Hong Leong Finance Ltd. in Singapore has plans to apply for a digital banking license following the Monetary Authority of Singapore’s (MAS) roll-out in June.
According to this Straits Times (ST) report, Hong Leong sees this as an “opportunity to find new customers and re-invent itself as a tech-savvy lender to the nation’s new businesses”.
The 58-year-old firm has plans to jointly apply for one of the licenses with fintech companies, its President Ang Tang Chor shared.
It seeks a partner that will be able to enhance its lending services with technology as it sees itself doing more business with millennials and new companies.
The 70-year-old said in an interview that the firm has the customer base and the reach, but they don’t have the platform.
Some of Hong Leong’s application process still uses fax, ST wrote.
Approximately 70% of the bank’s loan book “is made up of advances to small and medium=sized businesses in areas such as property development, food and beverage and logistics”.
The rest are lending to retail customers.
Ang told ST that Hong Leong’s potential borrowers are required to provide a history of financial information before the bank can approve new loans.
This potentially poses a problem for some individuals and smaller firms.
So by teaming up with a tech firm for a virtual license, the bank hopes to use efficient ways to get information, like real-time information on company invoices, or individuals’ credit card records and social media posts.
They are also looking to introduce payment cards for expatriate workers and instant credit risk assessments for car loans.
Ang believes that Hong Leong needs to adapt if it is to appeal to younger clients.
He said, “The next generation of depositors and clients are going to be people who are tech-savvy so we will have to go in that direction.”
“The fintechs have one advantage: they lend against data.”
It is slowly becoming increasingly important to financial institutions which have typically used other criteria like company balance sheets, he noted.
Featured Image Credit: Hong Leong Group Singapore