SINGAPORE - With technology rapidly disrupting the financial industry, Singapore's banks and regulators have to keep up to date and up to scratch with these changes, Prime Minister Lee Hsien Loong said on Thursday night.

For the banks, this is a business imperative.

Speaking at United Overseas Bank's 80th anniversary dinner at the Marina Bay Sands Convention Centre, PM Lee noted that lacklustre global growth, a regional economic slowdown and a prolonged period of low interest rates have crimped net interest and investment income.

The tightening of regulations after the financial crisis of 2008 has also contributed towards a more challenging operating environment today.

On top of all this, technology is moving very fast with new business models disrupting traditional banking, PM Lee noted.

For example, more and more people are making payments, for everything from movie tickets to restaurant meals, through their smartphones.

Companies are finding new ways to assess loan-worthiness by using data such as a customer's smartphone usage and social network data, and not just relying on credit bureaus, which are traditionally the preserve of banks.

The insurance industry is finding new ways to assess risks, set premiums and incentivise behaviour, PM Lee noted.

For example by monitoring wearables, insurance companies can offer premium discounts to policyholders with healthy lifestyle habits.

Singapore's banks must keep up, he said.

"Our banks are in a strong position. We are in the heart of a rising Asia. Our banks have strong balance sheets. And with a strong regional presence, they can take advantage of many opportunities around them," he said.

However this a highly competitive and rapidly evolving industry, he added.

"So we have to keep upgrading our technologies, our services and business models. Because while overall our banks are quite good, in almost every specific area, we can find other banks in the world that are better than us."