SINGAPORE -- Conventional banks may lack the nimbleness of fintech companies, but they are increasingly adopting leading-edge tech innovations to meet the challenge from the newcomers, bankers told the Nikkei Forum Innovative Asia in Singapore on Thursday.
Singapore's DBS Group, the largest bank in Southeast Asia by assets, is among the established financial services companies trying to prove wrong critics who say traditional lenders are held back by the weight of their large systems. "We try to convert the sheep into the wolf," said Piyush Gupta, DBS' chief executive.
The bank, founded in 1968 and present in 18 markets, began working on its digital transformation 10 years ago. In India, where a large portion of the population does not have bank account, DBS introduced mobile banking in 2016.
Traditional banks have been compelled to respond to the competitive threat from fintech companies, which operate with light balance sheets, few staff and no legacy systems. One example is China's WeBank, in which online leader Tencent Holdings has a 30% stake. Established four years ago, it offers micro loans averaging 8,000 yuan ($1,180) to individuals and small business through Tencent's mobile messaging platforms WeChat and QQ.
"The average information technology operating cost per account is $0.60 in 2018, which is substantially lower than traditional banks," Henry Ma, WeBank's chief information officer, told the forum. Such low operating costs allow the lender "leeway" to experiment with its new business model. WeBank partners with financial institutions by leveraging the latter's loan syndication skills to share risks.
Like DBS, Japan's Sumitomo Mitsui Financial Group is also increasingly shifting to digital banking, embarking on cashless payment services with new products like Square, a mobile payment system. Katsunori Tanizaki, the group's chief information officer, said at the forum that artificial intelligence and big data also enhance the bank's risk management and can help in the fight against money laundering.