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Professor Sumit Agarwal of the National University of Singapore says fintech services factor into the growth of Asian financial centres
He singles out Singapore as a ‘safe haven’ for investors with its political stability, trusted systems and transparency
Financial markets are in constant motion as institutional funds and private investors look to rebalance their portfolios and seek out new opportunities in emerging sectors.
But amid the daily trades reflected in the ups and downs of individual indices, there are also broader trends at work. These are driven by geopolitical factors, economic realities and the ongoing search for a sense of security coupled with reliable returns.
Over the past decade, that has seen a shift in gravity for global financial activities, moving away from the traditional centres in North America and Europe towards Asia. Most signs indicate that this reordering is set to accelerate further.
This shift is reflected in the latest edition of the semi-annual Global Financial Centres Index, jointly produced by the China Development Institute in Shenzhen and the London-based think tank Z/Yen Partners. It ranks Singapore and Hong Kong among the world’s top four financial hubs, after New York and London.
The ranking, released in September last year, also places three mainland Chinese cities – Beijing, Shanghai and Shenzhen – in the top 10. This confirms that the turn towards Asia has continued despite the impact of the Covid-19 pandemic and uncertainties such as those caused by Russia’s invasion of Ukraine.
A closer look at the causes of this shift reveals that investors of every type have three foremost considerations when deciding where to relocate funds or explore alternatives.
The first is connectivity, as it affords easy access and allows both residents and non-residents to move investments to and from other financial centres without undue delay.
The second is predictability, which comes down to having a trusted legal code, a respected arbitration system and a sociopolitical environment that is not prone to unexpected change.
And the third is the vibrancy of a place that results from having an open economy and support for established industries, early stage start-ups and international opportunities, all of which offer good prospects for growth.
4
Singapore ranks as one of the world’s top four financial hubs, according to the Global Financial Centres Index produced by the China Development Institute and think tank Z/Yen Partners. Photo: Shutterstock
Business /
Banking & Finance
Global financial activities see gravity shift from Western hubs towards Asia
Professor Sumit Agarwal of the National University of Singapore says fintech services factor into the growth of Asian financial centres
He singles out Singapore as a ‘safe haven’ for investors with its political stability, trusted systems and transparency
In Partnership With
DBS
Wealth management in the new world
+ FOLLOW
Morning Studio editors
Morning Studio editors
+ FOLLOW
Published: 4:00pm, 21 Feb, 2023
Why you can trust SCMP
Advertisement
Financial markets are in constant motion as institutional funds and private investors look to rebalance their portfolios and seek out new opportunities in emerging sectors.
But amid the daily trades reflected in the ups and downs of individual indices, there are also broader trends at work. These are driven by geopolitical factors, economic realities and the ongoing search for a sense of security coupled with reliable returns.
Over the past decade, that has seen a shift in gravity for global financial activities, moving away from the traditional centres in North America and Europe towards Asia. Most signs indicate that this reordering is set to accelerate further.
This shift is reflected in the latest edition of the semi-annual Global Financial Centres Index, jointly produced by the China Development Institute in Shenzhen and the London-based think tank Z/Yen Partners. It ranks Singapore and Hong Kong among the world’s top four financial hubs, after New York and London.
Global financial activities have been shifting towards Asia over the past decade, moving away from the traditional hubs in North America and Europe. Illustration: Shutterstock
Global financial activities have been shifting towards Asia over the past decade, moving away from the traditional hubs in North America and Europe. Illustration: Shutterstock
The ranking, released in September last year, also places three mainland Chinese cities – Beijing, Shanghai and Shenzhen – in the top 10. This confirms that the turn towards Asia has continued despite the impact of the Covid-19 pandemic and uncertainties such as those caused by Russia’s invasion of Ukraine.
A closer look at the causes of this shift reveals that investors of every type have three foremost considerations when deciding where to relocate funds or explore alternatives.
The first is connectivity, as it affords easy access and allows both residents and non-residents to move investments to and from other financial centres without undue delay.
