Staying grounded while competing digitally

THE pandemic is making its impact felt not just in the way we interact during meetings, but also in the way we bank. It is perhaps unsurprising that consumers are increasingly comfortable with digital engagement.

The UOB Asean Consumer Sentiment Study 2021 showed that almost 8 in 10 (79 per cent) of the 3,500 respondents surveyed reported increased usage of their mobile app to perform banking activities in the last 6 months.

The respondents came from 5 Asean countries, including 1,000 from Singapore and more than 600 each from Indonesia, Malaysia, Thailand and Vietnam.

Looking ahead, 7 in 10 anticipate that their online banking activities will increase in the next 6 months.

This was led by respondents in Thailand (81 per cent), followed by Indonesia (79 per cent), Vietnam (76 per cent), Malaysia (62 per cent) and Singapore (51 per cent).

Yet, despite increased comfort with online services - 34 per cent of all respondents said they preferred banking services through mobile devices - a slightly larger proportion of respondents (37 per cent) said their preference is for an integration of digital and physical services.

Indeed, the majority of respondents from Singapore, Malaysia and Thailand chose the omni-channel option as their preferred choice, while for Indonesia and Vietnam, their preferred choice overall was to access banking services via their mobile devices.

Vietnam was the only country which exhibited a strong preference for mobile (38 per cent opted for mobile devices and only 30 per cent opting for "integrating physical and digital services").

For Indonesia, 40 per cent opted for mobile devices while 39 per cent opted for an integrated approach.

For head of group personal financial services at UOB, Jacquelyn Tan, the results of the survey are not terribly surprising.

"We were one of the first few banks to come out and say yes, digital is important; it's important to invest in digital transformation but it's also important to invest in the physical transformation," she told The Business Times in an interview.

Indeed, the bank has been working on their omni-channel strategy since the early 2010s and was better able to articulate the results of its investments in the past 2 to 3 years.

Competing digitally

In fact, UOB was the first bank in the region to develop a new business model focused on customer engagement when it launched TMRW, Asean's first digital bank in 2019.

Focused on the emerging affluent, TMRW was launched in Thailand in March 2019 and in Indonesia in August 2020.

The new business model is anchored on digital engagement as a means to scale, and TMRW's ATGIE (acquire, transact, generate data, insights, engage) puts quality customer engagement and not customer acquisition as a key performance indicator.

In September this year, the bank announced that it will invest up to S$500 million over the next 5 years to double the retail customers it serves digitally.

The goal is to serve more than 7 million customers across Asean by 2026.

Part of the investment involves combining TMRW with its Singapore mobile app, UOB Mighty. The app was rolled out in Singapore in October with plans for the app to be rolled out across existing markets in the region.

Building financial resilience

Perhaps unsurprisingly, the bank is also leveraging digital wealth management solutions as it sets out to serve more of Asean's growing population of underserved yet increasingly affluent consumers.

According to the consumer sentiment study, Asean consumers are focused on building financial resilience for the long term even as finances remain a worry.

In Singapore specifically, 38 per cent of consumers are putting more money into investments in the past 6 months, an increase of 8 percentage points from the previous year.

One in two Singaporean respondents (51 per cent) who have invested said they are choosing to buy more stocks and bonds. Millennials, or those aged 23 to 39 years old, are leading the way, with 46 per cent indicating they plan to invest more.

According to Tan, close to 90 per cent of customers using SimpleInvest are new to unit trust products and are making monthly investments of S$1,500 on average.

SimpleInvest is available on the UOB TMRW app and aims to simplify investing by offering customers 3 investment objectives: liquidity, income or growth.

"Additionally, 35 per cent of those using SimpleInvest have started a regular investment plan," said Tan. "This is a positive sign that Singaporeans are more confident and taking steps to strengthen their financial resilience and to achieve their long-term financial goals."

Of the countries surveyed, only Indonesia was more aggressive than Singapore in terms of investment plans. More than half of respondents there (53 per cent) said they were planning to allocate more money into investments. Singapore took the second spot at 41 per cent, followed by Thailand and Vietnam (39 per cent each), and Malaysia (38 per cent).

Across age groups, one in two Gen Z respondents (51 per cent) indicated that they are planning to invest more in the next 6 months. This was followed by the millennials (46 per cent), Gen X (36 per cent) and Baby Boomers (27 per cent).

Staying grounded

Even as the bank has made strides in the digital space, it has also actively reshaped its physical touch-points, whether through relocating, reformating or right-sizing.

In Singapore alone, adoption of digital payment channels such as PayNow and QR code increased by over 200 per cent while physical cash deposits and withdrawals decreased by more than 30 per cent in 2020.

Yet, "what we have seen is that customers have a distinct preference on which channels to engage the bank across the different journeys and products", said Tan.

For instance, customers feel quite comfortable applying for a credit card or personal loan digitally. But for higher value services like wealth management products or longer-term borrowing needs like mortgages, the preference is to do it physically.

But even physical experiences can be enhanced with artificial intelligence (AI). At their high street wealth banking branches - the first of its kind was launched at Faber House in Orchard Road in 2019 - customers are profiled via a mix of AI and data analytics to create personalised experiences.

After scanning their identification card at the self-help ticketing kiosk for instance, customers are immediately pushed relevant financial solutions that could be of interest to them together with their eQueue number.

"What you receive is a bit different for each customer depending on your transaction history and what we know of you," said Tan.

Later, when they sit down with the relationship manager, they are able to use the digital portfolio advisory tool to view their portfolio, as well as run simulations on how their portfolio might perform in different economic settings.

All of this allows for more meaningful wealth conversations, said Tan, adding that at the end of the day, it is about creating "simpler" and "smarter" banking experiences.

"The flight to digital has accelerated (and correspondingly) consumers have heightened expectations, whether it's on personalising banking services or demand for a more seamless online to offline engagement," said Tan.

"We have been investing in digital transformation and physical transformation and we are seeing the results, but the combination of leveraging data and using human expertise and the whole omni-channel strategy to engage customers will be an ongoing investment."