Stanchart’s ‘Preferred Banking’ gunning for affluent Singaporeans

Travis Teo

travisteo@mediacorp.com.sg

SINGAPORE

Citing growth potential in their expanding wealth, the bank said its new service will offer investment advice and mobile banking to this group of people, consisting of young and mobile executives, professionals, couples and families.

There are about 725,000 in this “emerging affluent” market here, making up about 19 per cent of the population.

This segment has been growing annually at about 10 per cent every year from 2005 to last year, despite the challenging economic conditions last year, the bank said.

Standard Chartered also plans to hire at least 150 more relationship managers over the next two years to help drive its latest initiative. The bank added that it plans to introduce “Preferred Banking” to about eight different markets soon.

Analysts agreed that banks like Standard Chartered are chasing the right group.

“We are looking at our neighbours, Indonesia, Malaysia and further up north in fact towards obviously China as well and India, where these countries hold great potential for growing middle income group,” said Sias Research lead analyst Moh Tze Yang.— Standard Chartered has launched its “Preferred Banking” service to target the emerging affluent market of Singaporeans earning between $6,000 and $16,000 a month.

The yen was little changed after the monetary policy decision, trading at 85.82 to the US dollar in Asian trade.

UOB Q2 profit rises 28%

Earnings attributed to fall in bad loans

SINGAPORE —

Net income jumped to $602 million in the three months ended June 30 from $470 million in the corresponding period a year earlier even as non-interest income plunged 31 per cent, the bank said yesterday.

Swings in stock and bond markets, and signs of economic headwinds in the United States, Europe and China have deterred clients from trading and making share sales, trimming earnings’ gains.

Singapore’s three-month interbank lending rate, or Sibor, has averaged 0.6 per cent this year, hampering net interest margins.

“The numbers demonstrate the revenue challenges for the bank,” said Mr Sanjay Jain, a Singapore-based analyst at Credit Suisse.

Still, the second-quarter profit matched the $602.6 million average estimate of eight analysts surveyed by

Bad-loan costs in the quarter fell 88.9 per cent from a year ago to $52 million, mainly because of lower collective and individual impairment on loans.

Non-interest income fell to $382 million from $551 million a year ago, as trading and investment income tumbled 95 per cent to $12 million, UOB said.

Net interest income, or the difference between what the bank makes from lending and what it pays on deposits, fell 2.6 per cent to $884 million in the quarter mainly from lower interest margins.

The net interest margin, a measure of loan profitability, narrowed to 2.14 per cent from 2.35 per cent a year earlier, it said.

UOB’s fees and commission income, including credit card and fund management fees, grew 27 per cent to $285 million as economic conditions improved and net loans grew 6.1 per cent to $103.8 billion.

Rival Oversea-Chinese Banking Corp’s second-quarter profit missed analysts’ estimates, as its trading earnings also slumped and its lending margins narrowed.

The DBS Group, South-east Asia’s biggest lender, last month reported an unexpected second-quarter loss of $300 million as it booked a one-time goodwill impairment charge at its Hong Kong unit.

UOB shares fell 1.1 per cent to $19.30 at the close of trade yesterday. The shares have dropped 2 per cent this year, compared with a 3 per cent increase in the benchmark Straits Times Index.

United Overseas Bank (UOB), the last of the three listed local banks to announce earnings, reported a 28 per cent increase in its second quarter profit as declining bad loan charges offset a slump in client trading and share sales.Bloomberg.BLOOMBERG

Otherwise, existing rules are sufficient and within reason, market players said.The recent move to introduce new rulings to regulate short selling on the Singapore Exchange (SGX) has been largely well-received by market players.

Jo-ann Huang

For better banking, think small

Small banks that offer longer hours and free coffee could boost service standards in the sector

It seeks to “surprise and delight” its customers, have “no stupid bank rules” and offer “satisfaction guaranteed”.

It’s open from 8am to 8pm and even offers dog biscuits if you bring your dog along.

The only thing is, Metro Bank opened in the United Kingdom and not in Singapore.

It just shows, though, how new and smaller banks can pave the way towards better service.

And Metro Bank isn’t the only small bank that does so well.

Another is Umpqua Bank in the United States. Walk into the lobby of a “store”, as they call each branch, and you might think you’re in a major retailer.

“Umpqua has in recent years unveiled a new generation of branches that sport touch-screen video walls providing product information, Internet cafes and conference rooms that any business, charity or community group can reserve at will,” was how Dean Foust described it in The new bank that opened at the end of last month promises far better service than its competitors.BusinessWeek.

There’s even a coffee bar with Umpqua coffee, free Internet access and CDs by local musicians on sale in some of the branches.

Even as these and other small banks in other countries expand and offer better service, there has been discussion in Singapore lately about consolidating banking further so that local banks can compete better internationally.

It could well be time, though, to look beyond overseas expansion and think about allowing small new competitors to offer innovative banking services for customers here.

