Financial data sharing initiative can narrow income inequality gap
Singapore
SINGAPORE'S new nationwide financial data sharing initiative can help banks narrow the income inequality gap exacerbated by Covid-19, and simultaneously create a billion-dollar business opportunity for the nation's largest lender, DBS chief Piyush Gupta said on Monday.
All Singapore residents, including non-DBS/POSB customers, can access the Singapore Financial Data Exchange (SGFinDex) via the bank's digital financial planning tool DBS NAV Planner, with the bank targeting lower-income earners who lack the traditional know-how, risk appetite and excess savings for investment.
"This fundamental idea that people with low income are disadvantaged, and continue to be disadvantaged because they don't find an opportunity to leverage the opportunities in the financial market - that is a true social problem," said Mr Gupta in a media briefing following the government's announcement on SGFinDex.
The open banking initiative will boost the effectiveness of the DBS NAV Planner, envisioned as a financial planning and advisory tool for the masses.
As it is, the platform appears popular among lower-income earners. Over half, or 53 per cent, of the 1.8 million users that have come on board since its launch in April earn S$2,999 or less each month, while 23 per cent earn between S$3,000 to S$4,999. These figures compare to 9 per cent of users who earn upwards of S$10,000.
Some 400,000 users had their finances turned around, from negative to positive cashflow, since coming on board the DBS NAV Planner.
Crises exacerbate wealth gaps, Mr Gupta said, citing a DBS study in August showing that the low-income groups suffered the largest decline in income amid the Covid-19 pandemic. "We believe there is a very real opportunity to narrow this gap, by helping lower-income groups better manage their money," he said.
He expects the growth of these underserved markets to amount to a "billion-dollar business" for the bank in three to five years' time. These earnings will be accumulated from the fees the bank collects when helping customers make investments, he explained.
Accessible via the bank's digital banking platform, DBS NAV Planner uses artificial intelligence to give users a one-stop overview of their financials, such as savings, loans and insurance plans. It also advises users on coverage gaps and recommends affordable investment options.
The integration via SGFinDex allows users to also track the performance of their investments across various cash holdings and CPF.
Separately, OCBC told BT that one in every three digitally active customers uses its digital financial tools, which have had a 75 per cent growth in usage since Covid-19. Also, 30 per cent of those who have invested digitally are first-time investors.
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