Reimagining the financial landscape

ROUND-TABLE PARTICIPANTS

• Shee Tse Koon, Singapore country head, DBS Bank
• Dennis Tan, CEO, Prudential Singapore
• Lim Kell Jay, head of Grab Financial Group Singapore (GFG)
• Gregory Van, CEO, Endowus
• Sunny Quek, head of global consumer financial services, OCBC Bank
• Janet Young, head of group channels and digitalisation, UOB

Q: What is the biggest challenge confronting your specific business segment in the world of finance, and what are some solutions to tackle this?

Shee: With the exponential use of artificial intelligence (AI), predictive analytics and technology among banks and fintechs, the biggest challenge would be how the industry can drive disruptive innovation and deliver truly transformative financial services and solutions that are also a force for good, addressing the unmet needs of people.

We have seen the un-bundling of conventional financial services by fintechs/techfins over the years, carving out a niche and focusing on a small part of a bank's business, resulting in payments and alternative lending solutions and the emergence of robo-advisors for investments. Today, we are embracing the next wave of growth in the metaverse and are coalescing our talent and ecosystems to come up with game-changing technology that can positively shape the way we bank, protect and grow our wealth in this new realm.

At DBS, we have built up a wide ecosystem of partners, and have twice as many engineers and data scientists as bankers, to ensure we can disrupt before being disrupted in order to ride the next growth and innovation cycle and stay on top of it.

But one thing does not change - our enduring customer obsession to ensure digibanking remains intelligent, intuitive and invisible. While the industry accelerates and scales innovation, we must remain rooted in the fundamental truths and principles that make us who we are.

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This means looking at the ethical use of technologies such as AI to solve problems and enable people to reach their full potential. Amid the growing tech bifurcation in the global technology space, we would also have to look at open and transparent frameworks that can outline best practices, digital integration and data sharing across borders.

With the uncertain interest rate environment and banks facing sustained net interest margin compression, inflation pressures increasingly look to be more than transitory. While inflation pressures may boost the interest rate outlook, it will also lead to inflation-led cost pressures.

There is no better time than now to start exploring non-interest rate-dependent revenue streams. Conventional banks will need to look into how they can better tap on using digital/technology (data, AI, machine learning, blockchain, distributed ledger technology, et cetera) to create new revenue streams and diversify away the risk from interest rate movements.

At DBS, we believe our digital assets which include the DBS Digital Exchange, Partior and the Climate Impact Exchange, can unlock value for our business.

Lim: The challenge for newer fintech players in Singapore is about defining their role and purpose among consumers, especially since most would already have access to basic financial services. What will truly set financial institutions and fintech players apart will be the consumer engagement layer that they can build, and a community that people want to be a part of. An active ecosystem spurs innovation, and also benefits end users.

In addition, having a partnership mindset has and will continue to help drive impact within the industry. We have been collaborating closely with market regulators to shape the future of financial services in Singapore, which we hope will lead to greater consumer benefits.

Today, Grab Financial Group offers accessible and convenient digital financial services to our consumers and there is room for us to provide more services to under-banked individuals. The digibank, in collaboration with Singtel, is a key area of future growth for us and a natural extension of our GFG business, where we aim to offer our consumers and driver, delivery and merchant partners access to a wider suite of products, from savings to secured lending.

Van: Inaction by investors comes to mind. The world of investing can be daunting, and in the wake of widespread fraud cases, volatile market conditions, and the expanse of literature available, one can be overwhelmed before taking that first step to investing. This is exacerbated by poor industry practices, where layers of fees upon fees are being levied, and where advisors often receive unseen kickbacks to promote specific products that may not be appropriate, and likely very expensive, for their clients.

It is essential to provide customers with unbiased offerings that are not based on incentives or hidden fees that plague the industry.

Tan: Resilience to environmental, social and governance (ESG) risks is a challenge that affects not just the finance sector but also many other sectors. We are united with local and global efforts and are committed to making health and financial security accessible, stewarding the human impacts of climate change, and building social capital.

For example, Prudential is supporting the transition towards a low-carbon economy through decarbonisation of our investment portfolio and ensuring an inclusive transition.

