DBS chief Piyush Gupta sees Alibaba, Tencent changing South-east Asia banking

DBS Bank CEO Piyush Gupta speaking at the Adult Learning Symposium on Nov 3, 2016. ST PHOTO: KEVIN LIM

SINGAPORE (BLOOMBERG) - Chinese Internet giants Alibaba Group Holding and Tencent Holdings are poised to transform South-east Asian banking, with the biggest competitive threat coming from their payment platforms, according to the head of the region's largest lender.

"They will change the banking landscape," DBS Group Holdings chief executive officer Piyush Gupta said in an interview Monday. "They have done that in China and they are expanding into other parts of Asia. They are the biggest competitors."

Competition in payments will mainly occur in the area of online purchases of goods and services, said Mr Gupta, who is using digital technology to expand DBS's banking business in India and Indonesia. Still, the S$5 billion that his bank invested in technology in the past five to six years has reduced costs and will help DBS defend its territory against Alibaba and Tencent, he said.

Alibaba affiliate Ant Financial, China's largest online financial services company, operates Alipay, which competes on payments with Tencent's own service on its social media platform WeChat. The two platforms boast a combined total of more than 1 billion users and their parent companies are now making inroads in South-east Asia.

Alibaba made its biggest overseas acquisition in April with a US$1 billion (S$1.41 billion) investment in Lazada Group, an online emporium based in Singapore. Ant Financial, formally known as Zhejiang Ant Small & Micro Financial Services Group, has unveiled an investment in Thailand's Ascend Money.

Meanwhile, Tencent backs Garena, a Singapore-based online gaming portal and e-commerce provider that was valued earlier this year at US$3.75 billion and may seek a US initial public offering within three years.

DBS acquires about half of its new credit-card accounts and 60 per cent of its new small and medium enterprise clients through digital banking, Gupta said. More than 90 percent of the bank's overseas remittances are transacted digitally, DBS said in July. The lender started a three-year partnership with International Business Machines Corp. in 2014 to harness cloud technology for data analysis to improve customer service.

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