OCBC sees more taking first step in financial planning

Singapore

SINGAPORE might be a well-developed financial centre, but consumers here remain daunted by the effort it seems to take to plan their finances.

This fear of financial planning has an impact on their financial well-being. About 75 per cent of Singaporeans are not on track to their ideal retirement and only 28 per cent save a portion of their salary every month, recent data from OCBC's Financial Wellness Index showed.

The need to start financial planning early is further amplified by job uncertainties amid Covid-19. As it is, only half of Singaporeans have sufficient funds to tide them over six months in case of a job loss.

While the first step towards financial planning may appear daunting, OCBC's numbers prove that the majority are able to turn their finances around with the help of digital tools.

The bank has 200,000 digitally active customers who engage with its financial planning tool, OCBC Life Goals, every month. It was early in initiating such tools for financial planning, having launched this in 2016.

Of these active customers, three in five who set monthly savings goals meet them. More than 80 per cent of those who completed their financial planning journey are on track with their financial plans, OCBC told The Business Times.

By end-2020, 40 per cent of customers who completed a financial plan delved into investments to support their long-term goals. This figure was less than 10 per cent at the start of last year.

Overall, about 22 per cent more customers are invested compared to the previous year. On digital wealth sales, the bank has seen a 2.5 times year-on-year growth, with S$350 million worth of digital wealth sales in 2020.

Using artificial intelligence, the bank was also able to target customers with revolving credit and "nudge" them on the app. About 10 per cent took action and paid their bills.

Tech-savvy millennials were found to be most proactive in taking steps towards managing their money on the OCBC app.

Before the bank introduced financial planning tools digitally in 2018, customers who did financial planning with the bank were almost 50 years old. Now, the biggest growing segment of people doing so are under 40.

Students under 23 who started their financial planning journey jumped nearly four times in 2020 - compared with 2019 - while the segment of young singles between ages 23 and 29 grew 2.5 times over the same period, according to OCBC data.

Half of those who plan their finances with OCBC Life Goals earn between S$3,000 and S$7,900, while about a quarter earn between S$3,000 and S$4,999.

Around 60 per cent of the bank's customers who started financial planning did so via digital banking, be it mobile or desktop.

As awareness around good personal finance habits continues to grow, the launch of SGFinDex (or Singapore Financial Data Exchange) last December comes as the latest enabler towards more effective planning.

SGFinDex enables citizens to use their SingPass to retrieve their personal financial information - such as deposits, credit cards, loans, and investments - from participating banks; and other information such as HDB loans and CPF balances from government agencies.

Such information can be consolidated on a single platform, such as a financial planning app or website, for a more holistic view of one's personal balance sheet.

The inception of SGFinDex appears promising for OCBC so far. About one in six customers has, within 30 days or so, started financial planning since consolidating data with the bank.

OCBC Singapore head of wealth management Tan Siew Lee said that with SGFinDex, the bank has enhanced its financial planning tools to help customers better understand their overall financial health.

They will also receive personalised tips on healthy financial habits and can make use of the tools to manage their finances, plan for their retirement and start investing.

"SGFinDex will enable more Singaporeans to get started with financial planning, and we will continue to bring new innovation in digital financial services to help our customers achieve their financial goals," said Ms Tan.