SINGAPORE (Mar 23): UOB Kay Hian is maintaining its “buy” call on Oversea-Chinese Banking Corporation (OCBC) with a target price of $14.95.
In a Thursday report, analyst Jonathan Koh says, “We are encouraged to see OCBC embarking on many IT initiatives to improve operating efficiency.”
OCBC has established an in-house unit with an initial investment of $10 million to develop artificial intelligence (AI) capabilities across commercial banking services, such as wealth advisory and loan financing.
See: OCBC is first bank in Singapore to establish AI unit
The AI unit dubbed the AI Lab @ The Open Vault (AI Lab @ TOV) serves as a test bed to demonstrate feasibility of new AI technologies before integration with OCBC’s existing systems.
In Jan 2017, OCBC launched its AI-powered chatbot, which currently has already generated more than $100 million of home loans.
Meanwhile, OCBC’s retail customers can now speak to Siri, Apple’s virtual assistant, to perform their day-to-day banking and make cashless payments.
See: OCBC customers can now ask Siri to show them the money
In addition, the bank has built two software programmes – Bob and Zac – which utilises robotic process automation technologies for deployment in consumer secured lending and finance.
Bob handles home loan restructuring, including verification of customers’ data, determining eligibility for restructuring and recommending appropriate home loan restructuring packages. It takes just one minute to complete the 199 process steps, compared to 45 minutes for a person.
Zac on the other hand takes 12 minutes to complete the 166 process steps to generate daily sales performance reports, compared to two hours for a person. Top management now receives sales reports promptly at 9am daily instead of 4pm, which enables more effective decision making.
OCBC’s new regional data centre was fully operational since 3Q17.
See: OCBC lifts the veil on $240 mil purpose-built regional data centre design to withstand attacks
The purpose-built data centre which it fully owns and operates is designed to prevent security breaches from cyberattacks.
The six-storey facility has a built-up floor area of 134,500 sq ft and was developed for $240million, serving the needs of OCBC Group, including Bank of Singapore, OCBC Wing Hang, Great Eastern, Lion Global Investors and its overseas branches across 18 countries.
Hence, the analyst believes that the bank has great potential to improve its productivity by trimming headcount of 29,174 staffs, the largest among local banks.
As at 9.39am, shares in OCBC are trading 36 cents lower at $12.90 or 1.4 times FY18 book with a dividend yield of 3.1%.
