CIMB banks on all-digital strategy in the Philippines

But the advent of disruptive technology and financial technology (fintech) will allow banking players to enter markets differently. Our approach in the …

CIMB Group Holdings Bhd is counting on an all-digital strategy to help it make inroads in the Philippines, an attractive but tough banking market whose internet and mobile banking penetration is among the highest in the world.

It formally launched operations there on Jan 29, becoming the country’s first all-digital bank.

Analysts say CIMB Group will be a test case for other banks looking to make strides in one of Asia’s fastest-growing economies. Most foreign banks, including Maybank Philippines Inc, the only other Malaysian-owned commercial bank there, employ a branch-heavy model and struggle to make an impact.

It is a competitive market, with about 21 universal banks, 22 commercial banks, 57 thrift banks, 492 rural banks, 40 credit unions and 6,267 non-banks with quasi-banking functions.

“Starting a traditional banking business in new markets is never easy, especially without brand and scale. But the advent of disruptive technology and financial technology (fintech) will allow banking players to enter markets differently. Our approach in the Philippines is anchored in this principle,” group CEO Tengku Datuk Seri Zafrul Aziz tells The Edge.

As an “all-digital, mobile-first” bank, CIMB Bank Philippines Inc’s (CIMB Philippines) consumer banking proposition is backed by a suite of products accessible online and via mobile, he says.

“We also have a partnership-heavy distribution strategy, working with known local brands to provide electronic distribution at scale. This is what we mean by achieving brand recognition and scale quickly,” he adds.

CIMB Philippines’ partners include 7-Eleven and DragonPay, with a total of 8,000 customer touchpoints nationwide.

That CIMB Group has chosen the Philippines from all its regional markets to embark on an all-digital strategy is no surprise.

Filipinos were the world’s heaviest internet users last year despite relatively slow connection speeds, spending an average of 10 hours and two minutes online a day. This was according to Digital 2019, a report released last month by Hootsuite and We are Social, showing people’s online behaviour around the world.

Overall, there were 76 million internet users in the country. Mobile banking usage reached 54%, higher than the global average of 41%.

In December last year, CIMB Group also embarked on a digital banking proposition in Vietnam, launching its first digital lounge in Ho Chi Minh City and its “Octo” mobile banking app. But, unlike in the Philippines, it is also counting on branches to operate there. It set up its first Vietnamese branch, in Hanoi, in 2016.

“We have been making steady progress in Vietnam with the business growing organically,” Zafrul says, without elaborating.

CIMB Group is not opting for a branch banking model in the Philippines. It currently has only one branch in the Philippines, it is understood, to mainly fulfil the banking licence requirement.

“Consumers of today and tomorrow need innovative financial solutions that are relevant to their needs as well as help them get ahead and advance their financial well-being, but they don’t necessarily need a physical bank,” says Vijay Manoharan, CEO of CIMB Philippines.

On its website, CIMB Philippines says it offers, among others, bank account opening in just 10 minutes, the best in market interest rates for savings accounts, no transaction fees and withdrawal options at over 8,000 partner locations and over 20,000 ATMs nationwide for free — all through its Octo mobile app.

Its “UpSave Account” offers an interest rate of 2% a year, which it claims is eight times higher than that of competitors.

When asked how soon he anticipates CIMB Philippines making a profit, Zafrul says: “We have some internal benchmarks and milestones. We feel comfortable with the investments we are undertaking, and are currently focused on building a robust digital business and bringing high-value propositions to the market to drive customer acquisition.”

Of CIMB Group’s overseas operations, Indonesia, Singapore and Thailand are its biggest contributors to earnings.

The group also recently received regulatory approval from the Securities and Exchange Commission of the Philippines for its investment banking joint venture, CIMB Bancom Capital Corp, in the country.

According to Zafrul, CIMB Group holds a 60% stake in Bancom Capital Corp while Bancom II Consultants Inc and PLP Group Holdings Inc each holds 20%.

“This is anchored in bringing CIMB’s Asean investment banking brand to Filipino corporates wanting to expand in the region and originating in-bound transactions from Asean to the Philippines. It’s an extension of our very successful Asean investment banking franchise,” he says.

The Philippines is a promising market, considering its economy has been the fastest-growing in Asean in recent years. Last year, the economy grew 6.2%, the slowest in three years, but still among the fastest in Asia.

The World Bank has projected that the economy will grow 6.5% this year and by a slightly faster 6.6% in 2020 and 2021. Its forecasts are below the Philippine government’s target range of 7% to 8% yearly until 2022.

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Indecision Mars Crypto Efforts In Malaysia, As Government Remain Undecided Over Legalization

… and central bank issued a joint statement, confirming they were setting up regulation on cryptocurrency and initial coin offering (ICO) assets.

The Malaysian government is still undecided whether to legalize cryptocurrencies in the country.

According to a report by English-language local media New Straits Times on Jan. 12, the Malaysian Federal Territories Minister, Khalid Abdul Samad, while fielding questions on whether digital currencies are currently legal or illegal, replied saying: “At the moment, the answer is neither legal nor illegal as the situation is still unclear.”

Mr. Samad noted that while he was involved in the launch of Harapan Coin (HRP) — a proposed political cryptocurrency — he isn’t the finance minister and therefore the matter does not fall under his jurisdiction.

It would be recalled that in December 2018, Malaysia’s finance regulator and central bank issued a joint statement, confirming they were setting up regulation on cryptocurrency and initial coin offering (ICO) assets.

