The Monetary Authority of Singapore (MAS) will pump in $400 million in grants and funding to help increase the number of locals who can take on more senior jobs within the financial services industry.
The money is part of the Financial Sector Development Fund (FSDF) administered by MAS, to be put into the Talent and Leaders in Finance programme from 2021 to 2025.
The commitment by MAS and the Institute of Banking and Finance (IBF) is part of the refreshed Financial Services Industry Transformation Map (ITM) unveiled by Lawrence Wong, Deputy Prime Minister and Minister for Finance, on Sept 15.
“[This] will invest more in skills training for our people, with a focus on developing more Singaporean finance specialists and leaders,” says Wong, who is also MAS’s deputy chairman.
Under the updated ITM, MAS is projecting the financial sector to grow by an average of 4% to 5% per annum (p.a.) between 2021 and 2025, creating between 3,000 and 4,000 jobs on average per year. This is a slight decrease from the previous few years. From 2016 to 2020, the financial services sector grew by an average of 5.7% p.a., exceeding the target of 4.3% p.a. The sector created an average of 4,100 net jobs each year, higher than the target of 3,000 net jobs p.a.
According to Wong, more than 3,000 Singaporeans now hold senior roles in the financial sector, up more than 80% compared to 2016. “For example, the CEOs of JP Morgan, AIA, and Fullerton Fund Management in Singapore — Edmund Lee, Wong Sze Keed and Jenny Sofian — are all Singaporeans; we also have many Singaporeans holding regional positions overseas.”
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As one of the 23 sectors identified by the Committee of the Future Economy, the Financial Services ITM was launched in 2017 with a strong focus on innovation and technology adoption and developing a world-class workforce.
The ITM 2025 outlines growth strategies to further develop Singapore as a leading international financial centre in Asia — to connect global markets, support Asia’s development, and serve Singapore’s economy, says MAS.
While Singapore’s financial sector has done well, the external environment has become more complex and challenging, says Wong. “We are only just recovering from the Covid-19 pandemic but we don’t get to take a breather.”
Singapore is entering a phase of elevated macroeconomic and geopolitical risks, says Wong. “Key structural drivers like technology and digitalisation have the potential to transform and disrupt financial markets and services. Finance must also step up and take bold steps to catalyse the transition to net zero. Amid all this, Asia remains a region with high growth potential in the global economy and we want to contribute to its growth.”
Enhance asset class strengths
Broadly, the ITM for the financial services sector comprises five key strategies, namely to: enhance asset class strengths, digitalise financial infrastructure, catalyse Asia’s net-zero transition, shape the future of financial networks and foster a skilled and adaptable workforce.
First, to enhance asset class strengths, MAS will work with the financial industry to deepen capabilities in asset classes where Singapore plays a key regional or global role.
Within the foreign exchange (FX) space, for example, MAS will broaden and deepen the electronic FX trading ecosystem by anchoring more FX platforms and liquidity takers. On insurance, MAS will catalyse insurance risk advisory and alternative risk transfer solutions for Asia, to address pandemic, climate and cyber risks; and facilitate the participation of capital markets in risk financing.
In the wealth management space, MAS wants Singapore to become Asia’s centre for philanthropy through building impact monitoring solutions, philanthropy advisory competencies, and innovative philanthropy models. In 2020, Singapore chalked up total assets under management of some $4.7 trillion, up 17% over 2019 — with much of the new growth coming from family offices.
According to Wong, there is growing interest among high-net-worth individuals and family offices to do more in this space. “We will work with them to set up philanthropic foundations here, identify deserving causes in the region, and enable them to better track the impact of their giving. If done well, we can help uplift societies and contribute to Asia’s development.”
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Meanwhile in asset management, MAS will enhance the Variable Capital Company (VCC) regime and other fund structures to cater to broader industry needs.
Another opportunity is in the private markets, says Wong, where there is “strong growth potential”. “In 2020, the deal value for Southeast Asian private equity and venture capital deals totalled almost US$9 billion [$12.6 billion]. This is expected to reach US$70 billion by 2024.”
In fintech, MAS will anchor “promising start-ups” in areas like Web 3.0, artificial intelligence and green fintech.
Digitalise financial infrastructure
Second, to digitalise Singapore’s financial infrastructure, MAS will promote the development of digital infrastructure and platforms.
These include bond market infrastructure, where MAS will improve end-to-end efficiency in primary bond issuances, listing and settlement processes, and strengthen Singapore’s proposition as a bond issuance and listing venue of choice.