The second is predictability, which comes down to having a trusted legal code, a respected arbitration system and a sociopolitical environment that is not prone to unexpected change.
And the third is the vibrancy of a place that results from having an open economy and support for established industries, early stage start-ups and international opportunities, all of which offer good prospects for growth.
He adds: “Countries from China and India to Vietnam, Thailand and Indonesia, with their large populations, are opening up and achieving higher levels of financial inclusivity. In India alone, 500 million new bank accounts have been opened in the last few years, and that creates a huge number of potential investors.”
The introduction of financial technology, or fintech, has been transformative. Empowered by the increasing speed and power of the internet, innovators have come up with solutions that make banking more accessible to everyone, from city-dwelling high-net-worth individuals (HNWIs) to new account holders in rural areas. Online transactions not only provide ease of use and increased efficiency, but they can also be done at a lower cost.
Research shows that investment activity via internet access in smaller towns in China and India is growing fast, and it is unlikely to peak any time soon. In addition, 2021 saw a record US$296 billion in private equity investments in the Asia-Pacific region.
These developments mean that major banks in the region with good international standing and strong digital offerings are well positioned to harness the growing opportunities. Singapore, for example, is home to some of the most widely trusted banks. Among them is DBS, which since 2009 has remained the highest-ranked Asian bank in the annual World’s Safest Banks list by New York-based magazine Global Finance. The rankings comprise the largest 500 banks worldwide by asset size, and are based on long-term foreign currency ratings issued by Fitch Ratings, Standard & Poor’s and Moody’s Investors Service.
As Singapore’s largest bank, DBS is regarded as being ahead of the curve when it comes to adopting technology, with 99 per cent of its applications being cloud-enabled, according to Steven Ong, managing director and head of DBS Treasures Singapore.
The bank leverages artificial intelligence (AI) and machine learning (ML) to gauge which investment alerts would be relevant to each customer, delivering only what makes sense for an individual based on analysis
4
Singapore ranks as one of the world’s top four financial hubs, according to the Global Financial Centres Index produced by the China Development Institute and think tank Z/Yen Partners. Photo: Shutterstock
Business /
Banking & Finance
Global financial activities see gravity shift from Western hubs towards Asia
Professor Sumit Agarwal of the National University of Singapore says fintech services factor into the growth of Asian financial centres
He singles out Singapore as a ‘safe haven’ for investors with its political stability, trusted systems and transparency
In Partnership With
DBS
Wealth management in the new world
+ FOLLOW
Morning Studio editors
Morning Studio editors
+ FOLLOW
Published: 4:00pm, 21 Feb, 2023
Why you can trust SCMP
Advertisement
Financial markets are in constant motion as institutional funds and private investors look to rebalance their portfolios and seek out new opportunities in emerging sectors.
But amid the daily trades reflected in the ups and downs of individual indices, there are also broader trends at work. These are driven by geopolitical factors, economic realities and the ongoing search for a sense of security coupled with reliable returns.
Over the past decade, that has seen a shift in gravity for global financial activities, moving away from the traditional centres in North America and Europe towards Asia. Most signs indicate that this reordering is set to accelerate further.
This shift is reflected in the latest edition of the semi-annual Global Financial Centres Index, jointly produced by the China Development Institute in Shenzhen and the London-based think tank Z/Yen Partners. It ranks Singapore and Hong Kong among the world’s top four financial hubs, after New York and London.
Global financial activities have been shifting towards Asia over the past decade, moving away from the traditional hubs in North America and Europe. Illustration: Shutterstock
Global financial activities have been shifting towards Asia over the past decade, moving away from the traditional hubs in North America and Europe. Illustration: Shutterstock
The ranking, released in September last year, also places three mainland Chinese cities – Beijing, Shanghai and Shenzhen – in the top 10. This confirms that the turn towards Asia has continued despite the impact of the Covid-19 pandemic and uncertainties such as those caused by Russia’s invasion of Ukraine.
