Banks in fast and furious chase to offer car loans online

Singapore

UOB is revving up its engine to secure more car loans, with its strategy being to work with a large swathe of car dealers in Singapore to process applications online, such that deals are closed in 15 minutes.

But the bank, which says it commands the largest reach into the car dealership ecosystem, will now face fresh competition from OCBC.

OCBC on Tuesday rolled out a digital solution that claims to make instant car loan approvals within 60 seconds, by likewise working with car dealers.

A senior executive from UOB told The Business Times (BT) that the bank now plans to finance one in four new car sales in the next 18 months or so. This is up from one in five new car sales currently.

UOB aims to continue expanding its number of partners to cover 90 per cent (up from 80 per cent currently) of car brands in Singapore in the next 18 months, Jacquelyn Tan, UOB head of personal financial services in Singapore, said in an interview.

UOB currently has 17 car dealerships, including Carousell, covering 15 car brands in Singapore.

OCBC has turned up the heat. A total of 11 authorised car distributors - which OCBC says account for the majority of car purchases in Singapore - will use OCBC's car loan approval process by this month, the bank said.

These distributors include EuroSports Auto, Kah Motor, and Wearnes Automotive.

DBS' head of secured lending Tok Geok Peng told BT it is working with nine car dealers in Singapore to make available its online car loan application service to customers.

DBS launched its digital car loan application in October 2019. DBS earlier in 2017 launched Singapore's first and largest direct seller-to-buyer car marketplace, in partnership with SGCarMart and Carro.

Digital loan applications by the banks rely on the national data repository, MyInfo, to simplify a process that would otherwise take a few working days.

UOB's Ms Tan said more than 80 per cent of UOB's applications include MyInfo submissions.

Currently, in the automotive industry, some 95 per cent of car purchases and car loans are completed with the help of car sales representatives.

OCBC uses real-time KYC (know your customer) and credit assessment system to eliminate the "tedious" filling of hard-copy forms.

Its digital application process also removes the need to share sensitive details with a third party.

Customers will instead input their personal details online using their own devices.

Sunny Quek, OCBC head of consumer financial services in Singapore, said that by the end of this year, one in every two OCBC Bank customers is expected to be signed up digitally.