Banks in Asia’s financial hubs such as HSBC and Citigroup are finding that the disruption from the coronavirus outbreak is helping them push back on a threat from a new breed of virtual upstarts.
With branches shut, customers social distancing and fearful of tainted cash, the brick-and-mortar giants are seeing a surge in demand for digital services for everything from wealth management to insurance. Now they are rolling out new video services and fresh mobile features for retail and affluent clients, speeding up a transformation to cement customer loyalty and reduce costs, consultants and bankers say.
“Most banks are using this as an opportunity to sharpen their strategy,” said Fergus Gordon, growth markets banking industry lead at Accenture. “There will be a longer-term impact on their balance sheets.”
The heightened digital activity comes just as banks were contemplating how to fend off an onslaught of fresh competition from virtual banks that are being allowed into Hong Kong and Singapore.
For HSBC, which gets about a third of its revenue in Hong Kong, the stakes are high. The city is opening the door to eight new digital-only lenders with powerful backers such as Alibaba Group. The start-ups could capture as much as $15 billion (Dh55.1bn), or 30 per cent, of the city’s banking revenue, Goldman Sachs Group estimated in 2018.
At HSBC, the share of retail transactions in Hong Kong conducted digitally hit 94 per cent in March. Active customers on its mobile app jumped almost 40 per cent from a year earlier, to 1.12 million. Citigroup’s digital wealth management transactions, including stock and foreign exchange, rose 37 per cent in the first two months of the year in Hong Kong. Overall in Asia, its digital brokerage and mutual fund transactions jumped more than 70 per cent in March from January.
“We do anticipate that Covid-19 will lead to an acceleration in customer adoption of digital channels, which will continue,” said Greg Hingston, HSBC head of wealth and personal banking for Asia Pacific.
Citigroup, during the crisis, has added features to its mobile app such as a “Help” function and is working on enabling two-way messaging.
“Our view is [that] customers will continue to embrace digital [banking] once the pandemic is behind us after having experienced first-hand the added convenience and possibilities it offers,” said Gonzalo Luchetti, head of Asia Pacific and Emea Consumer Banking.
Bank of China (Hong Kong), which has the biggest branch network in the city, has accelerated the roll-out of digital services, speeding up its plans by months, said Arnold Chow, an executive in charge of the personal digital banking products unit for investment and insurance.
Singapore’s three largest lenders, led by DBS Group, are reporting huge increases. More than 24,000 online equity-trading accounts were opened at DBS since Singapore tightened its lockdown on April 7. It saw more than 35,000 migrant workers, who are suffering the brunt of the city’s virus outbreak, opening bank accounts in less than two weeks. Oversea-Chinese Banking Corporation and United Overseas Bank are reporting similar digital trends.
Gains for the bottom-line could be significant, absorbing some of the shock from the billions in loan losses provisioned by banks. DBS’s digital customers made up 52 per cent of its retail and small business base in Singapore and Hong Kong last year, up by almost a quarter since 2017. Such clients carry a cost-to-income ratio of 33 per cent, compared with 53 per cent for traditional customers, while delivering twice the income per head.
At the same time, its digital rivals are being stymied in Singapore, where authorities have pushed back plans to issue licences to the second half of the year from June, citing virus restrictions.
Hong Kong’s challengers have been slow out of the gate, largely offering gimmicks to attract customers. The first mover of the new virtual banks, ZA Bank, attracted interest from about 24,000 people in a programme started in January as it offered a 6.8 per cent deposit rate to select clients. WeLab, backed by Alibaba, is seeking to lure customers before the launch of its bank by offering interest-free loans to pay in advance a HK$10,000 (Dh4,738) handout promised to each resident as part of the city’s virus relief measures.
Both banks declined to comment.
Like Singapore, Hong Kong has been playing catch up with other major markets in Asia in financial technology adoption. About 67 per cent of digitally active people in both Asian hubs conducted financial services online last year, far below the reach of 87 per cent seen in China and India, according to a report from EY.
