Asian players more open to innovations: UOB

Singapore

ASIAN capital markets may be less developed than their counterparts in the West.

But this may also mean that players in the region are more open to innovations, as they have fewer legacy systems and regulations to grapple with, said UOB's head of group wholesale banking and markets Frederick Chin.

"We believe Asia has an edge and Singapore has the potential to become an important regional hub for digital security issuance and investments," he added.

UOB sees potential in tapping distributed ledger technology to streamline processes in the capital markets, Chin said, citing its involvement with digital asset platforms Marketnode and ADDX as testament to this belief.

UOB was the first bank in South-east Asia to partner with Marketnode, a joint venture between the Singapore Exchange and Temasek. In June this year, it became the first financial institution to pilot a digital bond issuance.

The bank is also working with another digital exchange, ADDX, to drive the development of digital capital market infrastructure.

Programmable securities, made possible by blockchain and smart contract technology, help improve the efficiency of issuance, settlement and distribution of capital markets instruments, Chin said.

Tokenisation of assets can also lower barriers of entry and provide more investment opportunities in fixed income and equities to investors.

For the issuer, the technology would improve liquidity, transparency and diversify the investor base.

On the payments and digital banking fronts, UOB has continued to see an increase in uptake of digital solutions.

For instance, as at April this year, it recorded a 53 per cent rise, year on year, in volume of online transactions.

It also saw a 120 per cent increase in proxy payments, such as via PayNow, in the first nine months of this year. At the same time, the volume of cheque payments dropped 25 per cent over the same period.

UOB Infinity, a digital banking platform launched for businesses in September 2020, recorded an 83.4 per cent take-up rate among the bank's clients, as at August this year.

The solution was rolled out in China that same month, and will be introduced in Hong Kong, Malaysia, Vietnam, Indonesia and Thailand in the next 14 months.

Still, Chin said challenges to digitalisation remain. The use of cheques is still preferred in some sectors, such as law firms and construction, due to prevailing market practices.

A lack of industry standards, for example, the lack of a set of standard application programming interface specifications, also slows digital adoption as clients will need to integrate their own operating systems individually with their respective banks.

"One way to overcome this is to actively collaborate with industry players and regulators on adopting common technology standards and platforms," he said.

In terms of trade finance, UOB is also looking to plug technology gaps to improve digital inter-connectivity among buyers, distributors and suppliers.

For instance, it is looking to tap the Singapore Trade Data Exchange's technology to facilitate extraction, validation and consumption of trade data electronically from various parties involved in a particular trade transaction, which can make it easier for banks to authenticate documents required in trade financing.

"Our aim is to enable a strong supply chain ecosystem that will help all parties involved scale up," Chin said.

For all our coverage of the Singapore FinTech Festival 2021, go to bt.sg/sff2021.