BankBazaar Singapore – January 10, 2018
Singapore: With more and more banks considering the integration of digital technology into their businesses and the government initiating concepts like smart nation, Singapore could witness a fintech revolution in the coming years.
Technologies such as distributed ledgers, artificial intelligence (AI), and cryptography are steadily gaining traction in the country’s financial sector. In November last year, OCBC became the first Singapore bank to use AI and machine learning to fight financial crime. In the same month, the Monetary Authority of Singapore (MAS) launched a grant to promote fintech.
Analysts across the board remain optimistic about the benefits of technology in the financial sector. In a recent report, Jonathan Koh, analyst at UOB Kay Hian, noted that fintech driven by the likes of AI and mobile technology could help banks reach more customers and lower costs.
Koh stressed his point highlighting the cost efficiency that OCBC has been able to achieve. In a separate report released earlier, UOB Kay Hian had said that OCBC’s staff-cost per employee was the lowest among banks in the country.
Another bank that has embraced digital technology is DBS. In 2016, the financial publication Euromoney picked DBS as the best digital bank. Last year, the lender said it plans to invest S$20 million over the next five years to get its employees ready for a technology-enabled future.
However, while the entry of technology into the financial sector is largely seen as a positive development, there are several concerns that remain. For instance, the concept of distributed ledger technology (DLT) that supports cryptocurrencies like Bitcoin is yet to receive widespread acceptance.
International banks like Santander have already begun to take steps towards the use of distributed ledgers. In Singapore, MAS is still running tests on the practicality of the technology in financial transactions and related activities.
DLT could potentially disrupt the traditional banking system and bring down earnings from products such as credit cards. This is a cause of worry for many. There are also concerns of governments losing control over the financial industry.
But to Koh such concerns are exaggerated. He pointed out how central banks remain in full control of fiscal policies despite the rising popularity of cryptocurrencies. And at least for now, cryptocurrencies are mainly used for low-value transactions that are usually done with cash.
Fintech is definitely here to stay and Singapore is likely to see technology playing a more prominent role in the financial sector soon. However, it is up to the lenders and the government to alleviate concerns of customers and ensure its prompt adoption.