UOB is chasing the millennial dollar with more aggression this year, with an aim to bank with one in two millennials in Singapore by 2019.
In an early salvo, UOB said on Tuesday it would offer a service to young professionals to have their interest earned from their One Account - a UOB savings account - and their rebates from spending on UOB's YOLO credit card channelled into a fund run by the bank's asset management arm.
For its millennial customers, UOB has waived the 2 per cent online sales charge and has also cut the minimum initial investment amount required to S$10 from S$1,000. The annual management fee of 0.63 per cent remains.
The S$1.15 billion low-volatility fund, known as the United SGD fund, invests mainly in bonds, and was up 3.36 per cent in the year up till Nov 30, 2016. The figure excludes the sales charge.
This "sweeping" service lowers the resistance to investing, and helps young affluent millennials - aged between 24 and 35 years - to set money aside for investments, said Dennis Khoo, UOB's head of personal financial services, Singapore.
"This is a really painless way to get started," Mr Khoo toldThe Business Times, noting there should be less resistance from young investors when it isn't extra money that they would have to place into the fund.
UOB's survey in August showed that the top reasons millennials here held back from investing were high upfront fees; preference for cash savings; and their view that the minimum purchase amounts for unit trusts is too high. Some 400 millennials earning at least S$6,000 per month were polled.
Customers can monitor the fund's performance on the bank's app, and top up investments online any time.
UOB is open to adding more funds to the mix, which can include funds not offered by the bank's asset management arm, Mr Khoo said.
Millennial spending currently accounts for 20 per cent of UOB's total card spend, and one in three millennials in Singapore currently banks with UOB. The bank aims to grow that figure to one in two by 2019.
As it is, 67 per cent of UOB's millennial customers already have a UOB current or savings account.
Meanwhile, millennial spending now accounts for 20 per cent of UOB's total card spend. Mr Khoo said its YOLO card - aimed at young professionals - has been a "runaway success", reaching critical mass in about 15 months, ahead of their internal projections of 24 to 36 months.
This also comes as banks here are competing to more closely tie customers' spending, saving and investing habits to the banks' services.
Banks have used savings accounts to encourage customers to have a more active relationship with the lender, moving beyond the basic salary crediting, to paying bills and tying higher interest on savings with card spending. This trend, said Mr Khoo, also speaks to the rising need of banks to compete by raising quality deposits in the post-crisis period.