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Actual experience at digital banks has not matched the hype: Forum

Actual experience at digital banks has not matched the hype: Forum

Source: Straits Times
Article Date: 23 Sep 2022

The author has experienced some hiccups with his experience of using the services of a digital bank such as finding it difficult to catch hold of customer service and inconveniences doing a fund transfer.

Recent news coverage on digital banks as well as my experience with them have led me to question the purpose of these banks (Making digital banks more inclusive, Sept 16).

My digital banking experience thus far with Trust Bank has been a step down.

The novelty of having a nice uncluttered interface and friendly messages displayed on screen wore off quickly.

As a customer, I get a basic savings account and credit card services that most other banks can provide.

Customer service, relying mainly on chat rooms, is hard to access. Calling the help lines involves a long wait.

To pay for my Trust Bank credit card bill, I was instructed to do a fund transfer using another bank's digital service. It is ironic for a new digital bank to ask its customers to use another bank's digital app. A simple deduction from my Trust Bank savings account or payment via a third-party channel like AXS or 7-11 would make more business sense.

After the digital bank licences were announced, it was thought that incumbent banks would be motivated to improve their services and invest in digital transformation. That has been largely successful in spurring competition, with consumers benefiting the most.

Now that the digital banks are here, the actual experience does not quite match the hype - at least not yet.

Chen Wencong


Making digital banks more inclusive: ST Editorial

One of the rationales for the licensing of digital banks in Singapore was that they would accelerate financial inclusion by serving those segments of the population and business community that are not served adequately by traditional banks, such as new entrants into the workforce, gig economy workers and micro-businesses. But there is a risk that some segments of the population may remain underserved. For example, The Straits Times ran an article recently which highlighted the experience of a retired banker and entrepreneur who did not qualify for a credit card from Trust Bank, a digital bank that has been launched by Standard Chartered Bank and the FairPrice group. Unable to reach the bank's customer care team, he was informed of his rejected application by a chatbot, without reasons being given. As the bank also has no physical branches, he was unable to appeal in person.

This might reflect teething problems in processing applications or be an isolated case. But even so, there is a real risk that people such as retirees may be among those excluded from accessing certain services by at least some digital banks - which would be a problem given that the proportion of retirees is set to rise to around 25 per cent of the population by 2030, from just over 14 per cent in 2019. Digital banks' use of user-friendly automated processes to on-board customers may yield the benefit of rapid customer acquisition, but it may also result in some qualified applicants falling between the cracks.

Even if the process works perfectly to reach exactly those segments that the bank wants to target, there will be some who will remain underserved. There may be ways for digital banks to broaden financial inclusion. The most obvious would be to make it easy for rejected applicants to appeal. In the absence of physical branches, the best way banks can do this is to provide easy-to-access helplines around the clock that are manned by humans rather than relying on virtual assistants. This is one area where they could offer better service than at least some traditional banks. Another step they could take is to gather more data on applicants covering broader metrics. Retirees for example, may have assets or passive income that do not show up in the first assessment of their applications by an AI-driven algorithm which focuses on salaried employment.

So rather than being rejected at the start, they should be given an opportunity to furnish additional data that might strengthen their case. Micro-enterprises that might be turned down by wholesale digital banks may similarly have undisclosed assets that they or their owners could pledge. No single bank - whether traditional or digital - will be able to serve all segments of the population. But there are measures that banks can take to ensure that exclusions are minimised.

Source: Straits Times © SPH Media Limited. Permission required for reproduction.

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