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OCBC eyeing forex fray for overseas travel spending
OCBC is mulling the launch of a multi-currency account with a debit card function for overseas travel and online shopping in foreign currencies (FX), stepping into the competitive fray for such popular services in the last few years as launched by banks, fintechs and telcos.
The Business Times understands that OCBC has been looking at the ways in which it can launch its service, either by building the platform in-house, or hiring a vendor to do so.
The decision, among other things, can come down to the fee structure: building a platform in-house will mean upfront costs that can run up to a couple of million dollars. Hiring a vendor could mean paying the vendor a recurring fee based on usage volume.
In response to queries from BT, Tan Siew Lee, head of wealth management Singapore at OCBC, said: "We are currently exploring various opportunities to enhance the FX needs of our customers for investments, education and even travel."
OCBC already has a multi-currency account, through which customers can save and transact in eight different currencies. There has been increased interest in its multi-currency account, she added.
The multi-currency account offering used to be mainly aimed at wealth customers who wanted to make an additional FX spread pick-up on their savings, assuming they anticipate FX changes right. Parents can also lock in better FX rates before sending their children overseas to study in countries such as UK, US, and Australia.
But this focus changed in early 2017 when DBS launched its multi-currency account that came attached with a Visa debit card.
The account allowed users to change Singdollar into foreign currencies that included the major G4 currencies, the Hong Kong dollar, the Australian dollar and the Thai baht, and spend the foreign currencies when they travel overseas using the debit card.
The move, in effect, disrupts moneychangers, as travellers could use the card to pay for overseas expenses when they travel.
And by debiting directly in the foreign currency, customers also avoid higher FX and conversion fees on their credit card spending overseas. The debit card can be used for online purchases denominated in foreign currencies, too.
DBS told The Business Times that the foreign-currency spend on the MCA Visa Debit card jumped by more than two times in 2018 from a year ago. "We can expect this traction to sustain and grow," said a spokesman.
DBS also uses this service to grow its deposits. To discourage a low balance in the multi-currency accounts, those with a balance below the average daily balance of S$3,000 incur a S$5 charge monthly. DBS said deposit balances in its multi-currency accounts have increased by more than 20 per cent in 2018 from a year ago.
"We observed that customers who transact more with the multi-currency account have also increased their deposit balances in both Singdollar and in foreign currencies," the spokesman said.
DBS has expanded the services provided under the multi-currency account, offering zero-fee remittance, as well as trade settlement on DBS Vickers in foreign currencies.
UOB, which launched its multi-currency service called Mighty FX in January last year, has also seen surging demand for this service. It told BT the number of Mighty FX accounts surged at an average of about 13 per cent month-on-month from January 2018 to January 2019.
The average amount converted on Mighty FX stands at about S$1,430. The average number of transactions made per month is about 4,000, with the top currencies - by number of conversions - being the greenback, the Australian dollar, and the euro.
UOB's pursuit of deposits via this service is less rigid: users of Mighty FX need a base savings account with UOB, though the minimum balance of those accounts can be just S$1,000.
Aaron Chiew, head of digital and mobile, regional digital banking, at UOB, said many customers are using Mighty FX to change currencies in real-time, or to set alerts to convert the currencies at a rate they prefer.
Competition in the multi-currency service has heated up in the last few months. RHB in September last year launched its multi-currency card wallet RHB TravelFX, which does not require users to be RHB banking clients.
The battle has extended to fintechs and telcos, as they muscle into the payments space that offer a new revenue stream via FX conversion.
EZ-Link, You Technologies Group and Mastercard offer YouTrip, a multi-currency mobile wallet that allows users to pay in several currencies.
Singtel in October last year launched VIA, its cross-border mobile payment alliance with regional associate AIS and Kasikornbank, Thailand's largest digital bank. The service allows users of Singtel's Dash wallet to make payments in Thai baht at popular tourist locations.
The eventual aim is to turn Singtel Dash into a "roaming wallet" for cross-border payments. Singtel has said it would expand this service in India, the Philippines and Indonesia, through its associates. All in, the Singtel group has access to more than 700 million customers in the region.
READ MORE: UOB speeds ahead on cross-border payment