A closer look at the causes of this shift reveals that investors of every type have three foremost considerations when deciding where to relocate funds or explore alternatives.
The first is connectivity, as it affords easy access and allows both residents and non-residents to move investments to and from other financial centres without undue delay.
Advertisement
The second is predictability, which comes down to having a trusted legal code, a respected arbitration system and a sociopolitical environment that is not prone to unexpected change.
And the third is the vibrancy of a place that results from having an open economy and support for established industries, early stage start-ups and international opportunities, all of which offer good prospects for growth.
Hong Kong also ranks highly in the Global Financial Centres Index, followed by Beijing, Shanghai and Shenzhen in the top 10. Photo: Shutterstock
Hong Kong also ranks highly in the Global Financial Centres Index, followed by Beijing, Shanghai and Shenzhen in the top 10. Photo: Shutterstock
“It is clear that the centre of world economic growth is now in Asia,” says Professor Sumit Agarwal, the Low Tuck Kwong distinguished professor of finance, economics and real estate at the National University of Singapore. “There is so much production activity, and the demand for financial services – borrowing, lending and investment – is also enormous.”
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A weekly curated round-up of social, political and economic stories from China and how they impact the world.
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He adds: “Countries from China and India to Vietnam, Thailand and Indonesia, with their large populations, are opening up and achieving higher levels of financial inclusivity. In India alone, 500 million new bank accounts have been opened in the last few years, and that creates a huge number of potential investors.”
The introduction of financial technology, or fintech, has been transformative. Empowered by the increasing speed and power of the internet, innovators have come up with solutions that make banking more accessible to everyone, from city-dwelling high-net-worth individuals (HNWIs) to new account holders in rural areas. Online transactions not only provide ease of use and increased efficiency, but they can also be done at a lower cost.
Advertisement
Research shows that investment activity via internet access in smaller towns in China and India is growing fast, and it is unlikely to peak any time soon. In addition, 2021 saw a record US$296 billion in private equity investments in the Asia-Pacific region.
As the internet makes banking accessible to more people across the Asia-Pacific, banks with a strong selection of digital services are well positioned to seize upon the opportunities presented by the region’s growing levels of online investment activity. Photo: Shutterstock
As the internet makes banking accessible to more people across the Asia-Pacific, banks with a strong selection of digital services are well positioned to seize upon the opportunities presented by the region’s growing levels of online investment activity. Photo: Shutterstock
These developments mean that major banks in the region with good international standing and strong digital offerings are well positioned to harness the growing opportunities. Singapore, for example, is home to some of the most widely trusted banks. Among them is DBS, which since 2009 has remained the highest-ranked Asian bank in the annual World’s Safest Banks list by New York-based magazine Global Finance. The rankings comprise the largest 500 banks worldwide by asset size, and are based on long-term foreign currency ratings issued by Fitch Ratings, Standard & Poor’s and Moody’s Investors Service.
Advertisement
As Singapore’s largest bank, DBS is regarded as being ahead of the curve when it comes to adopting technology, with 99 per cent of its applications being cloud-enabled, according to Steven Ong, managing director and head of DBS Treasures Singapore.
The bank leverages artificial intelligence (AI) and machine learning (ML) to gauge which investment alerts would be relevant to each customer, delivering only what makes sense for an individual based on analysis.
Data analysis, artificial intelligence and machine learning can be leveraged to create a personalised banking experience for each customer. Illustration: Shutterstock
Data analysis, artificial intelligence and machine learning can be leveraged to create a personalised banking experience for each customer. Illustration: Shutterstock
“We’ve created an internal data mart with 15,000 customer data points that stitch together a client’s profile – the pages visited, the content of interest, the frequency of visits and the amounts spent on different categories, among others,” Ong explains.
“We then convert the data into personalised, actionable insights – what we call ‘nudges’ – that are customised for the customer, to guide the customer in transactions or investment decisions.”
On the other end, nudges are sent to the bank’s wealth advisers to help them decide when it is time to engage a customer in “high-priority conversations”.