As part of a highly connected world, our futures are interlinked with both people and planet, so we must collectively work towards creating a sustainable future built on robust ESG practices.

Quek: The "digital and mobile-first" era that marks the 2020s has revolutionised the banking and payments space, leading to an array of digitalised innovations that are reconfiguring life for the modern consumer.

New digital technologies have greatly heightened customer expectations. Customers these days want it fast, easy to use and free. How do we achieve customer satisfaction?

We always begin with our customers in mind, asking ourselves how we can better understand their pain points and their requirements to better serve them. We do not take a one-size-fits-all approach. It is absolutely crucial to understand the different needs of different customer segments and provide solutions that fit each segment.

This digital shift has seen us change the way we serve, the way we work and the way we operate. With technology, we have been able to make use of robotics and AI to automate the mundane everyday tasks so that our staff can focus on higher-value work.

OCBC has led the industry in rolling out numerous digital firsts in areas such as instant account opening and loan approvals, contactless payments, biometrics and cardless ATM cash withdrawals. We aim to digitalise all aspects of banking to make it simple, seamless and of value to our customers.

Young: As a customer-centric bank, staying engaged in a digital-first world that is transforming continuously is an aspiration which we strive and focus on. The accelerating pace of technology and digitalisation is reshaping the way people live and work, and is giving rise to new business models that present tremendous opportunities and challenges. Anticipating customers' needs and wants while ensuring that risks are understood is important as we make banking simpler, safer and smarter for our customers.

To remain relevant to our broad customer base, we take an omni-channel approach where our customers can choose their preferred way to engage with us, be it in-person or digital. Being omni-channel sounds simple, but there are myriad complexities in ensuring a frictionless online/offline experience.

At UOB, we examine every customer journey to ensure a seamless and intuitive experience for our customers. The benefits of our omni-channel approach is also enhanced through collaboration and innovation with fintech firms, Big Tech and ecosystem partners. Embedded finance, which enables our banking services to be integrated seamlessly into a consumer's lifestyle or a business operation, continues to evolve and keeps us innovating to stay ahead.

Web 3.0, the next generation of the Internet, offers massive potential to revolutionise the way people engage with their bank. Web 3.0 brings with it decentralised finance, which heralds a new level of transparency, information sharing and democratisation of products and services. Banks will need to place even greater emphasis on the value and experience they offer to consumers if they wish to stay engaged and relevant in a 3.0 world.

For example, we see hyper-personalisation as a way data can be used to create progressive solutions to the point where the customer feels like the product or service was tailored just for them. Hyper-personalisation is fundamental to UOB TMRW, our new unified all-in-one banking platform. Be it wealth, rewards, payments or advisory, we see a future where banking is more engaging, transparent and simple through hyper-personalisation, powered by the smart application of technology.

Q: One criticism of the world of finance is that some parts of it can be exclusionary. How can access to wealth or financial products, for example, be better democratised?

Tan: Wealth products have often been perceived to be complex and difficult to understand, coupled with a relatively high cost to entry with limited accessibility.

However, fintech has levelled the playing field, making financial information and services more accessible. Not only are products simpler to understand, the availability of micro products and digitalisation of distribution channels, have improved access and affordability for everyone.

While we have seen increasing financial inclusion in recent years, financial players can continue to include more people in the financial system through outreach and literacy programmes. This will empower more people to take advantage of existing solutions to improve their financial well-being.

Lim: We believe that digital financial services can be a part of one's everyday life, evidenced by the rapid adoption of many new digital financial services in the past few years. Different segments of consumers have benefited from digital financial offerings that are simple to understand, easy to use and most importantly, rewarding.

Technology can be a leveller. Grab engages with millions of consumers and partners daily, and this allows us to derive deeper insights from a richer pool of data so as to deliver more tailored and localised solutions to our users. These include services such as micro-insurance plans for our driver-partners, GrabPay and PayLater by Grab for consumers who appreciate the flexibility and control afforded.

