You are here
S'pore banks must innovate to meet new challenges: PM Lee
SINGAPORE banks have held their own while operating in a liberalised sector, and must now innovate in a challenging environment where economic growth is uncertain, and disruptive forces are now at play, said Prime Minister Lee Hsien Loong on Thursday.
Speaking at UOB's 80th anniversary dinner, Mr Lee said that banks here should look at examples of innovation across the world, particularly in China and the United States, to adopt ideas to improve digital banking and the credit assessment process.
"Our banks are in a strong position," he said, noting that Singapore is at the heart of a rising Asia, and banks here have a strong balance sheet. Singapore lenders also continued growing through the global financial crisis, when many financial centres around the world suffered major setbacks and shrinkages, he added.
"But at the same time, this is a very competitive business that continues to evolve rapidly. For while overall our banks are very good, in almost every specific area, we can find others who are better than us."
Mr Lee pointed to the Alibaba sales on Singles Day on Wednesday, where 70 per cent of the billions in sales were mobile purchases.
Technologies such as blockchain, which can be used for real-time gross settlement or trade finance verification, are also emerging, he said.
The Monetary Authority of Singapore will have to stay updated, and understand the new risks that are emerging, while allowing new activities in a controlled way so that innovation is not stifled, said Mr Lee.
The emphasis on Singapore's financial sector was seen from the late 1960s. The government decided to build the industry as both an economic sector, and to support the broader economy, said Mr Lee. The Singapore banks grew, and the Asian dollar market took off.
But Singapore's financial sector was liberalised from 1997, partly as the industry was not as efficient, innovative, and responsive to the market as it should be, said PM Lee. Foreign banks were allowed into Singapore to compete, including in domestic retail banking.
"This more competitive environment forced our local banks to consolidate. But it also spurred them to upgrade, innovate and grow," he said.
"Our strategy has worked. Today, our three Singapore banks have gained a reputation for being amongst the strongest and safest financial institutions in the world. And we have a strong, vibrant financial sector that we can be proud of."
UOB, first known as United Chinese Bank, was set up in 1935. Its founder, Wee Kheng Chiang, was among seven businessmen who established and ran the bank in the turbulent post-depression era. Wee Cho Yaw, now chairman emeritus and adviser to the bank, took over from his father as managing director in 1960. The younger Wee orchestrated several acquisitions in his time as chief executive officer, including the S$10 billion takeover of Overseas Union Bank in 2001. In a short speech, he said he was lucky for being "at the right place, at the right time".
Wee Ee Cheong, who took over as chief executive officer of UOB Group in 2007, said that the bank today is well-placed to seize opportunities emerging from Asia.
"Even six years after the global financial crisis, there is heightened volatility and complexity in financial markets. Despite this, Asia is clearly on its way to be a global economic powerhouse, and there are great expectations for the region's prospects," he said.
"While Singapore is our home base, we see our future as closely tied to the success of the region. And UOB is well-placed to seize the tremendous opportunities, with the rise of Asia, increasing connectivity and cross-border flows."
As part of its anniversary celebration, UOB announced a S$20 million contribution to a scholarship programme - known as the Wee Cho Yaw Future Leaders Award - to provide tertiary education funding for students from less privileged backgrounds. The S$50 million scholarship programme was established with a S$20 million gift from UOB and a 1.5 times matching grant from the Singapore government.
The award will be provided in partnership with the Nanyang Technological University and the National University of Singapore. Awardees will be selected based on their financial background, followed by academic performance and community efforts including volunteer work. The first cohort of awardees will be selected in 2016.