Being headquartered in Singapore offers an advantage for DBS, as the city state has become a global wealth management centre for investors and fund managers, according to a September 2022 report by accounting firm PwC. Its data showed that Singapore’s assets under management reached a record S$4.7 trillion (US$3.5 trillion) at the end of 2020, growing 17 per cent year on year. Of those assets, 78 per cent were sourced outside of Singapore, with more than half coming from the Asia-Pacific region.
Over the years, Singapore has also seen its number of single-family offices (SFOs) grow rapidly. The Monetary Authority of Singapore (MAS) estimated there were 700 SFOs in the city state as of the end of 2021, up from 400 the year prior. Recent industry reports estimate the number has likely climbed to well above 1,000, and possibly as high as 1,500.
4
Singapore ranks as one of the world’s top four financial hubs, according to the Global Financial Centres Index produced by the China Development Institute and think tank Z/Yen Partners. Photo: Shutterstock
Business /
Banking & Finance
Global financial activities see gravity shift from Western hubs towards Asia
Professor Sumit Agarwal of the National University of Singapore says fintech services factor into the growth of Asian financial centres
He singles out Singapore as a ‘safe haven’ for investors with its political stability, trusted systems and transparency
In Partnership With
DBS
Wealth management in the new world
+ FOLLOW
Morning Studio editors
Morning Studio editors
+ FOLLOW
Published: 4:00pm, 21 Feb, 2023
Why you can trust SCMP
Advertisement
Financial markets are in constant motion as institutional funds and private investors look to rebalance their portfolios and seek out new opportunities in emerging sectors.
But amid the daily trades reflected in the ups and downs of individual indices, there are also broader trends at work. These are driven by geopolitical factors, economic realities and the ongoing search for a sense of security coupled with reliable returns.
Over the past decade, that has seen a shift in gravity for global financial activities, moving away from the traditional centres in North America and Europe towards Asia. Most signs indicate that this reordering is set to accelerate further.
This shift is reflected in the latest edition of the semi-annual Global Financial Centres Index, jointly produced by the China Development Institute in Shenzhen and the London-based think tank Z/Yen Partners. It ranks Singapore and Hong Kong among the world’s top four financial hubs, after New York and London.
Global financial activities have been shifting towards Asia over the past decade, moving away from the traditional hubs in North America and Europe. Illustration: Shutterstock
Global financial activities have been shifting towards Asia over the past decade, moving away from the traditional hubs in North America and Europe. Illustration: Shutterstock
The ranking, released in September last year, also places three mainland Chinese cities – Beijing, Shanghai and Shenzhen – in the top 10. This confirms that the turn towards Asia has continued despite the impact of the Covid-19 pandemic and uncertainties such as those caused by Russia’s invasion of Ukraine.
A closer look at the causes of this shift reveals that investors of every type have three foremost considerations when deciding where to relocate funds or explore alternatives.
The first is connectivity, as it affords easy access and allows both residents and non-residents to move investments to and from other financial centres without undue delay.
Advertisement
The second is predictability, which comes down to having a trusted legal code, a respected arbitration system and a sociopolitical environment that is not prone to unexpected change.
And the third is the vibrancy of a place that results from having an open economy and support for established industries, early stage start-ups and international opportunities, all of which offer good prospects for growth.
Hong Kong also ranks highly in the Global Financial Centres Index, followed by Beijing, Shanghai and Shenzhen in the top 10. Photo: Shutterstock
Hong Kong also ranks highly in the Global Financial Centres Index, followed by Beijing, Shanghai and Shenzhen in the top 10. Photo: Shutterstock
“It is clear that the centre of world economic growth is now in Asia,” says Professor Sumit Agarwal, the Low Tuck Kwong distinguished professor of finance, economics and real estate at the National University of Singapore. “There is so much production activity, and the demand for financial services – borrowing, lending and investment – is also enormous.”
EVERY SATURDAY
A weekly curated round-up of social, political and economic stories from China and how they impact the world.
