UOB Targets Growth Outside Singapore, Turns to Tech to Cut Costs
(Bloomberg) -- United Overseas Bank Ltd. plans to increase the portion of revenue it gets from outside its home market of Singapore to about 50% by 2021, despite forecasting a challenging year ahead.
“For 2019, market volatility is expected to remain,” Chief Executive Officer Wee Ee Cheong told analysts and investors in Singapore Wednesday. “Geopolitics, rising global trade tensions and concern over a synchronized global slowdown weigh on sentiment.”
UOB will target growth in the Asean region, which already makes up the bulk of its non-Singapore revenue. Growing internationally while improving customer services will attract more clients doing business throughout Asia to give it greater scale and improved risks, Wee added.
Banks globally are grappling with the rise of non-bank financial firms that offer services including loans and payments through mobile devices and other digital channels. Hong Kong began to issue banking licenses to the likes of Alibaba Group Holding Ltd. affiliate Ant Financial and Tencent Holdings Ltd. earlier this year while Singapore’s financial regulator is studying similar permits.
UOB, Singapore’s third-largest bank by assets, has spent about S$1.6 billion ($1.2 billion) in the five years through 2018 on technology, most of which has gone on enhancing various platforms from wealth to cash management, according to a May presentation.
It introduced a mobile-only bank known as TMRW in Thailand in February. UOB spent around S$100 million on app development and tech architecture and solutions on the launch of TMRW.
Chief Financial Officer Lee Wai Fai said around 20 products make up 80% of processing costs and that technology could be used to improve the bank’s services while reducing expenses. It aims to lower its expense-to-income ration to about 42% in 2021 from 44% today.
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