Quek: Wealth management used to be something for only the affluent segments. But we believe in democratising wealth so that all segments of society can do more to grow their wealth and plan for a better future.

The introduction of open banking at the end of 2020 allows customers to have full visibility of their entire portfolio. Being able to see all their financial data in one place means that customers have a better sense of where they are doing well and where they may require more boosting.

At the same time, we started enabling our customers to invest and buy insurance on our OCBC Digital mobile app, making wealth management products more convenient and accessible to customers.

We also allowed more bite-sized investments so that customers are not held back by the feeling that they need a lot to invest. Instead, we allow monthly investments of just S$100 in our Blue Chip Investment Plan, as well as US$100 in our OCBC RoboInvest. It is important for customers to get started with their investments as early as possible so that they can build up their funds over a longer period of time.

Van: Fintech was built off the back of financial inclusion, making credit and investments accessible to all, and disrupting the exclusionary aspects of finance.

But access without education can lead to reckless investments, and that would defeat the whole purpose of democratising the world of finance. So closing the knowledge gap between Wall Street and retail investors is paramount. Expert financial advice and best-in-class products at low cost can be delivered to everyone because of technology.

We lower the barrier of entry to products previously only available to exclusive segments, while providing comprehensive education through blogs, webinars and tutorials to improve overall financial literacy.

Young: While the focus on financial inclusion tends to be on consumers, this is also a key issue for small and medium-sized enterprises (SMEs) in Asean. Despite their importance to the economy, the International Finance Corporation estimates that there is a US$4.7 trillion funding gap for SMEs globally, with about 45 per cent of that in East Asia and the Pacific.

We believe that digital innovation and ecosystem partnerships have the ability to change this and increase financial inclusion for SMEs. UOB has tapped the growth of "embedded finance" and worked with our fintech partners to enable SMEs access to financial products through non-traditional intermediaries such as Big Tech and fintechs. An example of our ecosystem approach is the use of Avatec.ai's credit assessment solution for alternative data scoring on e-commerce platforms.

Merchants with little or no credit data are now able to apply for business loans directly on these e-commerce platforms, using alternative data such as their sales data for credit scoring.

In order for SMEs to gain access to financing and to grow their business sustainably, it is important that they are equipped with the right tools and resources in the age of digitalisation.

To help SMEs transform and digitalise, The FinLab, UOB's innovation accelerator, expanded its focus in 2018 and developed a Business Transformation programme for SMEs. The programme has assisted more than 4,000 SMEs across Singapore, Thailand and Malaysia by connecting them with The FinLab's established regional network of industry mentors, resources, fintechs and tech solution providers.

In 2020, we also launched The FinLab Online, a digital platform to help SMEs and startups across Asean implement digital solutions to transform their businesses. More recently in Singapore, together with NTUC LearningHub, NTUC U SME, and Ngee Ann Polytechnic, The FinLab launched the SME Digital Reboot programme to provide SMEs with access to digital resources and tools, to help them understand their business needs and determine a sustainable digitalisation strategy.

Q: How can digital finance bring greater transparency to the market, in order to drive greater financial literacy and ultimately, foster stronger financial independence?

Quek: The Covid-19 pandemic has played a significant role in increasing consumer digital adoption. In 2020, 56 per cent of our total customer base were active users of digital banking, compared to 39 per cent in 2015. This unlocks new potential for digital finance to bring about benefits beyond providing seamless banking services.

To promote stronger financial independence, we enable our customers to better control their finances through the OCBC Digital mobile app. The ability to have good control over your money comes with relevant and insightful information and data. We use the information and data to make customers more aware of where their money is coming from, and where their money is going. By having the knowledge pushed to them continuously and on a timely basis through contextual "nudges" on our app, they will develop better money discipline and be able to better manage their expenses through saving, budgeting, or getting better value out of their credit card spending. With visibility and clarity of their money flow, we seek to help customers see savings in their bank accounts at the end of the month.

