A Smart Financial Centre.
Bellow we transcribe the speech by Ravi Menon, Managing Director, Monetary Authority of Singapore, at Global Technology Law Conference 2015 on 29 Jun 2015 about the Finance challenges the industry is facing and how technology and FinTech can work to promoting a culture of innovation in the financial industry.
"A Smart Financial Centre" - Keynote Address by Mr Ravi Menon, Managing Director, Monetary Authority of Singapore, at Global Technology Law Conference 2015 on 29 Jun 2015
"The Geeks Shall Inherit the Earth”
Technology is changing the way we live, work, and play.
Robots and unmanned drones are becoming more common.
Robotic cleaners like iRobot have lightened the load of household chores.
Pizza restaurants in cities ranging from Mumbai to Moscow have started to deliver pizzas using drones.
Digital payment systems are taking off rapidly, especially in developing countries.
Kenya launched in 2007 M-Pesa: a simple and low-cost service that allows users to deposit and transfer funds through SMS text messages.
When the legal profession is organising a conference on technology, you know that something momentous is brewing! I congratulate the Singapore Academy of Law for its acumen in setting technology as the theme for its conference.
A sector where I believe technology is going to be fundamentally transformative is financial services. In fact, there is a new buzzword: “FinTech” – financial technologies or the integration of finance and technology. Two things are happening.
First, non-financial players are using technology to offer innovative solutions that mirror the services traditionally offered by financial institutions (“FIs”).
Payments – Apple, Google, Paypal, Amazon, and Alibaba have payment solutions that replace physical wallets and credit cards.
Lending - Zopa, Lending Club, and Funding Circle offer peer-to-peer lending solutions that match lenders and borrowers on their online platforms.
Investment – “robo-advisers” like WealthFront use data analytics to dispense online personal financial advice and investment management services.
Indeed, these non-financial firms look set to disrupt the financial industry.
As a senior banker in the US puts it: “People need banking, not banks”.
The second thing that is happening is that FIs are fighting back.
As disintermediation threatens FIs, they are being pushed into a rethink of their business models.
Rising costs, shrinking margins, and the weight of new regulatory requirements are pressing FIs to look into more cost-efficient ways of running their businesses.
They are increasingly turning towards innovation and technology for solutions.
In an ironic way, the FinTech insurgency is forcing change among the incumbent FIs.
Leveraging on their size and networks, FIs are using technology much more intensely to enhance their product offerings and service delivery.
Example: US insurance companies, Progressive and Allstate, are using telematics to develop usage-based motor insurance, also known as Pay-As-You-Drive (or Pay-How-You-Drive).
Instead of rewarding past good driving behaviour, these insurers are able to price premiums contemporaneously with current driving habits.
What does all this mean? As a powerpoint slide used by a FinTech company in Silicon Valley rather immodestly proclaims: “the geeks shall inherit the earth!”. It is no doubt an exaggeration. But the message is clear:
In the years ahead, countries, businesses, and people who know how to use technology and innovate will have a keen competitive advantage.
Why This Time is Different
Now, have we not heard this story before – that technology will transform banking and then nothing changed fundamentally? Indeed there have been false starts in the past.
More in the original source and other great insights worth reading:
http://www.mas.gov.sg/News-and-Publicat ... entre.aspx
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