Now the IRS offcer PayNow QR as a payment option on its myTax portal.

As a result of the collaboration between DBS Bank and IRS, now Singaporeans would be able to pay their taxes such as income tax, property tax, service tax digitally.

Raof Latiff, Group Head of Digital, Institutional Banking, DBS Bank told the media, “Singapore continues to make steady headway in fulfilling its ambition to become a digital payments society with statutory boards such as IRAS taking the lead to implement secure and instant payment solutions that provide greater convenience to individual and corporate taxpayers. The QR code has become increasingly ubiquitous and we look forward to supporting IRAS in continued efforts to enhance their customer payment journey and drive broader adoption of QR payments locally.”

DBS Bank, which is the largest bank in Southeast Asia, announced a 22 percent drop in its second quarter profit for this year. This is mainly due to the money it set aside to deal with loan losses as a result of the coronavirus pandemic.

According to the bank, it’s net profit fell to S$91.35 billion in the April-to-June quarter — down from S$1.6 billion a year ago.

It further said it expects its loans portfolio to grow by 5 percent for the full year, led by non-trade corporate loans; while net interest margins could inch lower to 1.6 percent.

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According to HSBC, it is the first bank in Malaysia to offer digital account opening services.

This follows Bank Negara’s Malaysia unveiling of a new policy document for eKYC.

However, the process is still not a fully digital one as it still requires customers to show up at its self-service machine for identification and verification process. The self-service machine is said to be available 24/7.

Tara Latini, Country Head of Wealth and Personal Banking, HSBC Malaysia told the media, “Our digital features are constantly being improved to empower our customers to pick the best banking experience that fits their lifestyle. As customers’ preference continues to evolve, we continue to enhance our products and services to strengthen our relationship with them.”

“The launch of this online account opening service and our recent launch of DuitNow QR are part of our vision of the future of banking – a blended approach where we serve our customers with the best of our digital world and our people.”

Recently, HSBC Malaysia signed a memorandum of understanding (MoU) with the Malaysia Digital Economy Corporation (MDEC)  to enhance the adoption of technology among small and medium enterprises (SMEs), large local corporates and multinational companies (MNCs) in the country.

In a statement, HSBC Malaysia said, “The initiative will be pivotal to thrusting Malaysia forward as a major global digital powerhouse,” HSBC Malaysia said in a statement today.”

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However, a wave of new fintechs, neobanks and even telecom operators are creating their own digital lending systems to better serve SMBs. But how can they ensure they overcome the existing challenges? And with so many players contending for banking licenses, who will win the race to support SMB lending?

Data is key to build trust
Small businesses in Southeast Asia face the same struggle when accessing credit: it is crucial for them to have a credit history to prove their creditworthiness. It’s a vicious cycle. Financial institutions are cautious and have strict risk policies which do not match the reality and needs of this vibrant but potentially underserved sector.

Data is the missing link. Traditionally, SMBs would need to provide a multitude of data for the bank to score their creditworthiness and underwrite a loan—but this is often not available in the same way as it is for larger businesses.

Recognising this challenge, new entrants into the market have experimented with alternative ways of scoring businesses using different types of data. In Southeast Asia, Mobile Network Operators (MNOs) have access to vast amounts of data on customers compared to banks. Alternative data such as phone airtime consumption, bill payments and other customer behaviours are being used where traditional credit scoring data points are not available.
Other players are similarly shifting toward community or behaviour-based data to assess businesses using the data that is available. Advancements in data science and machine learning are giving new players a predictive power to assess the ability to repay a loan.
Neobanks reinvent SMB lending
Among those looking to overhaul current SMB lending practices are neobanks. Typically birthed out of the idea of challenging the current processes of the incumbents, neobanks are not bounded by legacy systems, or burdened by branch networks. New neobanks like TONIK in the Philippines boast lower operating costs than the incumbents, meaning they can generally offer lower rates on business loans.
Business owners are open to a purely digital proposition. However, it is simply not enough to provide digital channels to access financial services. Similarly, neobanks will need to find creative ways to assess businesses looking for a loan.

In addition to neobanks entering the Asian market, there are several non-banks looking to reinvent themselves in this sector. Many are seeking to acquire a digital banking license including Grab in Singapore and Gojek in Indonesia increasing competitiveness; both companies have started out as ride-hailing service providers in their respective markets.

With that, both of them have recognised the opportunity and are now repositioning themselves as neobanks to start provisioning loans to underserved businesses. Once again, the common factor here is data. Grab and Gojek already have large volumes of data on their customers and are using that knowledge to effectively boost lending to small businesses.

Local market offers meaningful insights
Understanding the intricacies of the local market is essential if neobanks and other new players are to get SMB lending right. They need to look at what factors make most sense when underwriting a small business loan. They need to sync with what data is available and the likelihood of the repayment based on the local circumstances.

