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Seniors lead digital adoption rates in Singapore as virus disrupts normal life

Seniors have been among the fastest to switch to digital banking services in Singapore in 2020, likely as they were forced to stay indoors by the novel coronavirus outbreak.

Almost a third of the more than 100,000 DBS Group Holdings Ltd. customers who activated online spending services between February and April were above 50 years old, according to Jeremy Soo, head of the lender's Singapore consumer banking group.

Rival Oversea-Chinese Banking Corp. Ltd. reported a 20% year-over-year increase in digital adoption among customers aged between 60 and 80. Senior customers are "our fastest-growing segment for digital adoption," said Pranav Seth, head of digital and innovation at OCBC Bank.

Older people are generally perceived to be hesitant about adopting new technology, preferring face-to-face interactions at bank branches. According to a 2019 survey conducted by Singapore's Infocomm Media Development Authority, residents aged 50 years and above had lower adoption rates in online shopping, internet fund transfer and mobile wallets, compared with respondents in the 15-49 age group. A "lack of skills" and "no need to use" were cited as the main reasons to stay away.

That poses a challenge to traditional banks as they invest in technology and prepare to fend off the looming threat from new digital-only banks. The pandemic may have given them some more breathing space.

The Monetary Authority of Singapore said April 9 that it will delay its decision on awarding digital bank licenses to the second half, from an original deadline of June. However, the central bank urged individuals and businesses to use digital financial services and e-payments to contribute to distancing measures announced by the government.

READ MORE: Sign up for our weekly coronavirus newsletter here, and read our latest coverage on the crisis here.

The city-state is currently on a "circuit breaker" period; a partial lockdown implemented from April 7 and scheduled to last until June 1. Essential businesses remain open, although most workplaces and schools have been shut. That is helping drive customers to digital services.

DBS' Soo is optimistic that the trend will continue after the virus has subsided as the 50-years-and-above segment has been spending more on food delivery and online marketplaces and has conducted more contactless payments via credit and debit cards as they grow more conscious about hygiene.

United Overseas Bank Ltd. did not disclose the uptick in digital adoption attributed to the senior demographic, although Aaron Chiew, head of mobile and digital for group retail, noted a "record number" of customers accessing its digital banking services in March.

Popular with wider demographic

Apart from the seniors, the Singaporean banks' digital services have gained traction among the wider demographic.

"Since the virus outbreak, we have seen this [digital banking] growth accelerate as more people stay at home and adapt to the changes that we're all facing here," said DBS' Soo.

Digital banking signups in February and March rose 15% year over year. Responding to the higher demand, DBS has advanced the launch of features, such as online equity trading account opening and tele-advisory for online financial planning, that were originally slated for later in 2020.

"In the last two months, we have already accelerated several rollouts we planned for the course of this year," said CEO Piyush Gupta during an earnings call April 30. "In some cases, we have created shortcuts to add some more that weren't even on the agenda."

OCBC, too, has seen higher demand for digital services. The bank now acquires one out of every three credit card applications and 30% of its current and savings accounts digitally. Digital auto and home loans, which were introduced earlier in 2020, have also shown "significant uptake," according to Seth.

UOB did not disclose its customer signup numbers.

Cashless transactions up

The banks also reported an increase in online transactions as customers avoid physical cash.

For the first three months of 2020, DBS recorded 100 million more digital banking transactions and a S$8 billion year-over-year increase in value. Contactless card purchases almost doubled from last year, while its e-wallet PayLah! recorded 2.3 million more transactions in the first quarter, with the total value increasing by 40%.

In the same period, OCBC saw a 40% growth in financial transactions, with more than 90% of the total financial transactions in Singapore conducted digitally. ATM transactions have dropped 20% month over month in March, but QR code-based cash withdrawal from ATMs increased by 20%.

For UOB customers, first-quarter online grocery shopping grew 44% year over year. Online food orders rose 41% and e-commerce transactions were up 36%.

UOB also reported an increase in online applications for its investment products. Gold purchased digitally surged more than 20 times in March compared with 2019. Digital applications for unit trusts also hit a "record high" in the same month, Chiew said.

Digital efforts continue

The banks plan to keep up the effort to ensure that customers remain digital even after normalcy returns.

"To sustain this momentum and create a new digital normal for financial services in Singapore, we will need to have our customers experience these digital benefits over multiple interactions to establish the digital convenience and break the old habits for good," said OCBC's Seth.

DBS is projecting 1 million customers to become fully digital by 2020-end, from its original goal of 2021. The number of fully digital users, which the company defines as customers who actively bank online but who have not visited a branch or called its phone helpline for 12 months, is about 900,000.

"What the present situation may propel is the stickiness of this consumer behavior," said DBS' Soo. Prior studies have shown that this trend could be sustained as customers who pick up digital payments or banking services "tend to stick with them after overcoming the initial inertia or when they have the impetus to adopt digital services."