Samad was also reported to have previously proposed to Bank Negara Malaysia and Prime Minister Tun Dr Mahathir Mohamad to use the digital currency, Harapan Coin, for government transactions.

However, according to a report by Cointelegraph in November, 2018, a Malaysian Member of Parliament had urged the government to implement proper cryptocurrency regulations before undertaking the Harapan Coin cryptocurrency project. Cointelegraph further explained in December, 2018 through a dedicated analysis that as much as 30 percent of the funds raised for the project were destined for the system’s administrators — who remain effectively anonymous.

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Malaysian Government Reportedly Still Undecided on Whether to Legalize Crypto

… central bank issued a joint statement in which they confirmed they were setting up regulation on cryptocurrency and initial coin offering (ICO) assets.

The Malaysiangovernment is reportedly still undecided whether to legalize cryptocurrencies, English-language local media New Straits Times reports on Jan. 12.

When answering a query about whether digital currencies are currently legal or illegal, Khalid Abdul Samad, the Malaysian federal territories minister, reportedly said:

“At the moment, the answer is neither legal nor illegal as the situation is still unclear.”

Samad also pointed out that while he was involved in the launch of Harapan Coin (HRP) — a proposed political cryptocurrency — he wasn’t appointed as finance minister, noting that the the matter therefore does not fall under his jurisdiction.

In December 2018, as Cointelegraph reported, Malaysia’s finance regulator and central bank issued a joint statement in which they confirmed they were setting up regulation on cryptocurrency and initial coin offering (ICO) assets.

Samad has also reportedly previously proposed to Bank Negara Malaysia and Prime Minister Tun Dr Mahathir Mohamad to use the digital currency, Harapan Coin, for government transactions.

However, as Cointelegraph reported in November last year, a Malaysian Member of Parliament had urged the government to implement proper cryptocurrency regulations before undertaking the Harapan Coin cryptocurrency project.

Cointelegraph explained in a dedicated analysis in December 2018 that as much as 30 percent of the funds raised for the project were destined for the system’s administrators — who remain effectively anonymous.

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From Goldman’s 1MDB Scandal to Bitcoin, Here’s a Look Ahead at 2019

One year ago, Bitcoin was minting millionaires as its value surged to nearly $20,000. Now it is worth about $4,000, and many wonder whether it can …

Goldman raised more than $6 billion for that fund, called 1Malaysia Development Berhad, or 1MDB. The money was supposed to benefit the Malaysian public but ended up enriching Goldman and those close to Najib Razak, who was prime minister. In December, the Malaysian government filed criminal charges against Goldman, accusing the firm of violating securities laws there.

Those charges come on top of a Justice Department investigation of violations of the Foreign Corrupt Practices Act, which bars corporations from bribing foreign officials to gain a business advantage. Goldman’s former top banker in Asia, Timothy Leissner, pleaded guilty in August, describing his role in concealing bribes and kickbacks. Charges were also filed against Roger Ng, Mr. Leissner’s former deputy, who is being held in Malaysia pending extradition.

The firm initially tried to shake off the charges by claiming that any misconduct was the work of a few rogue employees, but reports that Goldman’s former chief executive Lloyd C. Blankfein met with a key figure in the fraud have undercut that defense.

Goldman’s chief executive, David M. Solomon, has offered a full-throated defense of the firm. In a message to employees, he wrote: “We believe our culture and our processes around our due diligence and compliance was strong at the time, and is even stronger today.”

An American corporation can be prosecuted for the acts of its employees, so Goldman does not have many defenses if prosecutors decide to file charges.

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Guan Eng puts the brakes on cryptocurrencies pending Bank Negara decision

KUALA LUMPUR: Finance Minister Lim Guan Eng has put the brakes on those seeking to create cryptocurrencies, pending the final word from Bank …

KUALA LUMPUR: Finance Minister Lim Guan Eng has put the brakes on those seeking to create cryptocurrencies, pending the final word from Bank Negara Malaysia.

“We need to be cautious as Bank Negara is the authority that handles and manages all forms of new currency technology.

“I am certain that there are those trying to introduce their own mechanism.

“This is where I wish to advise all parties, no matter who they are, intending to issue bitcoins or cryptocurrency, that they must refer to Bank Negara which is the authority that will have the final say on this new form of currency,” Lim said when answering a question by Datin Paduka Dr Tan Yee Kew (PH-Wangsa Maju) in Parliament on Monday (Nov 26).

Lim said it was necessary for the central bank to carry out an indepth study on the matter.

“Don’t do it without Bank Negara’s guidelines or directive on the matter to avoid doing something wrong and against the law,” he said.

He added that the government was still open to new forms of currency but this must be done in accordance with existing laws.

Dr Tan wanted to know what measure were being taken to address the issue of cryptocurrency as it could result in problems for the local currency.

Later, during debates at the committee stage on Budget 2019, Khairy Jamaluddin (BN-Rembau) asked about the status of the “Harapan Coin” cryptocurrency, saying there were reports that it has been sold through Harapancoin.com.

“Although it is a new initiative and has yet to get approval, it was reported that the coin is being traded at US$45 for 100 units and has since collected US$772,” he said.

The proposed Harapan Coin was raised by Federal Territories Minister Khalid Samad earlier this month, who said it would be the world’s first political fundraising platform using blockchain and cryptocurrency technologies.

Khalid had said that the paperwork and presentation on the Harapan Coin has been prepared and will soon be presented to Bank Negara and Prime Minister Tun Dr Mahathir Mohamad.

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