GET THE NEWSLETTER
By registering, you agree to our T&C and Privacy Policy
He adds: “Countries from China and India to Vietnam, Thailand and Indonesia, with their large populations, are opening up and achieving higher levels of financial inclusivity. In India alone, 500 million new bank accounts have been opened in the last few years, and that creates a huge number of potential investors.”
The introduction of financial technology, or fintech, has been transformative. Empowered by the increasing speed and power of the internet, innovators have come up with solutions that make banking more accessible to everyone, from city-dwelling high-net-worth individuals (HNWIs) to new account holders in rural areas. Online transactions not only provide ease of use and increased efficiency, but they can also be done at a lower cost.
Advertisement
Research shows that investment activity via internet access in smaller towns in China and India is growing fast, and it is unlikely to peak any time soon. In addition, 2021 saw a record US$296 billion in private equity investments in the Asia-Pacific region.
As the internet makes banking accessible to more people across the Asia-Pacific, banks with a strong selection of digital services are well positioned to seize upon the opportunities presented by the region’s growing levels of online investment activity. Photo: Shutterstock
As the internet makes banking accessible to more people across the Asia-Pacific, banks with a strong selection of digital services are well positioned to seize upon the opportunities presented by the region’s growing levels of online investment activity. Photo: Shutterstock
These developments mean that major banks in the region with good international standing and strong digital offerings are well positioned to harness the growing opportunities. Singapore, for example, is home to some of the most widely trusted banks. Among them is DBS, which since 2009 has remained the highest-ranked Asian bank in the annual World’s Safest Banks list by New York-based magazine Global Finance. The rankings comprise the largest 500 banks worldwide by asset size, and are based on long-term foreign currency ratings issued by Fitch Ratings, Standard & Poor’s and Moody’s Investors Service.
Advertisement
As Singapore’s largest bank, DBS is regarded as being ahead of the curve when it comes to adopting technology, with 99 per cent of its applications being cloud-enabled, according to Steven Ong, managing director and head of DBS Treasures Singapore.
The bank leverages artificial intelligence (AI) and machine learning (ML) to gauge which investment alerts would be relevant to each customer, delivering only what makes sense for an individual based on analysis.
Data analysis, artificial intelligence and machine learning can be leveraged to create a personalised banking experience for each customer. Illustration: Shutterstock
Data analysis, artificial intelligence and machine learning can be leveraged to create a personalised banking experience for each customer. Illustration: Shutterstock
“We’ve created an internal data mart with 15,000 customer data points that stitch together a client’s profile – the pages visited, the content of interest, the frequency of visits and the amounts spent on different categories, among others,” Ong explains.
Advertisement
“We then convert the data into personalised, actionable insights – what we call ‘nudges’ – that are customised for the customer, to guide the customer in transactions or investment decisions.”
On the other end, nudges are sent to the bank’s wealth advisers to help them decide when it is time to engage a customer in “high-priority conversations”.
Being headquartered in Singapore offers an advantage for DBS, as the city state has become a global wealth management centre for investors and fund managers, according to a September 2022 report by accounting firm PwC. Its data showed that Singapore’s assets under management reached a record S$4.7 trillion (US$3.5 trillion) at the end of 2020, growing 17 per cent year on year. Of those assets, 78 per cent were sourced outside of Singapore, with more than half coming from the Asia-Pacific region.
Over the years, Singapore has also seen its number of single-family offices (SFOs) grow rapidly. The Monetary Authority of Singapore (MAS) estimated there were 700 SFOs in the city state as of the end of 2021, up from 400 the year prior. Recent industry reports estimate the number has likely climbed to well above 1,000, and possibly as high as 1,500.
Singapore has put itself on the map as a global wealth management centre for investors and fund managers, and has also drawn a growing number of family offices. Photo: Shutterstock
Singapore has put itself on the map as a global wealth management centre for investors and fund managers, and has also drawn a growing number of family offices. Photo: Shutterstock
Policies have been put in place to make Singapore an attractive place for SFOs to set up operations, including tax incentive schemes for those allocating at least 10 per cent or S$10 million of their assets to be put towards local investments.
