Last Tuesday's report ("New tech 'need not spell end of traditional banking'") is positive news for both Singapore and the financial technology (fintech) industry.
It also resonates well with Monetary Authority of Singapore (MAS) managing director Ravi Menon's speech earlier this year in which he mentioned financial services as the sector where technology is going to be fundamentally transformative ("$225m boost for financial technology"; June 30).
I agree that banks may not disappear entirely, but their margins will further narrow if they fail to act on the disruption in financial services.
The fintech industry - which includes banks and start-ups - can do a lot more in Singapore, where the market is ripe for disruptive digital financial services.
First, Singapore is still a cash-based society.
According to financial sector analyst RFi group, only 15 per cent of retailers in Singapore accept contactless payments ("Singapore retailers slow to adopt smart payment solutions"; ST Online, May 5).
Singapore lags behind the global average of 20 per cent.
Furthermore, consumers still prefer to pay in cash. Based on figures from the MAS, the value of ATM withdrawals increased last year versus the previous year.
Second, financial literacy is at its lowest in Singapore, according to a MasterCard survey released earlier this year ("Poll: S'pore sees largest drop in financial literacy in Asia-Pacific"; April 28).
These challenges provide banks and fintech start-ups the opportunity to take the lead in transforming Singapore into a cashless and smart financial society.
Banks, though, need not take a hard-nosed approach.
They can work with fintech start-ups in changing Singapore's financial landscape, thus, benefiting customers.
Collaboration would include offering alternative options to withdrawing and depositing cash, making payments to retailers, as well as transferring money both locally and abroad.
By working together, banks and fintech start-ups can solve the financial literacy problem by offering online platforms and tools that educate customers on saving and spending wisely, investing and managing their day-to-day personal finances.
Banks and fintech start-ups must collaborate more and compete less to truly transform Singapore into a smart financial nation.
Rohith Murthy
