Welcome to the latest edition of Protiviti’s Asia-Pacific Financial Services Insights. In this monthly newsletter, we provide a summary of important developments across the Asia-Pacific financial services sector, including those related to the ever-changing regulatory landscape.
FSI headlines in the early days of 2020 have focused on the evolution and expansion of digital banking, the market impact of cryptocurrencies, a proposal to expand Australia’s BEAR, market forecasts and encouragement by the HKMA to work with customers impacted by the coronavirus.
Over 2020, as digital banking becomes more mainstream across APAC, it is expected we will see a specific focus on areas such as customer-centricity, customer collaboration, flexibility in offerings, capitalizing on the digital revolution, open banking and immediate payments, AI, machine learning and cloud technology.
Bank of America’s (BofA) Asia headcount expansion comes against the backdrop of a subdued recruitment outlook for the broader investment banking business as global lenders struggle with cost pressures and slowing M&A momentum. A third of BofA’s new hires in Asia will be senior bankers, including managing directors, for its merger and acquisitions advisory and capital markets businesses, mainly in Hong Kong, Singapore and Australia.
The Monetary Authority of Singapore has said it will issue five digital banking licenses, as part of the biggest liberalization of its banking sector in two decades. The digital banks are expected to start operations in a phased manner from mid-2021.
Traditional banks remain the preferred primary account for most consumers in Singapore as the Monetary Authority of Singapore pledges to evaluate the business plans of digital banking applicants and ensure a uniform level playing field among banks.
(Singapore Business Review, 22/01/2020)
Singapore-based ride-hailing giant Grab and gaming technology firm Razer are exploring the feasibility of applying for a Malaysian digital bank license. Local lenders Hong Leong Bank, Maybank, CIMB, Ant Financial, Malaysian telecommunications conglomerate Axiata and BigPay, the financial services arm of low-cost airline AirAsia, are also reportedly interested in the Malaysian license.
(Insurance Business, 23/01/2020)
As many as six new Hong Kong virtual banks have been announced by the Hong Kong Institute of Bankers (HKIB), reflecting the rising trend of virtual banks, especially in the APAC region. This latest list features Bank of China, WeLab Bank Ltd., and Fusion Bank Ltd.
Insurance companies are placing their hopes on the return of more mainland Chinese customers to help reverse a three-year decrease in sales even as China and Hong Kong’s economies are slowing.
The Hong Kong Monetary Authority (HKMA) has urged banks to adopt a “sympathetic stance” towards customers facing financial difficulties resulting from the coronavirus outbreak. The HKMA said lenders should consider temporary relief arrangement requests from borrowers, and should communicate their policies to staff to ensure they can be easily reached by customers to discuss their financial situations. Some banks have started introducing measures aimed at helping homeowners and businesses in the city survive the financial impact of the viral outbreak.
(Asia First, 10/02/2020)
The new measures removed the total asset requirements for foreign banks to set up businesses in China and relaxed limitations on shareholders of joint venture lenders. Foreign lenders will now be able to open both branches and wholly foreign-owned banks at the same time in China.
The official launch of China's sovereign digital currency could be much later than expected due to doubts over the application and usage of digital currencies in China. The People’s Bank of China announced the idea of launching a sovereign digital currency, with its affiliated digital currency institute, to step up its digital currency electronic payment scheme after Facebook unveiled a plan to launch its digital currency.
The Bank of Japan (BOJ) kept monetary policy steady and pushed up its economic growth forecasts. BOJ kept its short-term interest rate target at minus 0.1 % and pledged to guide 10-year government bond yields around 0 %.
(Japan Times, 21/01/2020)
Japan’s central bank will study and analyze related technologies and the impacts of digital currencies on the economy, with the possibility of issuing its own digital currency in the future. Wider use of digital currencies will enable low-cost and rapid international cash transfers and payments in Japan.
(Japan Times, 23/01/2020)
Although newer initiatives like Libra and Central Bank digital currencies could promote financial inclusion in the country, the Central Bank's current assessment says that innovation in the broader fintech space will make these solutions needless.
The Reserve Bank of Australia expects the economy to start generating inflationary pressures only when unemployment falls to 4.5% or below, which could prove to be a challenge as the jobless rate now is 5.1% from as low as 4.9% in February.