The global finance industry is evolving rapidly as fast-changing technology hits customer habits and banking staff levels.
That means the Republic must stay nimble and develop capabilities to ensure the sector continues to provide rewarding careers for Singaporeans, said Deputy Prime Minister Tharman Shanmugaratnam.
Speaking at the Institute of Banking and Finance's (IBF) 40th anniversary dinner last night, Mr Tharman, who is also Finance Minister, said the sector has been buffeted by speedy technological change. This has caused the automation and therefore the redundancies of many jobs, he said at the event held at the Ritz-Carlton hotel.
For example, analysts believe a large proportion of job cuts in the United States' financial sector reflects the ongoing shift from branch to mobile banking. This reduces the need for staff at branches.
Mr Tharman also noted that 74 per cent of global foreign exchange trading is executed electronically, up from single-digit proportions in the early 2000s.
Weak economic growth and higher capital requirements in the wake of the global financial crisis are also forcing financial institutions to review their business models and to restructure, leading to overall shrinkage in the world's financial sector.
"Redundancies have been outpacing new hires by roughly two-to-one. Financial institutions have been particularly pressured to consolidate activities in trading and securitisation, which have higher capital charges," he said.
The good news is that Asian finance is still enlarging its pie and market share, thanks to rising middle-class affluence and wealth creation in the region. "This is a solid story for another two decades at least, with increasing trade flows, rapid urbanisation and infrastructure development," he said.
However, growth of the sector will demand deeper skills, rather than a large expansion of jobs.
Mr Tharman urged his audience: "We must ensure we are well prepared with the skills, depth of expertise and innovative capabilities to stay relevant and competitive." He added that Singapore must proactively develop its Singaporean core while remaining open to foreign professionals with needed specialised experience and skill-sets.
He highlighted the need to develop capabilities in five areas including deep functional expertise which means deepening expertise across all areas including banking, capital markets and insurance.
A second area is achieving cross-functional capability in addition to a core competence in a particular business area. Thirdly, Mr Tharman referred to regional knowledge and experience as being essential as cross-border transactions are now the norm.
He also cited technological skills and adaptability as well as leadership as key areas. "We want to develop Singaporeans for positions of leadership in tomorrow's financial world. It requires both depth and breadth, and will increasingly require both local and global experience and know-how," he said.
To equip local practitioners, Mr Tharman announced that the MAS will be launching a new Asian Financial Leaders Programme later this year for Singaporeans who aspire to take on regional or global leadership positions.
The programme will allow participants to learn from regional policymakers, and interact with fellow financial sector leaders from other nations.
United Overseas Bank's chief executive Wee Ee Cheong, who is also the vice-chairman of the IBF Council, said: "We have a responsibility to ensure that our customers are served by the very best in the industry - people who have the required skill-sets as well as the correct mindsets to help them fulfil their dreams."