MAS will develop an industry funds settlement utility to centralise subscription, redemption, record-keeping workflows, and facilitate reconciliation of fund data flows, which will improve efficiency.
MAS will also launch a digital platform to connect small and medium enterprises (SMEs) across regions. “This facilitates trade discovery and enables easier access to trade financing for participating SMEs.”
Catalyse Asia’s net-zero transition
Third, to catalyse Asia’s net-zero transition, MAS is working with the industry to develop innovative solutions to scale sustainable and transition financing.
Through the FSDF, MAS will provide $100 million in grant funding over 2021 to 2025 for capability building, green fintech, climate risk and reinsurance, and solutions for sustainable and transition finance.
Wong highlights “three D’s” of focus: definitions, data and disclosure. “We need clearer definitions on what’s considered green, brown and activities transitioning from brown to green. We need data about projects to know which transition category they belong to, and track their progress in carbon emissions reduction. To get the data, we need corporates to disclose high quality information about the projects. These are fundamental building blocks, which are not well-developed in many jurisdictions. With these building blocks in place, we can expect more financial innovation and solutions in the sustainability space.”
The Green Finance Industry Taskforce will finalise the criteria for identifying green and transition activities for eight key sectors in 2023.
MAS also seeks to enhance sustainability disclosures and build data utilities, such as Project GreenPrint, to facilitate companies’ sustainability disclosures and investors’ access to companies’ ESG data. Earlier that week, MAS and the Singapore Exchange (SGX) launched ESGenome — a digital disclosure portal that helps listed companies generate sustainability reports.
ESGenome is one of four digital platforms under MAS’s Project Greenprint, a joint effort with the local bourse to simplify, standardise and improve corporate disclosures, as well as enhance stakeholder access and use of consistent and comparable environmental, social and governance (ESG) data.
Shape the future of financial networks
Fourth, MAS hopes to shape the future of financial networks by improving payments connectivity here and abroad. “It is too early to say what the future financial landscape is going to look like 10 years from now,” says Wong. “But there is tremendous potential for innovations like tokenisation and distributed ledger technologies to reduce the reliance on central parties or intermediaries.”
This includes expanding cross-border payment linkages with regional economies, such as real-time payment linkages. Project Nexus, for example, is a blueprint for enhancing global payments network connectivity. Announced in July 2021 by MAS and the Bank for International Settlements Innovation Hub Singapore Centre, the blueprint proposes multilateral linkages of various countries’ national retail payment systems.
MAS will also explore the potential of distributed ledger technology in promising use cases, such as in cross-border payments, trade finance and the capital markets.
MAS says it will support tokenisation of financial and real economy assets. Project Guardian, for example, is a collaborative initiative with the financial services sector launched in May. It seeks to explore the economic potential and value-adding use cases of asset tokenisation.
To connect digital currencies, MAS’s Project Orchid aims to build the technology infrastructure and capabilities necessary to issue a digital Singapore dollar, should MAS decide to do so in the future. Announced last November at the Singapore Fintech Festival 2021, MAS managing director Ravi Menon said: “MAS recognises there could be potential benefits offered by innovative retail central bank digital currency solutions in the future.”
Foster skilled and adaptable workforce
Finally, MAS wants to foster a skilled and adaptable workforce. Together with the IBF, MAS will work closely with the financial industry and tripartite partners to foster a strong workforce.
Singapore’s talent strategy is “two-pronged”, says Wong. “We know that we cannot build a regional and global financial centre with our local financial manpower here. Hence, we must continue to attract and retain top talent from abroad to form the best teams in Singapore.”
The Ministry of Manpower’s recent changes to the work pass framework, including the introduction of the Overseas Networks and Expertise Pass (One Pass) — a special class aimed at high-income earners drawing at least $30,000 a month — will enable Singapore to do so, adds Wong.
According to MAS, the FSDF’s $400 million grant to the Talent and Leaders in Finance programme will build workforce competencies in growth areas through training support for finance professionals at different stages of their careers.
It will also help develop specialist talent in sustainability and technology, while offering leaders opportunities to acquire expertise, international exposure and networks to help them succeed in their roles.
The updated ITM is “ambitious”, says Wong, and delivering it will not be easy. “The road ahead will be a bumpy one that throws up both risks and opportunities… If we do this right, our financial centre will continue to stay relevant and competitive, and be a key global financial node that connects global markets, supports Asia’s development and serves Singapore’s economy.”