“This money doesn’t just sit there; it goes into active investment portfolios,” Agarwal says. “These top-end people may be moving their money to Singapore because of political stability, or to take advantage of the favourable tax regime with no capital gains or inheritance tax. But we also notice the ‘peer effect’. For example, if someone makes a return of S$5,000 to S$10,000 on an investment, people living in the same building hear about it and try the same thing. You see that happening at all levels of society.”
Agarwal adds that, during a time of geopolitical tensions and other disruptions, Singapore in particular has been able to benefit from its “safe haven” status. Investors have no need to worry about the role of the authorities, sudden rule changes or the fraud and corruption sometimes seen in other countries.
Over the years, MAS has put much emphasis on ensuring that Singapore’s financial institutions are transparent and adhere to best practices. Its Guidelines on Fair Dealing for the board and senior management of such institutions set out their responsibilities for delivering fair dealing outcomes to customers “in the selection, marketing and distribution of investment products, and the provision of advice for these products”.
“The financial institutions [in Singapore] can say: ‘Your money is safe with us’,” Agarwal says. “Transparency is also a key part of that, ensuring customers understand any costs and fees in advance, and know the team advising them can be trusted. Overall, though, the cost of ‘parking’ your money in Singapore is very low, so I would ask: why go to a tax haven or somewhere like Dubai instead?”
Singapore does not have any inheritance, estate, capital gains or net wealth taxes, although there are progressive property tax rates for residential properties and high taxes linked to car ownership.
Singapore has long been leveraging its geographic location and multiculturalism to develop into an international business and financial hub, and as a result has built a strong ecosystem that is able to support the growth of private banking and wealth management. Agarwal notes that the expertise is readily available in the city state to advise clients who may be looking to invest anywhere throughout the Asia-Pacific region, from Australia to Vietnam or India.
Sound wealth management services are also about being in tune with what investors are looking for. Around the world, the push by financial regulators for companies to disclose their environmental, social and governance (ESG) performances has played no small part in increasing the public’s appetite for sustainable finance.
4
Singapore ranks as one of the world’s top four financial hubs, according to the Global Financial Centres Index produced by the China Development Institute and think tank Z/Yen Partners. Photo: Shutterstock
Business /
Banking & Finance
Global financial activities see gravity shift from Western hubs towards Asia
Professor Sumit Agarwal of the National University of Singapore says fintech services factor into the growth of Asian financial centres
He singles out Singapore as a ‘safe haven’ for investors with its political stability, trusted systems and transparency
In Partnership With
DBS
Wealth management in the new world
+ FOLLOW
Morning Studio editors
Morning Studio editors
+ FOLLOW
Published: 4:00pm, 21 Feb, 2023
Why you can trust SCMP
Advertisement
Financial markets are in constant motion as institutional funds and private investors look to rebalance their portfolios and seek out new opportunities in emerging sectors.
But amid the daily trades reflected in the ups and downs of individual indices, there are also broader trends at work. These are driven by geopolitical factors, economic realities and the ongoing search for a sense of security coupled with reliable returns.
Over the past decade, that has seen a shift in gravity for global financial activities, moving away from the traditional centres in North America and Europe towards Asia. Most signs indicate that this reordering is set to accelerate further.
This shift is reflected in the latest edition of the semi-annual Global Financial Centres Index, jointly produced by the China Development Institute in Shenzhen and the London-based think tank Z/Yen Partners. It ranks Singapore and Hong Kong among the world’s top four financial hubs, after New York and London.
Global financial activities have been shifting towards Asia over the past decade, moving away from the traditional hubs in North America and Europe. Illustration: Shutterstock
Global financial activities have been shifting towards Asia over the past decade, moving away from the traditional hubs in North America and Europe. Illustration: Shutterstock
The ranking, released in September last year, also places three mainland Chinese cities – