Big banks are busy building up digital channels. Where does this leave smaller banks that don’t have the same kind of budget? Singapore’s United Overseas Bank (UOB) is relying on partnerships. It has recently launched a digital bank in Thailand, in what may be an emerging pattern.
Classic measurements of a bank’s success may not apply to
digital-only firms – or, at any rate, are not being applied today.
Dennis Khoo, head of group retail digital at UOB, cites a
number of factors he believes represent momentum for TMRW, as the Thai-based
business is named, in its first two weeks of operation
- 11 million music video views
- 2 million likes on social media
- 500 visits to the website
These are not the usual milestones for a financial
institution. No figures on deposits, or fee income, or net interest margin.
This app is just for you
Khoo declined to say how many customers TMRW has. DigFin
checked Google Play, as this represents one gateway, and found the bank had attracted
about 100,000 downloads.
TMRW is a mobile-only bank aimed at millennials in Southeast
Asia. Its value proposition is in its customer experience, a data-driven
engagement that Khoo likens to Netflix. Unlike a traditional bank’s website,
which is usually a static page with every product offering on tap, TMRW’s app
offers a personalized menu that skips products that its algorithms deem
The learning curve becomes our advantage against copycats
Dennis Khoo, UOB
Over time, machine-learning tools will adapt to each
person’s behavior in order to prioritize the kind of information or offers it
puts at the top of the page.
For example, the app can learn which account a user would
prefer to make certain kinds of payments, based on transaction records. The app
will display the most likely account up top.
The service will alert customers if they’re in danger of
running short of cash and risking an overdraft. Similarly, it can alert users
for expiring subscriptions and services – which users can then cancel or renew.
Khoo said: “Engagement is using data to learn who you are,
predict your needs, and help you to make the right financial decision.” And in
what the bank believes is a simple manner.
For mid-tier players like UOB, it has to rely even more on
creating a network of partners – and try to grab market share fast.
“We are not the size of J.P. Morgan,” Khoo said. “We don’t
have tens of thousands of software engineers. Our strategy is to create an open
system that we can plug a lot of fintechs into.”
Indeed, UOB is leaving all of TMRW’s customer-facing
services to third parties, rather than build these on top of its platform.
"When tech companies create a software product, they would need to have a roadmap and to talk with customers all the time," Khoo said. "Banks, when building a product internally, is usually a project focusing on a specific customer need.”
A tech company focused on creating a product rather than just doing a project can do better than banks, Khoo
For the past year, UOB has been tracking thousands of
fintech companies with customer-facing solutions. It distilled that down to
five, and is currently running pilots with some of them.
Those that make the grade will be deployed regionally into
TMRW, which will launch in a second market by the end of this year. It aims to
build a customer base of 3-5 million in the next five years.
The first version of TMRW that has debuted in February is powered by two
The power of building a multi-fintech offer is in combining
these services. TMRW is using Meniga to track data, and Personnetics to make
sense of it.
“We are the first bank that takes Meniga’s
categorizing power, and then feed the data to Personnetics,”said Khoo.
Khoo’s team found Personnetics in a trade
show in HK in 2017. In July 2018, the bank became a minor stake-holder of the
“We were fortunate to be able to discover
them early. By making a small investment, we would have access to top
managements and express our needs, they could then take into their product road
Khoo declined to name use cases for PoCs other than the need for chatbots, to communicate better with customers. But last year, UOB set up a joint venture with China’s Pintec. The J.V., called Avatec.ai, creates credit profiles based on users’ social-media activities.
The risk of building a bank built around multiple fintechs
is that rivals can assemble a similar offering. There’s no proprietary UOB
ingredient, other than how it packages these fintechs. In some cases, TMRW will
be competing with fintechs head-on.
Khoo acknowledges this but says the important thing is to
experiment with what engages customers, by segment, by offer, and by advice or
research tips. But this has to be done in volume, and quickly. “The learning
curve becomes our advantage against copycats,” he said. “It creates a barrier.”