Vital to get digital banking right in Singapore

Sam Kok Weng Financial Services Leader, PwC Singapore

This article was contributed to and first published in The Business Times on 13 September 2019.

Lenders should leverage alliances and partnership opportunities so as to develop a fully digital ecosystem and access better technologies, innovations.

FASHION accessories trader Andria Lim is ready to board an early flight from Singapore Changi Airport for meetings with suppliers in Shenzhen. She settles in, blinks twice, activating the display in her glasses, followed by an instant retina scan authentication. She reviews her messages and finds a note from her banker on new forex products and tips on leveraging Asean markets for her business.

Andria concurrently logs on to the business trading interface on her bank's mobile app to find new orders, status of invoices and potential prospects. She identifies temp staff to recruit for her upcoming trade show from this Asean business community embedded in the app. What she enjoys most is connecting with other like-minded business owners and entrepreneur-friendly companies via the marketplace in the app, thanks again to the bank. This seamless single platform for all her business needs saves time and costs. The impact is much evident in her double-digit business growth numbers.

Welcome to the future of digital banking. This, however, isn't very far off from where we are today.

Much has already changed over the past few years in response to the evolving forces of customer expectations, technological advancements and changing consumption patterns. Established lenders have stepped up their game in digital banking, which typically commands razor-sharp focus on hyper-personalisation, adoption of new technologies and data-driven business models.

By mid-2021, Singapore will have as many as five new digital banks.

But the moot point is that all wheels of Singapore's financial services ecosystem must move in tandem to embrace the new regime and co-create an environment conducive for our digital banks to succeed. It's easy to start, but absolutely vital for us, as a nation, to get it right. After all, the financial services sector is what cements Singapore as the regional business capital and one of the world's most stable economies with consistent surplus and zero foreign debt.

At the outset, this calls for a complete mindset makeover. As a compact nation, we get caught into calling Singapore a "small market" with growth challenges. But then, if we think global and morph niche local segments into large global communities, the sky is the limit. The opportunity is now for us to punch above our weight in the global banking scene.

All ecosystem players must play their part in piecing the digital banking puzzle.

End users

Consumers are central to digital banking, and this is the best time ever for them all.

Specific segments of mass retail market with bespoke financial needs - for instance, gig economy players, avid travellers and cost-conscious consumers - will benefit from differentiated end-user experience.

Consumers need to believe in this change, experiment and try new services. They must understand the associated risks, yet be open-minded while soaking in the digital banking experience.

Data is fuel to digital banking. The policy framework around data privacy, which is driven by consumer preferences, has the potential to make or break the game.

Ditto for SMEs - the best of times are here. The most underserved segments will have access to financial and non-financial products that are not only attuned to their needs but also help measure risks and returns, and effectively power them up to compete. Singapore has emphasised the new digital banks' role in helping SMEs embrace digitisation. But then, the onus remains on SMEs to look at innovation and digitisation as their key recipe for growth.

Ecosystem enablers

The government, regulatory agencies, industry associations and educational institutions play a crucial role in enabling and mobilising ecosystem players in achieving Singapore's overarching goals. The right mix of education system, business collaborations, policy framework and regulatory regime is key. Singapore is most certainly aligned.

A sustainable self-reliant future of digital banking will also depend on infrastructure around technology, IP and proactive policy intent in understanding and removing roadblocks. Most importantly, what are we doing to prepare Singaporeans for big roles in the digital banking space?

The open-mindedness of policymakers in consistently tuning in to future requirements of this new emerging industry will go a long way. The objective is to move away from a one-size-fits-all approach, and ensure both the software and hardware of the digital banking ecosystem are fit and running.

New entrants

Fintechs and other new players vying for licences can look beyond quick gains, and instead harbour long-term visions of being ecosystem enablers and propellers of consumers' personal finance world. Alignment with investors' and shareholders' interests and expectations is critical, especially if this business segment is non-core to the new digital banks' parent group.

Formulate a business model with innovative value propositions. Create a customer journey thinking culture and constantly enhance customer experience through new products and services. Build a robust banking architecture and ensure new technologies are consistently deployed to support digital services to customers.

Leverage alliances and partnership opportunities to develop a fully digital ecosystem, access larger customer bases, better technologies and innovations. Ensure key regulatory obligations are adequately understood and built into the business plan. Define the controls for minimising its impact and develop mechanisms for effective and periodic monitoring.

Established banks

As businesses and citizens thrive, banking needs will evolve, creating opportunities for established banks. In the meantime, they will need to retool to stay relevant and be supportive of fair competition, even as they make hard choices about which customers to serve, how to win and where not to play. Agility in rebuilding their organisations around the customer, simplifying and structurally reducing cost to serve are key. Their success is important, as destructive competition is certainly not the idea.

Shun the usual complex products and "cast the net wide" approach to deliver enhanced customer experience with lower levels of operational risks. Introduce new branch formats and expand physical presence through third-party partnerships to drive sales and cut costs.

Innovation is the single most important factor driving sustainable top and bottom-line growth in banking. Banks need to protect and enable talent, become agile in their processes and be open to partnerships with outside institutions. Successful banks are taking a more proactive and integrated approach in managing regulatory obligations, risks and capital. Finally, obtain an information advantage - getting this in place will be the game changer.

Singapore can be the world-class place for digital banking incubation and a testbed for SME financing, providing the much needed platform for easy business model scale-ups, regional expansions and eventually, IPOs. We can lead the way, as long as we are innovative and relevant to end customers.

The government has set the ball rolling. Innovation and technology take centre stage in the country's new digital banking regime with clear focus on consumer protection, market coverage and value creation for society. A sustainable and robust business model with clearly charted "path to profitability" is made imperative. There is distinct recognition that the digital full banks model is untested locally, and as such, restrictions are necessary, which may eventually be lifted as and when success is proven.

*The writer is financial services leader at PwC Singapore

Consumers are central to digital banking, and specific segments of the mass retail market with bespoke financial needs will benefit from differentiated end-user experience.


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Sam Kok Weng

Sam Kok Weng

Financial Services Leader, PwC Singapore

Tel: +65 9367 3340

Andrew Taggart

Andrew Taggart

Clients and Markets Leader, South East Asia Consulting, PwC Singapore

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Winston Nesfield

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