Where traditional banks have gone wrong is mandating small businesses to comply with pre-existing policies and rigid systems. New players must understand the challenge first and then build a solution. They must consider many alternative models and data sources if they hope to meet the needs of small businesses across Southeast Asia. After all, neobanks have made a great start, but the race is far from over—and it requires them to build from a true understanding of the local market.

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The deal to buy UDC Finance marks Shinsei Bank’s biggest acquisition till date.

Shinsei Bank bought the company from Australia and New Zealand Banking Group (ANZ), who were trying to offload the assets for some time.

In 2017 ANZ Banking Group chief executive officer Shayne Elliott revealed that ANZ was striving to develop a simpler banking strategy and whilst UDC was a good business, ANZ is not the best owner of it.

In a statement, Shinsei Bank said, “Through this stock acquisition, and by leveraging its expertise in the small-scale finance business, Shinsei Bank envisages further growth of UDC in New Zealand where the GDP growth rate is relatively high among the developed countries.”

The deal is subject to regulatory approval.

According to ANZ, Shinsei’s purchase price represents a price-to-book ratio of 1.2x net tangible assets of $637 million as of March 31.

Reportedly, the deal will require Overseas Investment Office approval as well. RBNZ approval will also be required if Shinsei, which is listed on the Japan Stock Exchange,  wants to issue deposits to the public.

With regard to the deal to acquire UDC Finance, Shinsei Bank chief executive officer Hideyuki Kudo told the media, “In the Covid-19 ‘new normal’, we are confident that UDC, as part of Shinsei Bank Group, will continue to grow and contribute to the development of the New Zealand economy and help people and businesses in New Zealand with their financial needs. Based on UDC’s long successful history, solid business base, and efficient sales structure, UDC will be a major asset for the Shinsei Bank Group.”

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Banks in Singapore can defer both the principal and interest payments for mortgages through December 31^st, due to the Covid-19 outbreak the central bank said.

This adds to several other fiscal and monetary measures undertaken by the Monetary Authority of Singapore to help the city-state deal with the worst economic downturn in a decade caused by the coronavirus pandemic.

More than S$40 billion of existing loan facilities to small businesses will likely qualify for the relief plan announced for Singapore bank customers due to the coronavirus outbreak.

Samuel Tsien, chairman of the Association of Banks in Singapore, said in the statement, “The shock to the economy from the COVID-19 outbreak is unprecedented. We must take extraordinary measures to address not just a health crisis, but what has developed to become a deep global economic crisis.”

Banks such as DBS Bank, Oversea-Chinese Banking and United Overseas Bank are already taking steps to provide Singaporeans with measures that include deferring principal repayments and liquidity relief.

The Monetary Authority of Singapore, along with the Association of Banks in Singapore (ABS), the Life Insurance Association (LIA), the General Insurance Association (GIA), and the Finance Houses Association of Singapore (FHAS),  revealed a series of support packages to help ease the financial strain on individuals and SMEs caused by coronavirus pandemic.

The measures undertaken by the authorities will help individuals and businesses meet their loan and insurance commitments. They are also designed to support SMEs with continued access to bank credit and insurance cover and ensure interbank funding markets remain liquid and in good health.

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Elsewhere in Southeast Asia, Malaysia’s banks are preparing to offer broader loan deferrals to the tune of $32.8 billion to soften the impact of the Coronavirus pandemic. Malaysian banks will offer six-month deferrals for all individual and SME loans. They will also allow people to convert their credit card debt into three-year term loans.

In Singapore, companies facing liquidation jumped to 287 in 2019, the highest since 2005. The city state also saw 434 individual bankruptcies, the highest since 2004. All of these are expected to lead to an increase in bad loans at Singapore banks including at DBS Group Holdings.

Although the Singapore banks have announced easing of borrowing terms, analysts at Sanford Bernstein were quoted by regional media as saying that non-performing loan ratios for DBS and OCBC could climb to 1.8% this year from 1.5% in 2019. At UOB, the ratio may jump to 1.9% from 1.5%, they said. UOB had earlier said that its bad loan costs are expected to rise more than expected due to the Coronavirus outbreak and the steep fall in oil prices.

The Malaysian banking regulator has allowed Banks to draw down capital conservation buffer of 2.5 percent, operate below minimum liquidity coverage of 100 per cent, and use regulatory reserves, according to the press release.

Meanwhile in Southeast Asia, the Vietnam government has said that several banks have seen their bad debt ratios rise as clients face liquidity challenges due to the Coronavirus outbreak. According to a Vietnam government press release, 14.3 percent of the total lending at 23 credit institutes has been affected by the Coronavirus outbreak.

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The bank has appointed Chintan Shah as the head of cash management. The bank has also appointed Sebastien Avot as Deutsche Bank’s new head of trade finance for financial institutions in APAC. He will also serve as the head of distribution and credit solutions.

The appointment of Sebastien Avot is expected to help Deutsche Bank explore alternative ways of de-risking its trade finance business in the APAC region. Avot too made his intentions known to take both Deutsche Bank’s distribution and credit solutions and trade financing unit in APAC to the next level.

