Fintech will be part of Singapore's next wave of growth
IF THERE has been a recurrent theme in recent months, it's been that innovation plays a critical role in the restructuring of Singapore's economy and ensuring that as a nation, we continue to remain competitive. With the shifting tides of geopolitics that has brought China's dominance to the forefront, a small nation like ours must innovate to continue to play on the world's stage, or risk oblivion in a changing world.
Cornerstone of the future economy
Given Singapore's status as a global financial hub, innovations in the financial sector will play a key, and probably one of the most visible roles in driving Singapore's future economy.
In the last two years, financial technology, or fintech has become a buzz word, with some questioning if it is all hype, or for real. If there is one thing that Singapore does better than anyone else, it is the ability to identify growth sectors before they blossom and apply its strategies. The shift from labour-intensive to high-tech industries such as electronics and IT in the 1980s led to South-east Asia's first silicon wafer manufacturing plant being built in Singapore. Then in the 1990s, research and development resources started to gravitate towards biomedical sciences and medical technology. While these various sectors remain integral to Singapore's growth and its push for a Smart Nation, fintech will become - if it isn't already - a cornerstone of Singapore's future economy.
Partnerships and community
To drive real growth and enact real change will require deep collaboration on several levels. The model of a digitally-driven economy is one of connectivity, collaboration and community, facilitated by the sharing of information, resources and ideas. Collaborative partnership between government, financial institutions and technology start-ups will lead to innovations that benefit livelihoods, ensure the stability and resilience of our financial system and contribute to a more vibrant global economy.
In my years at PayPal, I have seen first-hand the multiplier effect of integrated partnerships, especially with our merchants. PayPal has always been a strong supporter of freelancers and SMEs (small and medium enterprises), which make up a significant proportion of our merchant customers, for the very reason that we believe that such partnerships create a strong ecosystem for innovation and creativity to thrive. Singapore mothers starting online businesses as a means to balance family life and professional satisfaction present a clear example of the impact technology can have on individual lives. In the case of the "mom entrepreneurs", the technology that transformed their professional and life options was the ability to receive payments more reliably and quickly. On a larger scale, we extended the reach of our platform in 2016 and offered our customers more flexibility and choice through partnerships with "new-generation businesses" such as Lazada, Redmart and Zalora.
Fintech in a digitalised economy
As the world becomes increasingly digitalised, businesses across sectors will have to adapt. From booking a taxi or Grab driver to shopping online, we are practically inseparable from our electronic and mobile devices. Global e-commerce payment volume stood at nearly US$2 trillion last year, says the latest eMarketer research report. However, the opportunity is even bigger as the phone is blurring the lines between online and offline; this is not just about e-commerce but about everyday commerce - a US$25 trillion market.
While fintech has a significant role to play in this digitalised economy, we must be careful to keep pace with consumers' needs and demands, as well as mindsets. Otherwise, adoption rate will be low, and the technology, while innovative, will have minimal impact. A case in point is the attempt to go cashless at hawker centres. Hawkers in a pilot project in Bukit Timah and Tiong Bahru food centres reported that after three months, only a handful of customers paid using the QR-code method. While the effort was commendable, consumers were just not ready.
Complementing industries
Singapore has grown rapidly since the early days of nation-building, attracting multinationals for export-led industrialisation and establishing itself as a reliable centre for high value-added activities in global supply chains. Given that future growth will inevitably be slower, the nation's next 50 years will depend on its ability to create value in and from homegrown private enterprises.
Fintech will be a key part in this next wave, not to replace existing industries, but to complement them and ride on their successes, so that the next generation will enjoy the fruit of our labour, as we have enjoyed those left by the previous generations.