Young: For consumers, the growth of digital-only banks and digital financial services such as e-wallets and payments will help improve access to financial products, especially in markets with high mobile penetration rates. We believe that technology has, and will, continue to play an important role in the democratisation of wealth. A good example is the use of blockchain to fractionalise investment products such as bonds or private equity funds into smaller and bite-size amounts. This will make these investments more suitable for retail consumers from an affordability and a portfolio risk diversification perspective.

An important part of financial inclusion is financial literacy and financial independence. In many aspects of our lives, the more we understand, the more we are empowered. This is no different when it comes to finance. Through the use of technologies such as AI and distributed ledger technology, we have made banking simpler, smarter and more transparent for consumers and businesses. At UOB, we leverage our AI-driven digital engagement engine that combines financial technology solutions to categorise and analyse large volumes of transaction data in real time. This allows us to share personalised insights with our customers, allowing them to have a better understanding of their finances and empowering them with the confidence to take control of their financial future.

Traditionally, wealth products have been for the wealthy, high-net-worth segment. In the last few years, we have seen the democratisation of wealth management due largely to the use of technology, machine learning and AI. At UOB, we have launched a suite of "Simple" products that provide entry to financial solutions. For example, UOB SimpleInvest enables our customers to invest from as little as S$100 into a bento box of funds. These funds are actively managed by renowned international asset managers whose expertise have previously been reserved for wealthy investors.

Tan: Digital finance has transformed the way we interact with financial information and services. Not only does it help to lower costs, it also removes geographical barriers and allows for greater accessibility and financial inclusion. Being able to access and engage with financial information shapes people's perspectives and understanding, and supports the growth of financial literacy, slowly but surely. This is the first step towards achieving financial independence and being able to get the most out of life.

Shee: Much has been done in recent years for the man on the street to enjoy the same opportunity as the high-net-worth individuals to accumulate their wealth and savings. There are 3 factors that can enable greater democratisation of wealth:

1) Empowering with relevant financial know-how: To enhance understanding of comprehensive financial planning and empower our customers to make informed decisions, DBS offers financial how-to guides, articles, videos, investment newsletters, market research reports as well as webinars for students, corporates, and the public. To extend our reach, DBS also partnered with companies, schools, polytechnics, the Singapore University of Social Sciences, Singapore Exchange and the People's Association to drive financial literacy among Singaporeans. Budding investors can also turn to a range of accredited financial advisors who understand the customer's needs, know the financial products well and are able to recommend suitable solutions. In Singapore, all financial advisors are supposed to go through a financial needs analysis with their client. Our DBS wealth planning managers are required to obtain Capital Markets and Financial Advisory Services qualifications and be licensed under the Representative Notification Framework before they can consult with our customers.

2) Access to digital financial tools and resources: It is important to ensure customers have access to advanced digital financial planning tools that leverage AI and data insights to enable proper budgeting and sufficient emergency cash, empower customers with better understanding of their risk profile, and better navigate their life journeys to improve financial resilience.

With all their financial information consolidated in one place, there is greater clarity on their net worth and overall financial health. By using AI models, we can more accurately project customers' income, savings, CPF, and investments, so they can identify and close money gaps and achieve financial goals now and in the future.

DBS NAV Planner offers a digital advisory feature which ensures that the investment advisory process is objective and transparent - removing guesswork along with investment biases - and aligns your risk profile to suitable recommendations. It also provides the market values of your investments so you can track them with ease.

Our customers in Singapore have about half of their assets under management in CPF and SRS (Supplementary Retirement Scheme) funds, and such tools might draw attention to using funds from these schemes for investing. Much of this is due to industry-wide collaboration between the public and private sectors in Singapore. Through the Singapore Financial Data Exchange (SGFinDex), individuals are able to have greater clarity of their financial health and plan their finances holistically.

When individuals consolidate their bank accounts through SGFinDex, their CPF and SRS holdings naturally become part of the consideration when funding their investments. At DBS, we have observed more customers coming forward to invest their CPF or SRS savings since the advent of SGFinDex.

3) Lowering barriers to entry: By democratising access to wealth management services with the use of technology and AI, we are also lowering the entry barriers and the cost of investing. For instance, portfolio management services that cater to different customer risk profiles are offered by our robo-advisor digiPortfolio. Previously available only to the affluent, robo-advisors are easily accessible to the masses. And those who prefer to invest regularly into exchange-traded funds and unit trusts can do so via DBS Invest-Saver, for as little as S$100 per month.

