Sunday, 20 September 2020

UOB is Best Retail Bank in Singapore for digitalisation, customer engagement and people development

By Janine Marie Crisanto

United Overseas Bank (UOB) increased retail banking income contribution by 15% as the financial industry grapples with digital advancement. The bank leveraged its omni-channel customer engagement model which helped grow retail deposits by 7% year on year. The bank continued to invest in digital transformation and innovation which resulted in 96% of all transactions being conducted digitally in 2019.

  • UOB executed an omni-channel client relationship model which helped maintain its 20% market share in retail deposits and loan products  
  • UOB’s products received high net promoter scores in the BankQuality survey and rankings
  • UOB raised over $1.21 million COVID-19 relief funds within a month, while it has also extended more than $2.93 billion in loans to mid-sized enterprises since April

The Singapore banking industry has been dominated by the three main domestic banking groups – DBS Group, Oversea-Chinese Banking Corporation (OCBC), and United Overseas Bank (UOB), accounting for the majority of customer pool and up to 70% share of consumer loans and deposits. They face fierce competition from 11 qualified full banks that vie for a slice of the lucrative retail finance and wealth management market, albeit with restrictions on the number of locations that they can operate from. A number of these banks did not start or had recently given up their retail business such as BNP Paribas and ANZ which sold its retail business to DBS Bank. 

Since 2014, the traditional brick-and-mortar banks have been transforming their core business processes and actively migrating customers to their online channels. Among Asia Pacific markets, Singapore has one of the highest digitally active consumer base with each of the three domestic players claiming to have over 50% of customers who are regular users of digital channels.

Due to the concentrated nature of the Singapore banking landscape and the strong digital proposition of banks, competition has been stiff for existing financial institutions while the barrier to entry has always been high for newcomers. However, this might soon change as the Monetary Authority of Singapore (MAS) announced in June 2019 the issuance of up to five virtual bank licenses as part of Singapore's banking liberalisation journey. MAS plans to issue two digital full bank (DFB) licences and three digital wholesale bank (DWB) licences. A DFB licence allows a licensee to serve the retail segment and receive deposits from customers while a DWB licence covers small and medium enterprises (SMEs) and non-retail segments. As of 31 December 2019, MAS has received 21 applications for digital bank licences – seven for DFB and 14 for DWB.

UOB wins Best Retail Bank in Singapore for strong focus on digital innovation and customer experience while cultivating a future-ready workforce

Figure 1. Scorecard for Best Retail Bank in Singapore


Note: Scores might not always add up due to rounding

Source: Asian Banker Research

In this year’s assessment of Best Retail Bank in Singapore based on the evaluation scorecard, UOB emerged as the top retail bank for its strong performance in digital journey, customer experience and people development.

UOB executed an omni-channel client relationship model which helped maintain its 20% market share in retail deposits and loan products

The largest bank in the country, DBS Bank through its high-street POSB franchise, has a dominant share of the domestic retail deposit market with an estimated market share of over 35% and leading position in wealth management after its acquisition of ANZ. It however continues to see its deposit market share eroded by its peers and continues to grapple with the relative high cost of running its retail business with a cost-to-income ratio above 45% despite a slight decline in the past year.

UOB on the other hand has been able to grow and win market share in domestic deposit and retail loans, estimated at over 20% as it focuses on more targeted product and marketing programmes. The bank maintains its strong position in the highly competitive market claiming to bank more than 40% of Singaporeans.

Although in terms of financial performance, OCBC has a slight edge with a higher retail revenue growth in 2019 as well as a compound annual growth rate from 2016 to 2019, UOB was able to increase its retail banking contribution to total bank’s income by 15% and decreased its cost-to-income ratio below 40% for its retail business. It has the second largest domestic retail loan and deposit base after DBS. Although DBS accounts for more than 35% of savings in Singapore, UOB was able to maintain and grow its 20% market share despite stiff competition in 2019.

UOB’s digital initiatives are part of its omni-channel approach to offering customers choice. UOB recognises the need to engage customers across a range of touchpoints and ecosystems that are built around customer needs such as home and auto financing. Today more than 50% of its customers are digitally active. The bank has seen a 20% increase in banking transactions with 96% of all transactions conducted digitally.

It started to digitalise its consumer banking products in 2018. Today, all its retail product application processes can be performed online. It also expanded its existing property ecosystem for homebuyers to cover more than 90% of property agents in the country to enhance the home buying journey. In 2019, more than 25% of mortgage applications were conducted online and more than 50% were processed instantly. Singaporean banks have been experiencing a slowdown in home loans due to property cooling measures implemented in 2018. Although the three banks still account for double digit market shares in mortgages – DBS with 30%, UOB with 24% and OCBC with 20%, only UOB did not see a contraction in home loans based on reported group data. UOB mortgages remained flat while the other two banks saw a decline of around -4% to -2% year on year. In the inaugural BankQuality Consumer Survey, UOB received the only positive net promoter score (NPS) rating for its home loan products with an NPS of 23%, while DBS scored -24% and OCBC scored -23%.

UOB was the first bank to allow customers to have cardless access to ATM and CDM machines back in 2011. Last year, OCBC added a QR code option for customers to perform their ATM transactions. DBS is the only bank that still does not offer a cardless ATM access option and a number of its product application processes remain manual.

In 2019, UOB also enhanced its mobile banking app, UOB Mighty. It launched Mighty Insights, an artificial intelligence-based service which is integrated into UOB Mighty to provide customers with personalised insights to help them manage spending habits and tips on money-saving. An average of 1.5 million transactions were made monthly on UOB Mighty with the total number of transactions increasing by 88% year-on-year. Digital onboarding also continues to grow with more than 30% of the bank’s customer accounts opened digitally.

UOB’s retail products received high net promoter scores in BankQuality survey and rankings

Despite their market dominance, the three domestic banks did not perform well in the net promoter based BankQuality survey and ranking that was introduced this year to incorporate the voice of customers into the award evaluation.  The ranking was dominated by foreign banks, Citibank led with a score of 101.4 followed by Standard Chartered with 101 in the net promoter based BankQuality score. DBS was third with 99.78 and UOB was fourth with 99.42. UOB however was the only domestic bank that did well in the channel and product level NPS.

Among the three big banks, UOB earned a positive NPS score of 6% for asset management, while DBS and OCBC received -17% and -18% respectively in the BankQuality survey.

UOB has the largest market share in issuing sales for VISA credit cards. In the BankQuality survey, UOB received the highest consumer rating for its credit card products among the three big banks with an NPS of 23%. DBS came in second with a 10% NPS, while OCBC received 6%.

UOB raised over $1.21 million COVID-19 relief funds within a month, while it has also extended more than $2.93 billion in loans to mid-sized enterprises since April

All banks have been proactive in helping mitigate the financial difficulties customers face as a result of the impact of COVID-19. Like its peers, UOB rolled out relief measures such as deferrals of home and car loan repayments and lower interest rates on personal unsecured credit.

In August, the bank announced that it has raised over $1.21 million (SGD1.65 million) for the “UOB Heartbeat COVID-19 Relief Fund” from a global network of 18 markets. The initiative aims to help frontline healthcare workers and vulnerable communities around the world. Since April, UOB has also provided over $2.93 billion (SGD4 billion) in loans through government-assisted funding schemes to its mid-sized enterprise clients in addressing immediate liquidity challenges.

In comparison, DBS set up a $7.35 million (SGD10.5 million) “DBS Stronger Together Fund” to assist communities across Asia. OCBC has approved a moratorium for $2.93 billion (SGD4 billion) in loans to individuals at end of April 2020. Meanwhile, Standard Chartered Bank has established a $50 million COVID-19 Global Charitable Fund.

In the BankQuality survey, the three domestic banks were ranked behind the foreign banks for helping customers during the pandemic.

Future-proofing the bank by cultivating a prudent, progressive and high-performing organisation

A key thrust for UOB in future-proofing its retail banking franchise is building a “Forward Compatible Culture.” This means the bank has been nurturing an innovative and entrepreneurial culture including attracting and retaining enterprising minds to stay competitive.

In 2019, UOB launched Better U, a group-wide learning and development programme, to train its workforce develop five core competencies essential in the digital era including a growth mindset, developing complex problem-solving skills, and acquiring skills in the fields of digital awareness, human-centred design, and data storytelling.

Jacquelyn Tan, UOB’s managing director and head of personal financial services, shared the bank’s philosophy. “The customer is central to everything we do. That is why we are constantly evolving and innovating our products and services to address consumers’ needs in a rapidly changing landscape. We are here to make banking simpler, smarter and safer by designing solutions to meet their financial goals and lifestyle preferences. Underpinning our advisory across all banking customers is our unique 'Risk-First' approach where we understand the customer’s goals, risk capacity and tolerance before making any financial recommendations. From credit cards to secured and unsecured loans, savings, wealth management products and advisory, and day-to-day transactional banking – we are well placed to fulfil the needs of consumers,” Tan elaborated.

For the full list and details of Excellence Awards winners 2020 click here

For details of the Excellence Awards programme 2020 click here 

For details of the BankQuality Consumer Survey and Rankings click here


Keywords: Digitalisation, Digital Bank, Mortgage, Covid-19
Institution: UOB, DBS, OCBC, BNP Paribas, ANZ, MAS, Citibank, Standard Chartered, Visa
Country: Singapore
Region: Southeast Asia
Guest: Jacquelyn Tan
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