Rather than limiting the number of local banks, supporting big banks while still allowing more options in the local market would offer customers more choices. And if small banks open up and do here what they’ve done in other markets, innovation and service could flourish.

For one, customers could have a great experience at the bank. Service at smaller banks is often faster and more personal.

Branch staff at small banks often know many of their customers by name and they pick up the phone themselves when customers call.

That free coffee, cookies, Internet access and children’s play area for people makes going to the bank a pleasure.

KEPT ON THEIR TOES

For another, the service levels at these nimble competitors keep big banks on their toes.

Some larger banks in the UK, like RBS, have recently improved their service levels and others may do the same now that Metro Bank is actually open.

As investment bank Execution Noble’s analyst Joseph Dickerson told the

What it could do, however, is raise the bar for service in the industry. And convenience could very well offset better rates offered by competitors”.

Changes like these would be a real benefit to consumers here. Just think, if we had something like Punggol Bank and it operated like Metro Bank in the UK.

Longer hours seven days a week, guaranteed better service, free coffee and “no stupid banking”, for a start.

Some of these new banks might develop innovative new products, and the competition could even strengthen the local banks for their forays abroad by forcing them to compete better at home.

That’s not to say that some local and multinational banks here don’t already offer good service. Indeed, some staff at the banks are great. With more competition, though, the target queue time of less than eight minutes at some banks might drop well below five; there might be coffee everyday rather than just snacks for seniors on Tuesday mornings; and accounts might get opened with less paperwork.

It’s true that some people hardly ever go to a bank anymore. For Internet and mobile banking users, a small local bank with fantastic service and great coffee may not matter.

For the many people who do sometimes need to walk into a bank branch and who want better service, though, small banks in other countries show what they might enjoy if more banks open here.Wall Street Journal right after Metro Bank opened, Metro “shouldn’t be a threat to the big banks when it comes to market share.

The writer is a consultant who has lived in Singapore since 1992.

Before OUTsourcing, are firms prepared for the PITFALLS?

The common reasons for using outsourcing partners are that it allows the company to reduce labour costs, free up capital and improve worker productivity. However, the recent service breakdown of DBS Bank’s network is a wake-up call for companies to re-examine their outsourcing strategy.

The cost to a company of a service or performance failure goes beyond the monetary, or even the punitive measures that could be imposed as a result of that failure.

(In DBS’ case, the regulator required that it set aside an additional $230 million to cover operational risk.)

For the company buying the outsourcing service, its brand equity is also at stake.

Brand equity is an important way to differentiate one’s product. Companies pay a huge premium for brand equity, which they justify not only on the grounds of extra profits that could be extracted but also the tremendous difficulty and expense of creating another similar brand from scratch.

In the case of the service disruption at DBS, great inconvenience was caused to customers. The unfortunate event — blamed on an IBM engineer — may have dented the brand equity DBS has painstakingly built up over the years.

We can draw some possible lessons from this. First, just as a company pays a price premium to acquire a brand, it should also factor into its outsourcing costs a “premium” for potential losses from negative brand equity resulting from a service or performance failure.

In addition, once the decision is made to outsource, the buyer-company must have in place a contingency plan to contain any negative impact of a possible lapse in the supplier’s performance.

In this, actions speak louder than words — hence, apart from keeping customers informed about recovery efforts, having staff engage affected customers will go a long way to restoring their confidence in the brand.

Needless to say, continuous investment in brand-building becomes even more pertinent when companies outsource their operations.Thee global outsourcing market for IT and business services exceeded $55 billion in 2008 and has been predicted to grow by 20 per cent annually over the next five years.

BITING THE HAND THAT FEEDS

This is particularly so when one must defend one’s brand against supplier opportunism.

This is when the supplier of the service competes for a share of the buyercompany’s market, after learning from the outsourcing experience.

Market trends show that such opportunism is on the rise. Legendary examples of such behaviour are companies like Goldstar, Samsung, Kia and Daewoo, which built up their product leadership through their early contracts to supply Western companies with components or products that were retailed under the latter’s brand.

Outsourcing allows manufacturers to increase short-term return on assets, minimise fixed costs and increase flexibility — but the long-term cost could be the multinational’s inability to contend with a growing number of local manufacturers, as it unwittingly nurtures its suppliers to compete against itself. Therein lies the outsourcing paradox.

In the automobile industry, it has been pointed out, car makers dependent on suppliers’ engineering capabilities could find their design and styling ideas leaked to competitors through shared suppliers.

Services firms that outsource their information systems run the risk of losing immediate control of their important valuechain activities. An e-commerce firm could give its competitors the edge through the defective performance of its supplier.

One aspect of opportunism which has largely been ignored, is when the supplier enters the consumer market as a direct competitor to the buyer-firm. This could lead to the loss of product differentiation for the original firm.

Eliciting pledges from the supplier, adopting multiple outsourcing and relying on relationship commitments, all do not adequately safeguard the latter.