But the biggest potential gains could be seen in other parts of the world, also under lockdown. In the US, digital banking usage is just 46 per cent, while in Europe the rate varies from as high as 82 per cent in Russia to as low as 35 per cent in France.
Lenders are realising that delivering more services digitally makes them more resilient to disruptions in their operations, said Andrew Gilder, Asia-Pacific banking and capital markets leader at EY.
“In the short term, they could defend some of the threat from the virtual banks,” he said.
US tops drug cost charts
The study of 13 essential drugs showed costs in the United States were about 300 per cent higher than the global average, followed by Germany at 126 per cent and 122 per cent in the UAE.
Thailand, Kenya and Malaysia were rated as nations with the lowest costs, about 90 per cent cheaper.
In the case of insulin, diabetic patients in the US paid five and a half times the global average, while in the UAE the costs are about 50 per cent higher than the median price of branded and generic drugs.
Some of the costliest drugs worldwide include Lipitor for high cholesterol.
The study’s price index placed the US at an exorbitant 2,170 per cent higher for Lipitor than the average global price and the UAE at the eighth spot globally with costs 252 per cent higher.
High blood pressure medication Zestril was also more than 2,680 per cent higher in the US and the UAE price was 187 per cent higher than the global price.
Sunday's Super Four matches
Dubai, 3.30pm
India v Pakistan
Abu Dhabi, 3.30pm
Bangladesh v Afghanistan
Top tips
Create and maintain a strong bond between yourself and your child, through sensitivity, responsiveness, touch, talk and play. “The bond you have with your kids is the blueprint for the relationships they will have later on in life,” says Dr Sarah Rasmi, a psychologist.
Set a good example. Practise what you preach, so if you want to raise kind children, they need to see you being kind and hear you explaining to them what kindness is. So, “narrate your behaviour”.
Praise the positive rather than focusing on the negative. Catch them when they’re being good and acknowledge it.
Show empathy towards your child’s needs as well as your own. Take care of yourself so that you can be calm, loving and respectful, rather than angry and frustrated.
Be open to communication, goal-setting and problem-solving, says Dr Thoraiya Kanafani. “It is important to recognise that there is a fine line between positive parenting and becoming parents who overanalyse their children and provide more emotional context than what is in the child’s emotional development to understand.”
The Bio
Favourite place in UAE: Al Rams pearling village
What one book should everyone read: Any book written before electricity was invented. When a writer willingly worked under candlelight, you know he/she had a real passion for their craft
Your favourite type of pearl: All of them. No pearl looks the same and each carries its own unique characteristics, like humans
Best time to swim in the sea: When there is enough light to see beneath the surface
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Sun jukebox
Rufus Thomas, Bear Cat (The Answer to Hound Dog) (1953)
This rip-off of Leiber/Stoller’s early rock stomper brought a lawsuit against Phillips and necessitated Presley’s premature sale to RCA.
Elvis Presley, Mystery Train (1955)
The B-side of Presley’s final single for Sun bops with a drummer-less groove.
Johnny Cash and the Tennessee Two, Folsom Prison Blues (1955)
Originally recorded for Sun, Cash’s signature tune was performed for inmates of the titular prison 13 years later.
Carl Perkins, Blue Suede Shoes (1956)
Within a month of Sun’s February release Elvis had his version out on RCA.
Roy Orbison, Ooby Dooby (1956)
An essential piece of irreverent juvenilia from Orbison.
Jerry Lee Lewis, Great Balls of Fire (1957)
Lee’s trademark anthem is one of the era’s best-remembered – and best-selling – songs.
Fourth-round clashes for British players
- Andy Murray (1) v Benoit Paire, Centre Court (not before 4pm)
- Johanna Konta (6) v Caroline Garcia (21), Court 1 (4pm)
Profile of Bitex UAE
Date of launch: November 2018
Founder: Monark Modi
Based: Business Bay, Dubai
Sector: Financial services
Size: Eight employees
Investors: Self-funded to date with $1m of personal savings
In Search of Mary Shelley: The Girl Who Wrote Frankenstein
By Fiona Sampson
Profile
Living in...
