Industry experts explain how the banks in Singapore want to be digital to the core, embed their services in the customer journey, and nurture a start-up culture that can drive change
Technology is a key driver of growth for the financial services industry in Singapore. Experts say technology is critically important and a key enabler in the government’s push towards a ‘Smart Nation’ and financial sector priorities are set out in the Financial Services Industry Transformation Map. Despite the COVID-19 pandemic, one of the bright spots for the Singapore economy in 2020 was the financial services sector, which registered 5 per cent growth in 2020 while the overall economy shrunk by 5.4 per cent.
Meanwhile, the full year 2021 outlook for the financial sector is expected to be positive 4.7 per cent, while the overall economy is projected to grow 4-6 per cent, according to the Singapore Ministry of Trade and Industries report from 25 May 2021. These statistics point to the fact that, similar to China, Singapore is set for growth in its financial services sector.
More recently, several multinational financial institutions have publicly announced that they will boost their hiring in Singapore in the thousands and the Monetary Authority of Singapore (MAS) projects 6,500 new jobs will be added in 2021.
A major share of these new roles are likely to be in the wealth management and technology sectors.
Alvin Goh, Association of South East Asian Nations (ASEAN) head of securities services, Citi, explains: “The continuous efforts to develop and deepen Singapore as a wealth and fund management hub, consolidate and strengthen its position as a key global foreign exchange centre, promote Singapore as an environmental, social and governance (ESG) financial centre and push to entrench technologies in the financial industry will provide the pillars for positive and sustainable growth.”
Technology and development
Technology will be key to continuing the development of Singapore’s financial services industry, and is supported by industry and government-backed initiatives including various grants. Technology is central to how Singapore financial services are produced, distributed, and consumed.
Industry participants observe that the Singapore financial sector has harnessed technology across various functions, from risk management, business analytics to customer services. It is now among the most tech-enabled financial centres, with a vibrant fintech ecosystem and solid digital infrastructure foundation.
According to Andrey Yashunsky, founder and CEO, Prytek, the banks in Singapore want to be digital to the core, embed their services in the customer journey, and nurture a start-up culture that can drive change.
Noor Adhami, head of securities services, HSBC Singapore, comments: “Innovation within the financial institution space has also been prominent — for instance, HSBC has been leading the exploration of digital assets to transform capital markets infrastructure. In 2020 we executed Asia’s first public bond issuance on a distributed ledger technology (DLT)-enabled platform with SGX and Temasek in Singapore.”
Technology innovation has received a further boost with the launch of more than 40 innovation labs in Singapore. In some cases, these have received grants to drive development in artificial intelligence, data analytics, and other emergent technologies.
“Singapore’s progress in creating an integrated financial services ecosystem using technology and data as the backbone is impressive,” says Adhami.
Testament to this creativity is the growing use of application programming interfaces (APIs) across financial institutions and fintechs, along with the introduction of foundational digital infrastructures, including digital identity and data exchange. Meanwhile, there has also been progress made in the payments space since Singapore opened up its payment systems to non-banks enabling interoperability in November last year.
Industry participants have also observed that Singapore has also been actively exploring distributed ledger technology (DLT). For example, Project Ubin provides an example where the regulator is collaborating with the industry to explore DLT for clearing and settlement of payments and securities.
Prytek’s Yashunsky suggests that the pandemic has fundamentally changed the banking and financial services industry. “As a result, many financial institutions in Singapore have repositioned their strategy to focus on developing and strengthening their digital capabilities to address the changing needs of their employees and customers,” he says.
Meanwhile, the government is helping to support this growth through the work of MAS and the Infocomm and Media Development Authority (IMDA).
Ready, Set, Growth
Singapore’s asset servicing ecosystem is set to continue on its growth trajectory, underpinned by new fund structures, its strong focus on digital and leading in innovation.
Technology will be a major key to this boost. Experts also believe that asset servicers will continue to innovate with digitalisation and automation to reduce operational costs while providing best-in-class service to clients.
“Singapore is a progressive funds hub with its flexible investment fund structures such as the Limited Partnership, and the VCC — a corporate structure designed for investment funds,” Adhami affirms.
Among other factors, the focus on ESG and financial inclusion will see more investors participating in the market. Singapore’s asset servicing sector needs to be prepared to support this demand, and to service new innovative products (ESG, digital assets) and evolving business models (wealth and distribution).
For HSBC, Adhami says: “We are increasing our talent pool, strengthening our digital capabilities and enhancing our expertise in servicing ESG-themed products to support the continued growth in Singapore.”
At Citi, Goh believes that Singapore will see comprehensive adoption of technologies such as robotic process automation and natural language processing. Additionally, Goh states the future will see the development of capabilities to service emerging digital asset classes and distributed ledger technology in the post-trade space to reduce latency and improve reliability and efficiency.
Goh concludes: “Singapore will strive to consolidate and enhance its position as one of the key Asia Pacific (APAC) financial hubs for wealth and fund management, which in turn will incentivise asset managers to manufacture fund products locally. The next phase is to promote connectivity with other fund jurisdictions in APAC through fund passport schemes or bilateral fund recognition regimes
