Singapore banks started this segmentation. In bank branches, we carved out separate corners - carpet, coffee and more senior people to serve you. You needed S$100,000 then."
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