OCBC Bank is in talks with Keppel Corporation, peer-to-peer lender Validus Capital, and Vertex Ventures, to form a digital-bank consortium.
OCBC is likely to take an equity stake in the consortium rather than open up its balance sheet, «Business Times» (behind paywall) reported. With a track record of being active in the small- and medium-enterprise (SME) lending space, this move could augment the bank's share in this segment.
If the Singapore lender opts to enter the digital banking scene, the bank will face direct competition from its own virtual entity. «We have to accept that there will be cannibalisation. But on the other hand, the mothership should also be in a position to go out and compete,» said OCBC's chief operating officer Ching Wei Hong during a press briefing in October.
Exploring Partnerships
In August, the lender has indicated that it is looking for partners ahead of the introduction of virtual bank licenses in Singapore.
Among the three local banks, DBS and UOB have rolled out standalone digital banks in regional markets and have stepped up their efforts in digitalizing processes, said CGS-CIMB analyst Andrea Choong in the report. «OCBC is a laggard in this respect, but we strongly believe it will be part of a consortium in the run for a license come end-2019.»
