DBS hitches a ride with Go-Jek for a super-app

DBS hitches a ride with Go-Jek for a super-app

Andy Mukherjee
13/11/18, 07:13 am

SINGAPORE (Nov 12): Southeast Asia’s largest bank is teaming up with a unicorn. The prize they may have in mind: a super-app like China’s Alipay and WeChat Pay.

Go-Jek Indonesia PT, which started out as a ride-hailing app, has since gone on to capture a much bigger slice of commerce, including food delivery, courier and hairdresser services, and bill payment. As my colleague Shuli Ren wrote recently, Go-Jek has the advantage of a central bank e-money licence in Indonesia, Southeast Asia’s most-populous nation and biggest economy.

So it’s only natural that Go-Jek’s impending expansion into Singapore has made DBS Group Holdings sit up and take notice. The lender, which is aggressively embracing technology in its core operations, wants to hail its own ride with Go-Jek if consumers across Southeast Asia use the startup platform to do more than book transportation.

For that’s when DBS can have a rich harvest of user and merchant data to make quick, cash-flow-based e-loans to both consumers and small businesses. It is in that context of algorithmic online lending that the regional strategic partnership between DBS and Go-Jek, announced to coincide with the annual Singapore fintech jamboree, assumes importance.

Lending by fintech firms is currently in the throes of a shakeup in China, as smaller players fall prey to tightening regulations and state-mandated caps on interest rates. The consolidation would see an online consumer-loans market, which is expected to be in shouting distance of $1 trillion by 2022, get carved up between the likes of Alibaba Group Holding’s Ant Financial and Lufax, backed by Ping An Insurance Group Co.

Southeast Asia, meanwhile, would witness another kind of disruption, with banks like Indonesia’s PT Bank Central Asia and Thailand’s Kasikornbank Pcl forced to defend their moats from an assault by nimble technology players.

Their supremacy in transaction banking has rewarded these traditional lenders by making sure around three-quarters of their deposits come from cheap current and savings accounts.

If they lose transactions to the likes of GoJek, which is backed by WeChat parent Tencent Holdings, then profitability could fade away. In some ways, the process may have already begun. At 26%, Kasikornbank’s return on equity in 2004 was double that of DBS. Now the Singaporean bank has almost caught up.

So why’s DBS doing better? The company runs the world’s largest open application programming interface for developers in the banking industry. Open APIs may be the “fastest way for banks to collaborate” with technology firms to cut costs and boost speed, notes Bloomberg Intelligence analyst Diksha Gera, adding that Thailand, Malaysia and Indonesia still need clearer regulatory frameworks.

The payoffs won’t be immediate, and not all of the handshakes will click. But DBS investors should still be watching deals, such as the one with Go-Jek, closely.

Andy Mukherjee is a Bloomberg Opinion columnist covering industrial companies and financial services.

Lendlease a step closer to listing of mall REIT on SGX: reports

SINGAPORE (May 23): Australia’s Lendlease could potentially be the next REIT to list in Singapore, following the footsteps of two recent US REITs. According to The Australian, Lendlease has appointed investment banks Citigroup and DBS to handle the listing. The Singapore trust, to be named Lendlease Global Commercial REIT, could be seeded with shopping centre assets worth A$1 billion ($948 million). Listed on the Australia stock exchange (ASX), Lendlease is a integrated construction, engineering and property company. Singaporeans may also be familiar with Lendlease given the comp....

China defence minister to attend summit amid rising US tension

(May 22): Chinese Defence Minister Wei Fenghe will address top diplomats at an upcoming summit in Singapore in a speech that could be pivotal amid rising tensions between the US and China. The International Institute for Strategic Studies (IISS) announced the late addition Monday to a roster of ranking officials that includes US Acting Secretary of Defence Patrick Shanahan attending the three-day IISS Shangri-La Dialogue from May 31. Wei is scheduled to deliver a speech on China’s place in the Indo-Pacific region on the final day of the conference and will take questions afterwards, wh....

SingHaiyi reports 48% rise in 4Q earnings to $9.7 mil on higher margins from US development

SINGAPORE (May 22): Property developer SingHaiyi Group reported a 47.6% rise in 4Q19 earnings to $9.7 million from a year ago, bringing FY19 earnings to $22.6 million, 20.3% lower than a year ago. Revenue declined 67.6% to $9.8 million from a year ago mainly due to the decrease in revenue recognised for the group’s completed Executive Condominium project, The Vales, and the group’s completed private condominium, City Suites. The lower topline was partially offset by the sales of the group’s completed commercial condominium project in the United States – Vietnam Town Phase II, whi....