Sebastien Avot joined Deutsche Bank’s London team in 2010. Prior to his appointment as the head of trade finance for financial institutions in APAC, he was previously overseeing Deutsche Bank’s distribution operations in the Middle East and Africa.

Chintan Shah also has been working with Deutsche Bank for over 16 years. Previously, he held the position of managing director and regional head of cash products and client connectivity for Deutsche Bank in APAC. He has also served as the head of trade finance and cash management for corporates in Thailand, Malaysia, and Indonesia. He will continue to operate in Deutsche bank’s office in Singapore.

With regard to the new hiring in APAC, David Lynne, head of corporate bank for the Deutsche Bank in APAC told the media, “Strengthening our set-up in the Asia Pacific region is a must in order to ensure we deliver holistic solutions to our clients worldwide.”

Recently, Deutsche Bank also renewed its partnership with SimCorp, a leading provider of investment management solutions and services. The partnership will allow Deutsche Bank to continue delivering integrated fund services solutions to its clients across APAC.

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Businesses in Thailand will soon be able to make cross border payments to Singapore, Myanmar, and Cambodia and the facility is expected to go online somewhere in the second or third quarter of 2020.

Currently, members of Asean often find it difficult to carry out international transactions due to the unavailability of a digital payment platforms that process multiple currency payments within a short period of time.

As a remedy to the problem, Thailand has decided to leverage the QR code technology and offer a seamless cross border payment option. QR code technology enables contactless, fast and secure payments with the use of mobile apps to merchants as well as consumers.

The recent developments can be attributed to the collaboration between central banks, fintech startups, and financial institutions from the Asean region.

Siritida Panomwon Na Ayudhya told the media, “Regional interoperability of standardised QR code payments between Thailand and these nations has continued to make strides.”

Last year, Thailand also signed a memorandum of understanding (MoU) with the central bank of Cambodia to develop a similar cross border payment platform that leverages QR code technology. The platform, which is now online, facilitates cross border payments in local currencies.

Many banks in Thailand have also independently developed digital payment services that facilitate cross border payments.

In 2019, Thanachart Bank partnered with a Lao bank to develop digital payment services in the neighbouring countries. During the same period, Siam Commercial Bank and Krungthai Bank developed digital payments in Cambodia and Singapore respectively.

The post Thailand to introduce QR code for cross-border payments in Asean appeared first on International Finance.

He revealed that Union Bank is having discussions with a couple of banks and that the bank will continue to focus on expanding its digital presence.

According to Edwin Bautista, Union Bank is waiting for approval from the central bank for one of the acquisitions, while negotiations are ongoing for another.

Recently, Union Bank also became the first bank in the Philippines to establish a smart branch that leverages world-class 5G technology for undisrupted and high-speed connectivity with IoT-enabled services.

For the launch of the new smart branch at Dasmarinas, Philippines, Union Bank has partnered with Globe Business, the enterprise arm of Globe Telecom. The bank deploys 5G connectivity at the branch for faster speeds, higher bandwidth, and a more stable internet connection.

Globe Business senior vice president Peter Maquera told the media, “5G is an important building block to help companies remain competitive in the digital age. This is the reason we are accelerating our efforts to deploy 5G, so we can provide more Filipino companies like Union Bank the chance to go beyond what the current technology allows them to do.”

In a bid to drive financial inclusion in the country, Union Bank launched a payment focused stablecoin last year. According to media reports, the bank-backed cryptocurrency called PHX, is being implemented on Union Bank’s i2i platform.

According to UnionBank’s senior vice president Arvie de Vera, the stablecoin resolves reconciliation issues and eases audit and compliance issues. The currency is available to i2i network participants and it can be purchased directly from their Union Bank accounts.

The post CEO: Further acquisitions a possibility for Union Bank in 2020 appeared first on International Finance.

The trade deal which was completed by DBS Bank using the NTP relates to a $2.5 million letter of credit transaction between Audi and Premium Automobiles.

While traditionally, the whole process would take almost a week for it to be completed, now using NTP, DBS Bank completed it within 24 hours.

The massive reduction in time is facilitated by the online submission of bank applications and trade documents, which in turn enable banks to process the edocuments in real-time. The platform also provides regular updates to all parties.

DBS Group Head of Trade Product Management Sriram Muthukrishnan told the media, “Technology continues to fundamentally reshape the world of trade and finance. With digitisation, trade information is increasingly democratised and interoperability between trade platforms is enhanced, allowing for efficient and seamless trade. The NTP enables client activities to come together in a secure and efficient digital environment.”

The NTP was developed by Singapore Customs and the Government Technology Agency in a bid to digitise trade in the region. The platform enables end-to-end digital trade by bringing all players in the trade value chain under a single platform.

Last month, DBS Bank launched a new cashless payment solution to help businesses dealing in cash make faster payments to their vendors or suppliers.

It targets the large cash and paper-based business-to-business payments and collections landscape in Singapore such as the food and beverage industry.

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