Singapore's virtual banks offer homegrown AI a chance to shine

SENIOR Minister Tharman Shanmugaratnam, chairman of the Monetary Authority of Singapore (MAS), is right to hail new virtual bank licences expected to be granted later this year as the next chapter in Singapore's banking liberalisation journey. He also has good reason to be confident in the ability of local banks to compete with future digital upstarts.

While it is undoubtedly true that virtual banking will represent a new chapter in Singapore's journey as a world-class financial hub, it is also an important milestone in the city-state's ambitions to be a leading artificial intelligence (AI) hub. If the connection at first does not seem obvious, I can assure you it will become apparent upon closer inspection. Let me explain.

AI is playing an increasingly important role in global banking operations across areas such as Know Your Customer (KYC), anti-fraud, and credit scoring. For example, face-to-face identity verification is being replaced with AI-powered facial recognition technology. Small- and medium-sized businesses, which have historically been underserved, are among the biggest beneficiaries of AI as banks' costs are brought down and new customer segments are opened up.