Are property marketplace players threatened as DBS comes after their customers?

The bank has small service providers rattled with the launch of its online property marketplace.

Small startups aiming to get in on the action on Singapore’s profitable e-commerce scene may need to rush as heavyweight banks are increasingly muscling their way into the marketplace scene, effectively sealing their dominance across verticals.

This comes as DBS recently unveiled its third consumer portal in the form of an online property marketplace designed to connect home buyers and tenants to prospective homes as well as enable purchase, rentals and loan transactions.

OCBC beat DBS to the game after launching a similar online advisory service a few months earlier with OCBC OneAdvisor which provides access to more than 135,000 property listings, policy details, regulations and affordability advice to prospective buyers and investors.

The move is widely seen as lending support to the banks' efforts to grow the customer base for their mortgage loans, which is a net positive for offering banks who faces dismal lending prospects in the coming quarters following the government's surprise cooling measures. 

Also read: Property cooling measures could threaten bank loan growth

"Real estate has always been a lucrative sector for any company to enter into," according to property agency Huttons Asia.

Housing loans constitute the largest portion of Singapore bank lending with UOB exposure estimated at 27.9%, according to UOB Kay Hian. OCBC trails closely behind with property exposure of 27.6% whilst about 21.4% of DBS loan portfolio are housing loans. 

However, smaller players which offer similar services run the risk of getting ran over by bank-led marketplaces who not only have formidable tech infrastructure but access to a massive pool of customer data already at their hands.

“Banks are well-funded, so naturally it is not a fair competition,” observed Paul Ho, chief mortgage consultant at online mortgage platform icompareloan. “Smaller platforms will definitely be at a disadvantage in terms of capital they have to make things work.”

Nevertheless, non-bank platforms can still cash in on their independence from the bank, added Ho, as customers still place premium on receiving the most objective assessment of their financial needs regardless of the bank which provides the service.

“You will still need a marketplace where opinions are not dominated and curated by one big boy,” said Ho.

Darius Cheung, CEO of property marketplace 99.co echoed the sentiment, adding that consumers are still likely to opt for non-bank platforms for their property needs. 

"Consumers are discerning and rather than trust a single provider, they would prefer a third party platform to provide a more comprehensive selection. I am doubtful it would attract users to search for homes where there is substantially less listings choice, nor for mortgage loans where consumers are allowed only DBS options," he told Singapore Business Review.

The complex bureaucratic structure of banks might also get in the way of innovation, Cheung added, which could dampen their attractiveness to homebuyers.

"Even in the fin-tech space where banks have formidable data, tech infrastructure as well as a regulatory advantage, we still see them struggling to outpace newer tech companies like Grab on the e-payments/ e-wallets front," he noted. "At the moment, we don't see this being a viable competition for us and have no plans for any reactionary measure."  

Huttons Asia, however, takes the middle ground, suggesting that banks need to strike the balance between competition and collaboration. "Banks can penetrate across verticals. But the banks' primary business model and success also depends on the patronage of SMEs/smaller platforms/startups businesses as well. Banks have to be sensitive about the needs of every player in the ecosystem."  

Security concerns
Data-powered platforms operated by an one entity also face heightened cybersecurity risk especially after the recent data breach at national public health system SingHealth where the personal information of 1.5 million individuals, even the Prime Minister's records, were illegally accessed.

In response to these concerns, the de-facto central bank Monetary Authority of Singapore (MAS) urged financial institutions to tighten customer verification processes and avoid using the information stolen (including names, NRIC number, address, gender, race and date of birth) for verifying customer identities.

“We have in place a set of rigorous authentication measures to validate our customer’s identity before proceeding with the request. However, to combat the risks arising from the SingHealth incident, we have further enhanced our customer verification process to prevent any unauthorised financial transactions,” said Koh Ching Ching, head, group corporate communications at OCBC Bank.

However, Ho argues that risk is an inherent part of the territory and that banks and startups alike need to amp their cybersecurity measures to stay ahead of the game.

"Whether we like it or not, more and more data is being volunteered or crawled, scraped or Sold across multiple platforms, such as those in the Big data and AI, so there is no real privacy to speak."  

For Huttons Asia, the SingHealth incident showed that even “stronghold” government agencies are not immune to cyber security risks. “As a consumer, I would still err on the side of caution rather than provide all my personal details to one entity.”