1 We will share with you some of the opportunities in the financial services sector that we see in the coming months and years.
2 Let me start with where we are today. The financial services sector has done well amidst the COVID pandemic. This year, for the first three quarters, we have achieved 4.7% growth, notwithstanding COVID; under very challenging circumstances, which is very credible. Having said that, as I have mentioned before, we need to pivot now, not wait for the COVID pandemic to blow over. And when we say that we need to pivot now, we mean not just those companies who have not done well or are still suffering from the impact of COVID, but also those sectors that have done well, including the financial services sector. From our perspective, we see that the disruption in the financial services sector will continue, if not, accelerate. There are a few factors driving this disruption.
3 The first is the use of technology and data to enable new products and services. This is a trend that is not just happening in Singapore, it is actually happening worldwide. Whoever can master the technology and the data better, will be able to have a competitive advantage against its competitors. So that is the first factor that will drive the continuing disruption in this sector. The second factor is the innovation that will drive the new products, services, and business model. Whoever that can be faster off the starting block to innovate new products and services, new business model, in support of the more diverse financial needs of the market, will have an advantage in this competition. So, these are the two changes – the greater use of tech and data, and the greater need for innovation to meet the increasingly diverse needs from different segments in the market.
4 But there is one thing that will not change, and there will be one thing that can help Singapore's financial sector stand out amidst the competition, and this has become more important than ever. That is the factor of trust. Actually, financial services is all about trust. Where people put their money, who people borrow from, who do we lend to, how do we help businesses to grow by enabling them access to financial services that they can trust and financial services that are sustainable. Amidst the current pandemic and the geopolitical shifts, the search for a safe harbour for funds to be put to good use has become even more important, and Singapore is one of those safe harbours in the world that can allow investors to connect with people who need the financial resources, to guard against the vagaries of geopolitics and the vagaries of a potential bifurcation or fragmentation of the global trading system. So this is one key advantage that we have and we hope to leverage it.
5 What is our ambition? Our ambition is for us to strengthen our position as the leading financial hub in Asia, in service of the global market. We see a great opportunity during this crisis to strengthen this position. Because when the going gets tough, the tough gets going. The financial sector will be able to distinguish the really good ones from the not so good ones or the average ones. And we want to be among the leading lights.
6 There will be three shifts, over and above what we have been doing and have done well in the past. There will be three shifts that our financial services sector will need to embrace, in order to realise our vision to be the leading financial sector in Asia, in service of the global market. The first shift has been much talked about and that is digitalisation. There are two aspects of digitalisation. One aspect of digitalisation is the more straightforward one, which is how do we use digital technologies to enable current services and product offerings. That is one level of digitalisation but there is a higher level of digitalisation, which is how do we use the technology and the vast amount of data that is now available to create new business models, new financial products, in service of the more diverse needs from the market. For example, MAS recently announced green, sustainable financing schemes to answer and respond to the demands of the market, for a new kind of financing arrangement that talks to the environmental agenda. This is just one example but this shows that we must continuously be able to innovate new products and not just digitise existing products. The trend for digitalisation will continue to accelerate the disruption in the financial services sector.
7 The second shift that has already happened for quite some years and will intensify in the current technological environment is that we will have to connect beyond Singapore. All banks, be it Singaporean or foreign banks in Singapore, will have to serve the market beyond Singapore. And this is where MAS’ initiative, the Business sans Borders (BSB), helps our banks and our businesses to go beyond Singapore to really tap the world as our market, rather than be constrained by the size of the domestic market. We have to shift beyond seeing ourselves as the financial services sector in Singapore, to us being the financial services sector, from Singapore to beyond Singapore.
8 The third interesting shift that we have seen is that the financial services sector will no longer, and have never been, operating in silos. In fact, the intersection between the financial services sector and the other adjacent sectors has become more important, and will become a key competitive advantage for Singapore, if we are able to do this well. Increasingly, the financial services sector will have to work closely with the legal sector, the trade sector, the retail sector, and even many of the digital giants. Increasingly, the financial sector will no longer be seen in isolation as a financial services sector. It is about how able our financial services sector is to connect to all the adjacencies and compete as a network, beyond just a narrow sector. In many of the recent visits that Minister Josephine Teo and I have attended, many of the people when they talk about financing, together with trade financing, with retail financing, with legal framework, you can see that these are all examples of how we are building the ecosystem around the financial services sector, to mutually complement one another in order to strengthen our value proposition.
9 So these are the three shifts – the shift towards digitalisation, the shift beyond Singapore, and the shift to beyond the financial services sector in isolation. If we do these three things well, then we have every confidence that we will be able to stand out amongst the crowd, leveraging our brand of trust and as a safe harbour amidst the difficult challenges that we have at this point in time.
10 In order for us to realise this vision, there are two key enablers that we must continue to work on. The first is the skills of our people. There are two parts to the skills development. We are very happy to see banks like UOB, spending a lot of effort to grow their own timber, as they say, to grow their own people, upgrade their skills, so they can be ready for the new roles in the new financial services sector. At the same time, banks like UOB and other digital players in Singapore are increasingly tapping and growing their networks to access talent that may not be in Singapore, but to work with Team Singapore, in order to strengthen their competitive advantages. So the skills part is very important for us, and we must continue to make sure that we have the strongest team playing, pitching for Singapore.
11 The second part of the enablers which MAS has been doing a lot in order to realise our vision as the financial services hub of Asia, in service of the world, is regulations. MAS have put in place and adopted a very progressive stance in its regulations, ranging from many of the regulatory sandboxes that they have put in place to allow new financial products and services to be trialed, to be experimented, and introduced in the market, meeting the new, diverse needs of the market, and yet at the same time, ensuring the soundness of our financial system, and ensuring that people can continue to put their trust in our financial system. So we will continue to work on these two areas – the training and the skills upgrade for our people and Team Singapore; and the progressive regulations in order for us to enable our companies and banks to continue to innovate, as the financial services sector continues to evolve.