Singapore playing catch-up in mobile banking use: Study
SINGAPORE —Despite the Republic having one of the highest mobile penetration rates among millennials in the world, only 67 per cent of this group indicated regular mobile banking use. This contrasts with market leaders the United States (78 per cent) and China (75 per cent), according to a study by Australian telecom network Telstra.
In Singapore, almost one in three adults falls into the category of millennials — defined as residents aged 18 to 34 years old — and smartphone ownership among millennial mobile phone users is especially high, at 99 per cent.
Of the eight markets studied by Telstra in its latest report, Exponential Performance — in a Millennial, Mobile, Programmatic World, however, Singapore ranks sixth in mobile banking usage by the younger and presumably more tech-savvy millennials. Wallet share for millennials is relatively low, at 22 per cent, indicating that the Republic is lagging in terms of riding the millennial value growth curve, said the report.
Mr Rocky Scopelliti, Telstra’s Global Industry Executive for Financial Services noted that based on wallet size and mobile banking use, the report’s findings suggest that Singapore’s financial institutions “have yet to fully engage with local millennials”.
“Financial institutions in Singapore must do more to maximise this opportunity, especially considering the high mobile penetration among millennials and the profitability trajectory of this demographic. They must digitally transform their business and operating models to increase the penetration of services among millennials,” he said.
On average, Singapore millennials have a mobile wallet size of US$81,868 (S$111,670) compared to Hong Kong’s US$115,088 and America’s US$95,809. To compare total wallet size among the eight markets studied, local currency values were converted to US dollar values using market exchange rates.
Among the major banks in Singapore, OCBC Bank captures the largest average millennial wallet, at US$107,424 — over 30 per cent larger than that of the average millennial in Singapore. In contrast, POSB, with a tradition of offering low-cost banking services for the mass market, captures the smallest wallet size at US$36,959, the survey showed.
Among the four major financial institutions in Singapore, OCBC has the highest proportion of millennials (41 per cent) compared with its nearest competitor, POSB (31 per cent).
Despite having the largest proportion of millennials within its customer base, OCBC does not enjoy the highest level of millennial digital engagement. According to the report, UOB claims that honour with 73 per cent, followed by DBS, with 69 per cent.
“Major financial institutions in Singapore are currently behind the likes of Chinese and Australian banks in cost-to-income ratios. They should invest in the right programmable technology to radically reduce either the cost of customer acquisition or the marginal cost of service. This will give rise to a modern financial services institution that is digitally led and can provide services that react to the needs of a demanding, mobile millennial in real-time,” said Mr Scopelliti.