Jack Ma, Grab eye opportunities in Singapore digital bank battle

The illustration shows banking and purchasing apps on a smartphone in Singapore. (AFP)
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Updated 13 January 2020

Jack Ma, Grab eye opportunities in Singapore digital bank battle

  • The rollout worldwide of ultra-fast, 5G smartphone infrastructure over the next five years is also expected to accelerate the digital transformation, said Rajiv Biswas, Asia Pacific chief economist at IHS Markit

JEDDAH: Singapore is opening up its banking industry to digital lenders in a reform that could shake up the sector across Southeast Asia, with Chinese billionaire Jack Ma and ride-hailer Grab among those seeking licenses.
Traditional banks are being challenged by a new generation of online-only competitors that can offer better savings and borrowing rates, as they don’t need to spend money on overhead such as physical branches.
The introduction of digital lenders into the Singaporean market heralds the biggest liberalization of the financial hub’s banking sector in two decades, and follows similar moves in the US, Britain, Japan and Hong Kong, among others.
With most adults in the city already having access to financial services, firms awarded licenses are likely to use the city-state as a gateway to the wider region, where many consumers still lack bank accounts.
“It’s a total reconfiguration of the terrain — we’re talking about radical changes,” said Lawrence Loh, a professor at the National University of Singapore Business School.
“Singapore is the launchpad for Southeast Asia.”
An eclectic group of 21 applicants are vying for five digital banking licenses, Singapore’s central bank and financial regulator said this month.
They range from Alibaba founder Ma’s online platform Ant Financial, as it ramps up efforts to expand outside China, to a consortium that includes Southeast Asian ride-hailing behemoth Grab and the region’s biggest telecom player, Singtel.
Other bidders are Asia’s biggest massage chair maker, V3 Group, and an alliance featuring computer gaming firm Razer and a supermarket chain operator.

It’s a total reconfiguration of the terrain — we’re talking about radical changes.

Lawrence Loh, Professor

Two of the licenses will be for full banking operations, allowing holders to take deposits from consumers, while three will be for “wholesale” banking — which limits a lender to mostly dealing with small and medium-sized enterprises.
The winners will be announced in June, with operations starting in 2021, the Monetary Authority of Singapore said.
Observers say the overhaul is unlikely to spark immediate, dramatic changes in Singapore itself. But the future impact could be massive if the new online lenders expand across a region of more than 600 million people, which is home to booming economies.
The opportunities appear huge — nearly a third of people in Southeast Asia still do not have bank accounts, according to a report by Google, Singapore investment firm Temasek and business consultancy Bain & Company.
Another 98 million individuals own bank accounts but have insufficient access to financial services, while millions of small and medium-size businesses are in need of funding, the report said.
And it projected digital lending in the region would rise five-fold to $110 billion by 2025.
The rollout worldwide of ultra-fast, 5G smartphone infrastructure over the next five years is also expected to accelerate the digital transformation, said Rajiv Biswas, Asia Pacific chief economist at IHS Markit.
“This is fundamentally challenging the old business model of retail banks, particularly in competing for the business of younger generations,” he said.
There could be difficulties in expanding across a region where some governments have traditionally sought to shield domestic banks from foreign rivals.
But analysts say regulators have gradually been removing barriers to competition, while Loh from NUS saw a bright future for digital lending, saying: “People are very quick to adapt.”
“E-commerce, online supermarkets, food delivery — they are all done online.”


Google Cloud prepares for Black Friday ‘peak on top of peak’

Updated 04 August 2020

Google Cloud prepares for Black Friday ‘peak on top of peak’

  • Cloud technology, used to host websites and store data, is a key part of many retailers’ e-commerce operations

OAKLAND, California: Alphabet’s Google Cloud unit is poised for a surge in fourth-quarter sales from US retailers, as they brace for record online shopping during the holidays because of COVID-19 lockdowns.
Cloud technology, used to host websites and store data, is a key part of many retailers’ e-commerce operations. As fees are often pegged to site traffic, a jump in activity will drive up revenue for the unit.
Carrie Tharp, vice president of retail and consumer at Google Cloud, said that her team had this year tossed out its linear growth model to predict how many servers it will need to process web orders for retailers around Black Friday.
“We’re planning for peak on top of peak,” she said on Monday. That could be a boon for Google Cloud, which has generated about 30 percent of its revenue during the fourth quarter the last two years.
Stores such as Kohls Corp. and Wayfair Inc. lean on Google months in advance to ensure it has enough servers to withstand increased shopping during holiday discount days such as Black Friday and Cyber Monday in November and December.
This year, Black Friday-style demand has flooded shops since March, when the United States began lockdowns, Tharp said.
Holiday shopping is expected to boost demand further, as retailers including Target Corp. and Walmart Inc. have said they will reduce in-store hours because of coronavirus concerns.
Tharp said the pandemic has already benefitted Google Cloud, with some retailers adopting its predictive algorithms years ahead of plan to help them work out the most efficient way of fulfilling orders.
Electronics retailer Best Buy Co., for instance, announced on Tuesday a multi-year deal to centralize customer and product data with Google Cloud to improve its loyalty program and online ad campaigns.
The companies declined to elaborate on the deal, but Tharp said she hopes it leads to Google eventually powering Best Buy’s web ordering system.