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Fintech gives fillip to jobs and funding in Singapore financial sector

Singapore

SINGAPORE'S move to develop the fintech sector came at a critical juncture, a time of weakness in traditional job creation in the financial industry, and just as the Monetary Authority of Singapore (MAS) was intent on spurring enterprise financing for growth companies, MAS' managing director Ravi Menon has said.

Some 2,000 jobs have been created in the fintech sector over the last two years, feeding into a net increase of 7,800 jobs in financial services and fintech - close to the financial services' Industry Transformation Map (ITM) target of 8,000 jobs. MAS now expects job growth in financial services to exceed the ITM target this year.

Being able to hit the fresh ITM targets was a pleasant surprise, said Mr Menon, who noted that the main drivers came from jobs related to digital technology and associated areas such as cyber security.

Speaking to The Business Times in an interview ahead of the Singapore Fintech Festival next week, he said: "If you look at the traditional areas in the financial industry globally, jobs have generally been cut back.

"So I think this fintech phenomenon has been most timely. It has created demand for many new technology-related jobs in the financial industry, offsetting the cutbacks in other areas."

This comes as the financial industry has experienced not just slower economic growth globally, but also tighter regulation and keen competition from non-financial technology players.

Mr Menon told BT as well that the financing activity for startups has picked up. Today, there are some 220 venture capital (VC) and private equity (PE) managers in Singapore; VC and PE assets under management in Singapore has grown at an average of 28 per cent per annum over the last five years. And as a sign of the interest in Asia, more than three-quarters of their investments are across Asean, South and North Asia.

Singapore has in recent times simplified the regulatory regime for venture capital managers, shortening the authorisation process from 16 weeks to four.

In a speech at the GIC Institutional Investors Roundtable, Mr Menon said MAS would go further to boost enterprise financing. It is working with the financial industry to develop a utility service for small and medium-sized enterprises (SMEs), which would aggregate information to help these smaller companies show their credit worthiness at the pre-IPO phase.

MAS also plans to create private market platforms so Asian growth companies can connect with investors for capital and expertise.

To boost the research coverage for both private and public markets, MAS is curating Asean VC and PE research with industry partners, and funding research to support market liquidity in the post-IPO phase.

These developments prompt the question of how sustainable the startup sector can be, given that most startups can, and do, fail. But Mr Menon noted that the aim is to ensure a constant thrum in the sector.

"If you look at the major innovation hubs, failure rates are, by nature, high. But people just move on to do new things. The capabilities don't die, they get sharpened by experience and failure.

"That's why the failure of startups shouldn't bother us. What should bother us is if the rate of new startups being created is slackening."

While encouraging fintech firms to disrupt the incumbents in the financial-services sector, MAS is also watching keenly how traditional jobs at financial institutions will be transformed for the digital age.

Mr Menon observed that chief executives of banks here are concerned that some staff are not adapting quickly enough to change, raising the question on whether some degree of anxiety should be injected to prevent complacency in this regard.

A recent Institute of Banking and Finance (IBF) survey of 1,028 financial professionals found that most felt technology could drive efficiencies, including replacing repetitive activities with automation. Yet, while two in five find it important to pick up new skills for the digital economy, they also find no urgency to do so.

But although this is the case, the government said last year that financial institutions should not be too quick to fire their employees as a "tendency", and in the name of disruption.

MAS has been taking deep dives to look at how jobs would be transformed for the digital age, right down to the specific skills that are needed for the roles at financial institutions.

In August, the IBF launched its one-stop career centre, designed to offer training to tackle skill gaps.

Estimates for at-risk jobs in Singapore are hard to pin down now, but major consumer banks were asked last year to retrain some 3,500 existing employees within three years. To date, about a third of these have been trained, including 450 who have moved into new roles.

Mr Menon said: "Job displacements and entirely new jobs occur more at the fringes. Rather, what we see more often is job transformation. Most jobs are going to be changed.

"The challenge is to figure out what is the likely configuration of new roles and displaced roles within existing jobs and to equip our workforce for it."

The Singapore Fintech Festival 2018 will be held from Nov 12 to Nov 16 at the Singapore Expo, and will be attended by top government officials and business leaders. Prime Minister of Canada Justin Trudeau, Prime Minister of India Narendra Modi and the managing director of the International Monetary Fund Christine Lagarde are among the attendees.