Lim: With the growth of the fintech industry, consumers can now have greater and easier access to digital services for different financial needs. This also means that there is a greater responsibility for fintech players to ensure that their consumers are able to understand and navigate this space well to reap the benefits and minimise any potential risks.

Take BNPL (buy now, pay later) for example, there have been concerns that the convenience and accessibility of this service may, in certain cases, contribute to an increase in consumer debt and potentially over-commitment. And this is where adopting a transparent approach is extremely important.

For Grab's PayLater service, any fees that are involved are clearly stated on our website and app. These fees are not hidden in any way. Via the app, users have clear visibility of how much they have spent and paid. In addition, we are co-creating content with well-regarded financial content providers, training providers and community builders to ensure any information that we share is not just interesting, but most importantly, useful in helping our consumers learn and make well-informed decisions.

Van: Digital platforms have the ability to transform the experience of investing and wealth management, for better or for worse. Technology is so scalable that seemingly small differences in design and business model can make services either more transparent or unnecessarily complicated for everyone. My hope is that the technology designers and regulators are working towards a sustainable and better future. Part of the commitment to transparency is also to help investors comprehensively understand what they are paying for and what they are investing in, which goes back to bolstering financial knowledge. Improving the financial literacy of our customers would help them to make more informed decisions about their financial health.

Q: As we move deeper into tapping the digital economy, how can the financial industry work with corporate customers to tackle the opportunities made available?

Van: There are 2 key ways to provide value for corporate customers. Employers need to take care of their employees' well-being, which will in turn lead to a happier and more productive workplace. They must promote the benefits to investing early, the difference between investing and speculation, and preparing for retirement by inculcating good financial habits for employees. We partner with corporates of all sizes, from large multinational conglomerates to small enterprises, to organise financial webinars to help communicate employee benefits on the Endowus platform. Corporations must manage their treasury responsibly to grow their idle cash reserves, with the right level of risk depending on the corporation's liabilities. With technology, higher-yielding cash management solutions can be attained and managed at lower cost, and with greater flexibility.

Shee: We need to collectively marshal the resources to drive systematic transformations that will fortify companies' moats, enabling them to be pandemic-resilient so that they not only keep their business going, but more importantly, bounce forward to expand into new growth vistas. We do it by efficiently and effectively channelling capital, facilitating connections that will empower businesses to expand not just in Singapore but also beyond our shores. I see 3 key priorities:

1) Accelerating digitalisation to ensure that our online-to-offline and offline-to-online presence and customer journeys remain seamless: For SMEs, the Singpass facial verification technology has been enabled since Nov 2020, enabling SMEs to open accounts as fast as 26 mins. Micro SMEs also need support with digitalisation, to ensure that they are not left behind as Covid-19 has led to a rapid increase in digital adoption among customers. For instance, to help F&B establishments cope with the various Covid-19 restrictions, we rolled out an F&B Digital Relief Package that enables F&B establishments to set up an online presence in as little as 3 days. We have helped over 1,000 F&B establishments go digital throughout the pandemic, enabling them to create new revenue streams.

2) Widening access to capital to help address micro SMEs' cash flow concerns and help innovative businesses to scale their positive impact: For instance, to help SMEs tide over the pandemic, DBS extended financial support and provided cash flow relief, availing over 12,000 collateral-free loans totalling more than S$6.2 billion to SMEs in Singapore since the start of the Covid-19 pandemic.

Micro and small businesses continued to receive the vast majority of these loans, with 99 per cent of loans in Q2 2021, when Singapore went through its first Heightened Alert period, going to micro and small enterprises. We also support and fund business that create innovative solutions towards positive impact.

DBS Foundation, the first foundation in Singapore dedicated to championing social entrepreneurship, is increasing the funding pool of its 2021 DBS Foundation Social Enterprise Grant Programme to S$3 million. These businesses have advanced solutions in the areas of climate change and unsustainable food systems, rising income inequality and urbanisation.

