By Anshuman Daga
HONG KONG (Reuters) -Singapore's digital banks will find it hard to carve out space in the city-state's saturated market, said Piyush Gupta, the CEO of DBS Group, Southeast Asia's biggest bank.
Online-only banks are due to start operations in Singapore next year in the financial hub's biggest banking shake-up in two decades.
"In Singapore, it's not that easy for digital banks to carve out space," Gupta told the Reuters Next conference on Friday, pointing to Singapore's 98% banking penetration and incumbents' strong digital product suite.
"Even in markets like Brazil and China you can see that the relative market share, size and growth of the incumbent banking system hasn't shifted very much," he said.
Last December, Singapore-based internet platform company Sea Ltd and Southeast Asian ride-hailing firm Grab's venture with Singtel won full digital bank licences https://www.reuters.com/article/singapore-banks-idUSL1N2IK0T1, and are due to start operations on a restricted basis from 2022.
But Gupta said guidelines by the Singapore regulator to ensure that newer entrants have a profitable business over the next few years would prevent them from buying market share by running huge losses over time.
"Without a doubt, you are going to have to compete. People will come in with aggressive pricing products and so on. But on the whole, I think we're relatively well positioned and we should be able to hold our own," he said.
Over the past decade, Gupta has steered DBS into investing billions of dollars to upgrade its technology infrastructure as it embraced cloud computing and digitised its services.
Gupta said the bank's business momentum was robust despite the Omicron coronavirus variant spreading globally and battering markets as investors worry about the impact on economic growth.
"When I look at our loan book and own loan pipeline, those are quite robust, and that's true across the region, including in China where macro numbers are slowing down. But for a player like us, we are seeing reasonably good momentum in our business there," he said.
"As we are looking at our pipelines and our business projection for 2022, I think we'll pretty much continue to see fairly similar momentum as we go into the year."
Last month, DBS beat market estimates with a 31% rise in July-September net profit, aided by growth in fee income and improving asset quality.
(Reporting by Anshuman Daga; Additional reporting by Aradhana Aravindan and Alun John; Editing by Ana Nicolaci da Costa)