Therefore, it is important that the buyer-company invest in brand-building as this creates in the market a preference for its product, which can help buffer the company’s brand from “me-too” brands.

When a firm deliberates whether to take the outsourcing route, its own ability to build and defend its brand equity must be an important criterion in its decision.

Outsourcing cannot be treated as a standalone activity, but one that should be integrated with its business and marketing strategies.

The writer is an Associate Professor at the Department of Marketing, NUS Business School.

tan soo jiuan

To most people, DBS Bank got off lightly for the seven hour breakdown of its online and branch banking systems on July 5. Perhaps too lightly, for the amount of inconvenience and embarrassment caused by rejected credit cards and not being able to draw cash from the bank’s 1,000-odd ATM machines across the island.

conrad@mediacorp.com.sg Today.

LAWS DO NOT ALLOW A FINE

However, MAS clarified that current laws [?] do not allow the authority to impose a fine on our banks for such infringements, although they can be subject to financial penalties such as having to set aside more money to cover risks — meaning, they cannot lend out that sum of money to make more money.

In any case, how large a fine can anyone impose on a financial institution, without hurting innocent stakeholders, including customers and shareholders?

A fIne also does little to assuage a wronged, inconvenienced or dissatisfied customer as it just ends up in the kitty of the authorities, and not the people who suffered.

Perhaps there should be a review of the rules regarding similar infringements of Internet banking and technology risk management guidelines, with some emphasis on speedily compensating affected customers without the need to engage in costly lawsuits.

MAS should also be able to extend its reach to take appropriate action against vendors and others involved in providing financial hardware and software services, including those providing outsourced services.

[# Can MERITOCRACY be OUTSOURCED ???? #]

To some extent, the ball is in DBS Bank’s court to assuage its stakeholders. True, DBS chief executive Piyush Gupta has offered his apologies several times over the past month for the inconvenience caused.

But is an apology enough to satisfy all customers?

Yes, it will be difficult to ascertain who actually suffered on that fateful July day. Still, a simple gesture of goodwill — say, an ice cream or a chocolate bar for all customers on a particular day — could go some way to recovering lost goodwill.

Or, DBS could make an appropriate donation to some charity or organisation in the name of all wronged or inconvenienced customers.

Conrad Raj

The writer is Editor-at-Large at

“Sticks and stones may break my bones, but words will never hurt me.”o most people, DBS Bank got off lightly for the seven hour breakdown of its online and branch banking systems on July 5. Perhaps too lightly, for the amount of inconvenience and embarrassment caused by rejected credit cards and not being able to draw cash from the bank’s 1,000-odd ATM machines across the island.

LAWS DO NOT ALLOW A FINE

However, MAS clarified that current laws [?] do not allow the authority to impose a fine on our banks for such infringements, although they can be subject to financial penalties such as having to set aside more money to cover risks — meaning, they cannot lend out that sum of money to make more money.

In any case, how large a fine can anyone impose on a financial institution, without hurting innocent stakeholders, including customers and shareholders?

A fIne also does little to assuage a wronged, inconvenienced or dissatisfied customer as it just ends up in the kitty of the authorities, and not the people who suffered.

Perhaps there should be a review of the rules regarding similar infringements of Internet banking and technology risk management guidelines, with some emphasis on speedily compensating affected customers without the need to engage in costly lawsuits.

MAS should also be able to extend its reach to take appropriate action against vendors and others involved in providing financial hardware and software services, including those providing outsourced services.

[# Can MERITOCRACY be OUTSOURCED ???? #]

To some extent, the ball is in DBS Bank’s court to assuage its stakeholders. True, DBS chief executive Piyush Gupta has offered his apologies several times over the past month for the inconvenience caused.

But is an apology enough to satisfy all customers?

Yes, it will be difficult to ascertain who actually suffered on that fateful July day. Still, a simple gesture of goodwill — say, an ice cream or a chocolate bar for all customers on a particular day — could go some way to recovering lost goodwill.

Or, DBS could make an appropriate donation to some charity or organisation in the name of all wronged or inconvenienced customers.

Conrad Raj

conrad@mediacorp.com.sg

The writer is Editor-at-Large at Today.

Review RULES for SPEEDY compensation

MAS should also be able to take action against vendors and providers of outsourced services

conrad@mediacorp.com.sg

Conrad Raj

The MAS should have tried to ascertain the financial impact to customers and businesses, at least the more serious losses.

For DBS, a simple gesture of goodwill — say, an ice-cream or a chocolate bar for all customers on a particular day — could go some way to recovering lost goodwill. Or, make a donation to charity in the name of all inconvenienced customers.

Look closer,   her  skin  on  her face is   FAKE!

pharoah88      ( Date: 06-Aug-2010 08:11) Posted:   World’s most heavily pierced woman

Our Bank  off-guarded.    Our Trees off-rooted.    lol!

We need to re-root our trees, by re-rooting them deeply into the ground and make sure all of them wont off-root during thunder storm.

How to escape when seeing tree trunks falling?  run side way or forward?