Singapore is one of the most advanced and digital-savvy countries in the world, with a high penetration of smartphones, internet, and mobile banking. However, a recent report by EPAM, a global provider of digital platform engineering and software development services, revealed that more than half of Singaporeans are uncomfortable with digital-only banking, preferring traditional banking models with physical branches and human interactions. What are the reasons behind this preference, and what are the implications for the future of banking in Singapore?
The report, which surveyed 9,000 retail banking consumers across nine countries, including 1,000 from Singapore, aimed to understand the consumer preferences and behaviours in the banking sector, especially in the wake of the COVID-19 pandemic. The report found that Singaporeans are generally satisfied with their banks, with 87 percent of respondents rating their bank as good or excellent. The main reason for this satisfaction is the excellent customer service, followed by the convenience and the security of the banking services.
However, the report also found that Singaporeans are reluctant to embrace digital-only banking, which refers to banking providers that offer solely digital access to their services, without any physical branches or human interactions. According to the report, 53 percent of Singaporeans express discomfort with banking providers lacking local branches, while 52 percent hesitate to engage with providers offering solely digital access. The report also found that 66 percent of Singaporeans are uneasy with the convergence of banking with social media, which enables automatic financial transactions through social platforms.
The Reasons for the Preference for Traditional Banking
The report suggested several possible reasons for the preference for traditional banking among Singaporeans, such as:
- The lack of trust in digital-only banking providers, especially those that are new or unfamiliar to the consumers. Singaporeans may have doubts about the reliability, the security, and the legitimacy of these providers, and may prefer to deal with established and reputable banks that have a physical presence and a track record in the market.
- The preference for human interactions and personal relationships in banking, especially for complex or sensitive matters, such as financial advice, loans, or investments. Singaporeans may value the human touch and the emotional connection that they can get from face-to-face interactions with bank staff, and may feel more comfortable and confident in making financial decisions with human guidance and support.
- The habit and the inertia of using traditional banking channels, such as branches, ATMs, or phone banking, which are familiar and convenient to the consumers. Singaporeans may be used to the routine and the convenience of using these channels, and may not see the need or the benefit of switching to digital-only banking, which may require them to learn new skills, adopt new behaviours, or overcome technical issues.
The Implications for the Future of Banking in Singapore
The preference for traditional banking among Singaporeans has significant implications for the future of banking in Singapore, such as:
- The challenge and the opportunity for digital-only banking providers, especially the four digital banks that are expected to launch in Singapore in 2024. These providers will have to overcome the barriers and the resistance of the consumers, and to build trust and loyalty among them. They will also have to differentiate themselves from the traditional banks, and to offer innovative and value-added services that can attract and retain the consumers.
- The pressure and the incentive for traditional banking providers, especially the incumbent banks that have a large market share and a loyal customer base in Singapore. These providers will have to adapt and innovate to the changing consumer preferences and behaviours, and to the increasing competition from the digital banks. They will also have to leverage their strengths and advantages, such as their brand, their network, and their expertise, and to offer a seamless and integrated omni-channel experience that can satisfy the consumers.
- The choice and the empowerment for the consumers, who will have more options and opportunities to access and manage their finances in the digital age. Consumers will be able to choose the banking provider and the channel that best suit their needs and preferences, and to enjoy the benefits of convenience, efficiency, and personalisation that digital banking can offer. Consumers will also have to be more aware and responsible for their financial decisions, and to protect themselves from the risks and the challenges that digital banking may pose.
