Maybank Singapore eyes wealth business with new Orchard branch

Singapore

MAYBANK Singapore is about to begin a new phase as it incorporates locally, 58 years after the bank first began operating in the city-state.

Malaysia's largest bank will have its first presence in Orchard Road, Singapore's premier shopping belt and tourist attraction, said John Lee, Maybank Singapore chief executive.

The group will be injecting more than S$2 billion, instead of the minimum regulatory of S$1.5 billion requirement, for local incorporation, he added.

"The fact that we've been here for a long time, we have got quite big business here, it's not surprising, so obviously S$1.5 billion will not be enough." said Mr Lee at a recent interview.

Maybank is one of Singapore's seven banks that are effectively seen as "too big to fail" due to its retail presence here. Such "domestic systemically important banks" face additional supervisory measures, and must locally incorporate their retail operations in a bid to ring-fence local deposits.

Effective Nov 5, 2018, Maybank Singapore operations will transfer its community financial services business via a scheme of transfer to Maybank Singapore Limited. The community financial services business are retail, private wealth, SME banking and commercial banking.

As at end-2017, Maybank's total assets in Singapore were about S$65.8 billion. It has 785,937 customers and about S$40.5 billion customer loans comprising mainly mortgages and auto finance.

Singapore is the group's second-largest market after Malaysia, contributing 9.4 per cent pre-tax profit and 25.7 per cent loans in 2017. Maybank Singapore registered higher net income of S$572.5 million for the first half of 2018 compared to S$495.6 million a year ago. Pre-tax profit came in 17.3 per cent higher at S$176.7 million versus S$150.6 million a year earlier.

With local incorporation, wealth management business is one of the key focus areas in the next three to five years.

The Orchard Road branch will be its first branch across the Maybank network to combine a café with banking services. The café will be opened daily, while banking services will be available daily except on public holidays.

Having a presence on Orchard Road allows the bank to serve the banking needs of a diverse client base, especially the private banking individuals and millennials who frequent downtown area, said Mr Lee. Being on Orchard Road will also help the bank grow its private banking business.

The group started its private wealth segment in Singapore five years ago before expanding it to Malaysia and Hong Kong. Today, its private banking assets under management is US$10 billion.

Mr Lee sees the Orchard Road branch useful for attracting Indonesians and millennials who may not know the bank.

"There are a lot of people on that street, particularly those from the Asean region, who many not know Maybank," he said.

Maybank Singapore has 20 full-service branches.

The Orchard branch will also be used to experiment with customer engagement, as Mr Lee hopes to reverse the growing invisibility of banking given that most financial transactions can now be done on the mobile.

With digitalisation, the risk is becoming irrelevant - after all, some 95 per cent of banking transactions can be digitalised, he said. "But digitalisation cannot be used for engagement."

This is why Maybank decided against having a chatbot as it realised people dislike talking to it.

"We experimented with it in Malaysia and decided not to offer it," explained Mr Lee, who will spend an hour every fortnight at the Orchard branch. "Obviously we hope it won't be just complaints, we want to show we are there.".

Maybank will also invite existing customers to use its Orchard branch.

When the branch is opened, there will be talks on Friday evenings and Saturday mornings for clients and members of the public. The schedule includes the café operator providing coffee art workshop, an estate-planning session by a lawyer, an investment talk on dividend stocks, and LinkedIn Marketing.

Mr Lee said he's unsure if the customer engagement at its Orchard Road branch will work, but if successful, the bank will extend the concept to other branches.