3) Driving a culture of innovation: The greatest opportunities lie in fuelling the competition to push one another to bring the best solutions to our customers. It is healthy for our business and the industry. Having the right engagement model can leverage the strengths of the startup and bring capability (in new tech), novelty (in proposition) and nimbleness (in delivery) and combine them with the strengths of the bank in regulatory/compliance infrastructure, security protocols, relationships/network, brand/trust and so on.

DBS has a dedicated fintech team (within our innovation group) that runs startup engagement programmes. The primary programme is Startup Xchange, that matches internal opportunity statements to startups. The focus is on startups using frontier technologies, such as AI, data science, immersive media and the Internet of Things. To date, we have introduced and assessed over 350 startups from which we have conducted about 45 proof of concepts - of which more than 15 have been deployed into production.

Lim: Specific to SMEs, we think there are opportunities to provide more merchant-centric solutions to help them grow and thrive in the digital economy.

The key value-add that we aim to bring is to connect our users with the merchant base, so that consumers can find what they need easily, and merchants are able to market their goods and services effectively while retaining control of their brand experience.

This is why we have invested in solutions such as the GrabMerchant Commerce, which enables small businesses to set up an online store quickly. GrabMerchant Commerce also provides them with tailored support in areas such as fraud protection, e-commerce sales, marketing and brand development, as well as advanced operations such as automation, customer relationship management, inventory and logistics, to help them grow. We have also worked on establishing new partnerships with regional and local payment gateways to provide more options for merchants to accept digital payments, which is now key to unlocking e-commerce growth, as well as address growth in contactless payments.

Tan: SMEs account for 99 per cent of businesses in OECD (Organisation for Economic Co-operation and Development) countries, and are a large group of customers whom we can work with to create shared value together. SMEs are crucial in driving productivity and economic growth, but they need support to accelerate this. In Singapore, Prudential is forging partnerships with SMEs to build key skills in areas such as digital and technology to upskill their workers and ensure that they are future-ready. After all, if SMEs prosper, the rest of us in the same economy will also flourish.

Young: There is a saying that the sum is greater than the parts. This is proven through the impact ecosystem partnerships can have, and why we focus on building such partnerships for the benefit of our customers.

As consumers demand for an intuitive and seamless banking experience, it is important for banks to be integrated into the wider digital ecosystem. This will make banking more accessible by extending its touch points to areas that intersect with consumers' digital lifestyles. To that end, we created a partnership ecosystem in 2020 which includes Visa, SP Group and Grab among others, to simplify digital payments and the rewards redemption process for our customers. Together with Fave, we introduced Rewards+, the largest rewards programme in Singapore on our unified digital banking app, UOB TMRW that combines the power of UOB Mighty and TMRW Digital Bank, which we launched in Thailand and Indonesia.

Such collaborations are also important in helping the industry transform and digitalise, particularly when there is a lack of common standards. Another good example is in the trade finance space where challenges to digitalisation remain due to the lack of a set of standard application programming interface specifications. Therefore, the growth of public-private partnerships initiatives like SGTraDex is encouraging, where key industry players, both public and private, with regulators, are actively collaborating to develop or adopt common technology standards and platforms.

A third area of partnerships which UOB has been focused on is with fintechs. Recognising the potential of fintech solutions in enabling the bank to accelerate our innovation drive and business transformation, we created The FinLab in 2015 to support and partner fintechs looking to enter and accelerate growth in Asia. One such collaboration is with Tookitaki, a FinLab acceleratee that specialises in regtech, helping to combat anti-money laundering risks. Our collaboration with fintechs has led to some exciting initiatives at the bank. UOB is one of the first banks in the region to incorporate AI heavily into our banking processes, both for the benefit of the bank and our customers. For example, we were the first to use AI to personalise the digital banking experience for our customers in the region when we launched Asean's first digital bank, TMRW, in Thailand in 2019.

In building this personalisation engine, we tapped into the digital engagement and data categorisation solutions of fintech firms, Personetics and Meniga.