Brokers' take

Banks | Neutral CGS-CIMB, Sept 26

We did a survey using Grab and Singtel, entities which had expressed interest in digital banking licences, and found that cybersecurity, an intuitive app, and interest rates, in that order, are key priorities of retail customers when choosing digital banks. We also found a disconnect between a consumer's thoughts on the bank's shareholders and their banking behaviour. The bank's "shareholders" ranked 5th (and last) in priority, but it was evident that government-linked corporations commanded higher trust levels than commercial entities, with consumers correspondingly being more willing to use them as depository institutions.

Credit card fee income could be most immediately at risk to digital banks. An estimated S$364 million of card fees (about 23 per cent of the market) could be at stake, but its impact may be muted given the many players in the market. Although 39 per cent of respondents (retail customers) are willing to put deposits in these banks, our study suggests that the average amount a customer is willing to place is relatively small, ranging between S$5,072 and S$12,697 (4-11 per cent of total DBU (domestic banking unit) deposits).