United Overseas Bank - UOB Kay Hian 2016-09-19: Key Takeaways From UOB Engage

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UNITED OVERSEAS BANK LTD U11.SI

United Overseas Bank (UOB SP) - Key Takeaways From UOB Engage

• UOB has showcased its capabilities in digital banking. The bank leads the market in contactless payment and contactless ATMs. 
• For corporate and SME customers, UOB provides Internet banking platform BIBPlus for transaction banking and trade finance transactions. 
• It also incubates and mentors fintechs through its collaboration with IDA’s Infocomm Investments to set up The FinLab.

WHAT’S NEW

• We attended UOB Engage on 16 Sep 16, an event organised to showcase UOB’s progress in digital banking.

Simplifying the crux of digital banking. 

• Management has a jovial but succinct way of understanding banking relationships, which compose of:
  1. Having conversations with customers – front-end sale and distribution channels.
  2. Making customers sign papers.
  3. Changing digits on computers.

Value creation through increasing frequency of interactions. 

• Digital banking focuses on part (a) as parts (b) and (c) could be automated by straight-through processing. Digital banking creates value by increasing the frequency of interactions with customers. 
• UOB also makes extensive use of data analytics to understand customers’ needs and preferences, so as to improve the quality of life for its customers.

Going contactless with UOB Mighty. 

• UOB was the first to launch contactless payment using Android-based smartphones in the Asia Pacific region. To make payments at retail outlets, customers simply have to launch the UOB Mighty app, click the “pay” function, select the desired credit or debit card, enter the PIN and tap on the NFC-enabled contactless payment terminal using their smartphones. 
• Customers can also use the UOB Mighty app to perform daily banking transactions, pay bills and transfer funds.
• UOB is the first in the world to offer instant issuance of digital credit cards through smartphones. Customers are able to apply and receive digital credit cards in minutes.

Rolling out contactless ATMs. 

• UOB will launch the first NFC-enables contactless ATMs in Southeast Asia by the end of this month. Customers will be able to withdraw cash from ATMs by tapping their smartphones at ATMs, scanning their thumbprint and keying in their PIN.
• UOB will install at least 60 contactless ATMs by Jan 17 and all current ATMs will be replaced by new contactless ATMs by Dec 18. Customers using Android-based smartphones can start using contactless ATMs with the UOB Mighty app by Jan 17.
• Customers with UOB Mastercard and VISA cards will be able to use contactless ATMs at a later stage.

BIBPlus – Business Internet Banking Plus. 

• UOB’s BIBPlus is an Internet platform for transaction banking and trade finance transactions. 
• Corporate and SME customers can access account services, payment services, trade services and foreign exchange using their smartphones with the BIBPlus app.

Incubating fintechs. 

• UOB and IDA’s Infocomm Investments have jointly set up The FinLab, an innovation acceleration programme. UOB’s senior management is actively involved in mentoring the first batch of eight start-ups which were selected out of 200 start-ups. The eight start-ups will be given resources and support to build their network and expertise. There will also be opportunities for the start-ups to sell their ideas to investors and partners.
• The eight start-ups offer a diverse mix of financial services and will undergo a 100-day programme. They include: 
  1. Stock2Day – helps retail investors invest in the Thai stock market, 
  2. CardUp – helps consumers make credit card payments for recipients who may or may not accept credit cards, 
  3. Nickel – a cross border money transfer platform for SMEs to make foreign exchange payments.

Investment in crowdfunding. 

• UOB has invested US$10m in OurCrowd, a leading equity crowdfunding platform. 
• Asian companies with scalable products and services can get access to funding through OurCrowd’s equity funding platform. They can also tap on OurCrowd’s global investor network to jumpstart their international expansion and business development. 
• OurCrowd has invested U$200m in 93 portfolio companies since its launch in Feb 13, including four exits (ReWalk, Trendlines, Nextpeer and Billguard).

Partnering Temasek to set up InnoVen. 

• UOB and Temasek have set up a JV called InnoVen Capital. InnoVen has identified 20 start-ups in Southeast Asia, India and China for venture debt funding. The 20 start-ups are from a diverse range of sectors, such as ecommerce, fintechs, logistics and big data. 
• InnoVen aims to provide high-growth and innovative start-ups with US$500m of venture debt loans over the next five years.

NOT RATED, Target Price N/A.

Jonathan Koh CFA UOB Kay Hian | http://research.uobkayhian.com/ 2016-09-19

UOB Kay Hian SGX Stock Analyst Report NOT RATED Maintain NOT RATED 99998.000 Same 99998.000