• Sustainable Finance – Sustainability was one of the core themes of the week along with how to accelerate impactful investing in sustainable finance. To date, there is US$350 billion dollars in Sustainable Finance and the market is growing. ESG measures (Environment, Social, Governance) are now at the heart of investment decisions. For the environment, there is a common measure for carbon emissions but the challenge is in S and G. There is still a lack of disclosures in place and no general agreement on how they should be measured. The key is looking at how is transition done i.e., what would be the social impact if we transition out of coal where it is still cheaper in emerging markets. Singapore aims to be the leading centre in sustainability in Asia and globally and plans to undertake the following: Build a financial system that is resilient to environmental risk; the Monetary Authority of Singapore (MAS) will introduce a concept paper on an Environmental Risk Management (ERM) Guideline in Q1 2020; develop Green Finance Solutions & Markets; and leverage innovation & Technology to reach a wider pool of capital & market players.
   
• The Rise of Digital Banks . . .or not? – Traditional banks will most likely have to offer retail FX at a loss (and make their money from corporates) to be able to compete with digital banks. With data, trust remains key but there are still barriers to trust for challenger banks as they have yet to deliver a new business model (net interest margin). The total market size is stable/stagnant (developed markets) so digital banks will only cannibalise that market, not grow it. Differentiation and quality of service is key and challenger banks are breaking up the value chain of banking services vs. transactional banking services. The Asian digital banks (WeBank, MyBank, TMRW by UOB etc), are learning from the mistakes of the US/EU pioneers and are paving the way for a new wave of digital banking.
   
• Digital Transformation – Any bank that thinks they are going to out innovate the world, will perish. This is where digital banks excel compared to the incumbents. Banks need to make it seamless and convenient to do business with them by embedding banking in the customer journey. Human-centered design needs to come to the forefront. FinTech and Big Tech are obsessed with customer experience, not just mobile but also IoT, 5G, AI, DLT and how they can all play a key part. Banks should not just listen to their customers but observe them, their spending patterns and behaviours. Along with design, banks must also be agile, scalable, use STP, Virtual Agents, be quick and use customer analytics to generate the right data about their customers to better define the customer journey. However, data is the big differentiator and data migration will be the biggest challenge for traditional banks with their digital transformation journey.
   
• Open banking (payments) - Open banking is more about open data. Open banking is frictionless and from the regulatory point of view, it is more transparent & fairer for market players. The Open API regime is crucial as we are just in the beginning. We need to create infrastructure on banks platforms. This would require the organisation to recalibrate the risk & governance aspects; participation from small FinTechs would be required to contribute to thought leadership by working with regulators and subsequently, regulators need to ensure financial stability & awareness. The next milestone for Open Banking would be getting banks to go from a “compliance to conquer phase.” The most successful use case is with real-time access to data i.e., e-wallet, end-to-end application, approval and disbursement within 3 hours. However, concerns were expressed by panelists that open banking is not a level playing field and there is regulatory asymmetry. Traditional banks are required to disclose data to regulators whilst the big tech firms such as Facebook, Amazon and Google, are not. Traditional banks do not face the same scrutiny as big tech firms. BigTech firms have a regulatory right to request bank account info whereas banks cannot and they have to disclose information, leading to an uneven playing field in the market.
   
• Talent - Talent is a key pillar to the rethinking of financial services business models to supercharge growth for stakeholders. Banks need to go back to the drawing board and reimagine what does a bank of today look like as there is lack of understanding of i.e., new risks, the power of quantum computing & cyber-security. Banks used to traditionally hire bankers but are now looking towards tech and data skills. A representative from Barclays highlighted that their priorities to deliver and retain talent is three-fold: Good management, a sense of purpose for the employee and the use of technology. Barclays hope that in 10 years, banks can focus on client/customer and product, with a strong secondary market of collective service partners (credit risk/KYC/core banking etc.) delivering non-differentiating standard services at scale. In addition, FS firms need to continue to upskill staff and embrace continuous education. As an industry, FS firms have a good understanding on what technology will do in next 3 years, but 5 years and beyond it will evolve.
   

A big thank you to those who came by our booth, visited our FinLab and got to meet the team. We look forward to seeing you all again next year at Singapore FinTech Week 2020!

Have a question or want to find out more? To get in touch,
contact us at: APACMarketing@synechron.com