Amid the excitement over Singapore’s first digital-only banks — to be announced by the end of the year — United Overseas Bank has already seen success with going digital, all by turning to tech and going branchless.

This time last year, UOB was riding on the high of TMRW’s launch in Thailand in March, with a subsequent debut in Indonesia planned for 2020. TMRW is the first Asean digital bank to serve the region’s digital generation, created for Asean millennials who expect personalised digital services on their mobile phones.

When Covid-19 hit, however, it threw a spanner in the works, forcing TMRW to postpone its sophomore entry to August. “Despite the disruption of Covid-19 to our development timelines, the pandemic has accelerated the adoption and usage of digital services and we see this as a growth opportunity,” says Kevin Lam, head of TMRW digital group at UOB.

Already, TMRW is reaching the unbanked in ways only a digital bank can. Three months after its launch in Indonesia in August, new users have signed up from remote, underserved areas. “We are seeing customers sign up and use TMRW actively in areas as far as Medan and Makassar, where we have limited or no UOB branches,” says Lam in an interview with The Edge Singapore.

“For a digital bank to be successful, it is imperative to address a market’s inefficiency and to do it well. In the case of TMRW, we know that the potential in Asean is huge given its large and growing mobile-first and mobile-only customer base,” he adds.

SEE:UOB digital bank focuses on TMRW's customers

According to estimates from the World Bank, 80% of people in Indonesia, the Philippines, Myanmar and Vietnam are unbanked. Elsewhere, the figure is smaller at 30% but still significant in Malaysia and Thailand.

To that end, UOB is pushing forth in Asean with an “attack-defend” strategy. “We have a two-pronged approach to continue to serve our customer base well where we are established while growing our customer franchise in the region through TMRW,” says Lam.

For its home market, UOB is hunkering down with a defensive stance. “In Singapore and Malaysia where we have an established network of infrastructure, people and channels, we continue to drive omni-channel innovation.” UOB Mighty, the bank’s all-in-one mobile banking app, saw a close to 30% y-o-y increase in monthly active users in July, says Lam.

Outside of these markets, UOB is ramping up its efforts to bring millennials — the “digital-first generation” — into the fold. “The number of digital-first or digital-only consumers in Asean is massive and is still growing,” says Lam. “TMRW is our challenger digital bank in Asean markets where there are opportunities for us to expand our service to more customers in areas that are underserved.”


A model for tomorrow

Lam moved to head TMRW just months ago after four years as country CEO of UOB Indonesia. The move came 15 years into his career at UOB, where he has held senior roles in personal financial services, wholesale banking, and technology and operations. He had also served six years at UOB Malaysia, becoming deputy country CEO.

Just like how Lam leverages on his knowledge of Indonesia for TMRW’s expansion, UOB draws on decades of experience in identifying the traits of each market. “Each market in Asean is diverse in terms of consumption behaviour and regulatory requirements. By combining our understanding of the nuances of operating in the diverse landscape across the region with our regional and standardised core banking system, we have both the ability and resources to accelerate the launch of TMRW in places like Indonesia or anywhere in our franchise, to serve the mobile-first and mobile-only consumers,” says Lam.

In just a little over a year of operations in Thailand, TMRW’s engagement-focused business model is already bearing fruit. TMRW achieved the third-highest net promoter score (NPS) among all banks as of April and is ranked Number One in terms of NPS for credit cards and for the savings and value that the TMRW credit card offers customers.

NPS, which tracks how likely customers will recommend a brand to their friends and family, is one of the key indicators of customer satisfaction, loyalty, engagement and advocacy.

In addition, a monthly survey by TMRW found that twothirds of its customers in Thailand recommend TMRW to their friends and family, says Lam. In terms of engagement, over one in four TMRW customers are highly active, performing at least four financial transactions over 30 days.

“Our ambition is not just to sustain this active engagement rate — which is very high for banks in general — but to lift the bar even higher so that more customers engage with TMRW at least eight times a month,” says Lam.

From its first market, TMRW brought the lessons it learnt into Indonesia, smoothing out the kinks just as demand from customers grew. “This was especially critical as we launched TMRW in Indonesia in the midst of the pandemic that had most people relying on digital services as they stayed home and stayed safe,” says Lam.