This article is part of a guide on where to live in the UAE. Our reporters will profile some of the country’s most desirable districts, provide an estimate of rental prices and introduce you to some of the residents who call each area home.
Citadel: Honey Bunny first episode
Directors: Raj & DK
Stars: Varun Dhawan, Samantha Ruth Prabhu, Kashvi Majmundar, Kay Kay Menon
Rating: 4/5
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Results:
5pm: Abu Dhabi Fillies Classic (PA) Prestige Dh 110,000 1.400m | Winner: AF Mouthirah, Tadhg O’Shea (jockey), Ernst Oertel (trainer)
5.30pm: Abu Dhabi Colts Classic (PA) Prestige Dh 110,000 1,400m | Winner: AF Saab, Antonio Fresu, Ernst Oertel
6pm: Maiden (PA) Dh 80,000 1,600m | Winner: Majd Al Gharbia, Saif Al Balushi, Ridha ben Attia
6.30pm: Abu Dhabi Championship (PA) Listed Dh 180,000 1,600m | Winner: RB Money To Burn, Pat Cosgrave, Eric Lemartinel
7pm: Wathba Stallions Cup (PA) Handicap Dh 70,000 2,200m | Winner: AF Kafu, Tadhg O’Shea, Ernst Oertel
7.30pm: Handicap (PA) Dh 100,000 2,400m | Winner: Brass Ring, Fabrice Veron, Ismail Mohammed
Know your Camel lingo
The bairaq is a competition for the best herd of 50 camels, named for the banner its winner takes home
Namoos - a word of congratulations reserved for falconry competitions, camel races and camel pageants. It best translates as 'the pride of victory' - and for competitors, it is priceless
Asayel camels - sleek, short-haired hound-like racers
Majahim - chocolate-brown camels that can grow to weigh two tonnes. They were only valued for milk until camel pageantry took off in the 1990s
Millions Street - the thoroughfare where camels are led and where white 4x4s throng throughout the festival
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Test squad: Azhar Ali (captain), Abid Ali, Asad Shafiq, Babar Azam, Haris Sohail, Imam-ul-Haq, Imran Khan, Iftikhar Ahmed, Kashif Bhatti, Mohammad Abbas, Mohammad Rizwan(wicketkeeper), Musa Khan, Naseem Shah, Shaheen Afridi, Shan Masood, Yasir Shah
Twenty20 squad: Babar Azam (captain), Asif Ali, Fakhar Zaman, Haris Sohail, Iftikhar Ahmed, Imad Wasim, Imam-ul-Haq, Khushdil Shah, Mohammad Amir, Mohammad Hasnain, Mohammad Irfan, Mohammad Rizwan (wicketkeeper), Musa Khan, Shadab Khan, Usman Qadir, Wahab Riaz
'Of Love & War'
Lynsey Addario, Penguin Press
Learn more about Qasr Al Hosn
In 2013, The National's History Project went beyond the walls to see what life was like living in Abu Dhabi's fabled fort:
New UK refugee system
- A new “core protection” for refugees moving from permanent to a more basic, temporary protection
- Shortened leave to remain - refugees will receive 30 months instead of five years
- A longer path to settlement with no indefinite settled status until a refugee has spent 20 years in Britain
- To encourage refugees to integrate the government will encourage them to out of the core protection route wherever possible.
- Under core protection there will be no automatic right to family reunion
- Refugees will have a reduced right to public funds
England's lowest Test innings
- 45 v Australia in Sydney, January 28, 1887
- 46 v West Indies in Port of Spain, March 25, 1994
- 51 v West Indies in Kingston, February 4, 2009
- 52 v Australia at The Oval, August 14, 1948
- 53 v Australia at Lord's, July 16, 1888
- 58 v New Zealand in Auckland, March 22, 2018