For example, because of the different regulatory requirements in Indonesia, instead of using fingerprint matching and facial recognition to onboard customers like in Thailand, TMRW adopted full digital onboarding by using video calls. The result? An onboarding process that clocks in at less than seven minutes, regardless of where customers live in Indonesia.

Personal touch

It is not just about convenience, either. According to Lam, TMRW is unique in its engagement-focused business model, which was designed to deepen customer engagement with every interaction. “These consumers have high expectations for digital services to be intelligent and personalised, which is why we designed TMRW to create a distinctive and engaging digital bank experience that they will value,” Lam says.

To achieve this, TMRW turned to data and machine learning. FinTech firm Personetics powers TMRW’s insight engine, which transforms transaction data into meaningful insights, presented within the TMRW app as ‘Insight Cards’ based on the bank’s understanding of their needs.

On Valentine’s Day, TMRW even sent its customers a personalised “love note”, generated from their transaction patterns in the past year and thanking them for their support. These notes highlighted behavioural patterns unique to the customers, such as TMRW advocates who interact with the app regularly, value-seekers looking for the best deal and disciplined bill payers. “Our digital bank business model continues to focus on deepening customer engagement with every interaction so that our customers continue to find value in banking with TMRW for the long term,” says Lam.

In Indonesia, TMRW taps Avatec’s AI-driven credit assessment engine, using alternative data and machine learning to assess the creditworthiness of customers during the onboarding phase. “Using this engine, we have the ability to offer loans to a wider base of customers who previously would not have had access to credit and we see this as a key driver for TMRW’s business,” says Lam.


Digital bank licences

At home, the banking sector is gearing up for the Monetary Authority of Singapore (MAS) to announce the successful applicants for novel digital banking licences. Up to two applicants will receive digital full bank (DFB) licences and three will receive digital wholesale bank (DWB) licences.

Currently in the running are a venture between Singapore Telecommunications and Grab, along with Ant Group and ByteDance, among others.

According to analysts, a successful DFB may have the potential to win between 2% and 4% market share in Singapore’s rapidly growing banking sector within the next few years.

Lam is undeterred by the incoming competition. “We believe that our ongoing investment in technology, omni-channel banking services and solutions and ecosystem partnerships in Singapore and across our network put us in a very competitive position to respond to the recipients of the new digital licences.”

With the successful launch of TMRW in two key Asean markets, Lam is also looking at regional expansion, with the bank currently on track to achieve its goal of 3–5 million customers in five years, starting from 2019. TMRW is also on track to achieving its target of highly-engaged customer base. “We also have both the ability and resources to accelerate the launch of TMRW anywhere in our franchise.”

SEE: UOB launches TMRW in Indonesia

As the year comes to a close, MAS’s highly anticipated announcement will come on the back of recent investigations into FinTech, led by China’s tighter watch on the sector.

Last month, Ant Group shelved its initial public offering after a clampdown and higher capital requirements imposed by Chinese regulators, an abrupt halt to what was poised to be a record US$35 billion ($47 billion) IPO. Still, MAS has indicated that it will stick with its plans to award digital banking licences by the end of the year, undeterred by tighter scrutiny of major Chinese applicants overseas.

“Regulatory tightening that’s happening in China will not have an impact on the digital banks here,” said Ravi Menon, managing director of the MAS, in a recent interview. “It’s not our job to try to guess what the geopolitical situation might be like and what actions might be taken by other countries with respect to some of these entities.”

“China started from a different place. Initially, it did not regulate many of these FinTech entities to the full extent,” says Menon. “And now the authorities are converging to the same position as most of the rest of the world. I think that is the right thing to do and it creates a level playing field.”

Likewise, Lam emphasises that banks have a duty to maintain strict standards. “Fundamentally, a bank must be a bastion of trust to ensure depositors have confidence that their money is safe. We embrace the philosophy of ‘funding before lending’ and we see growing our deposits business and serving customers as the precursor to growing our digital lending business. This, we believe, is critical to any bank, digital or otherwise, for long-term stability and sustainability.”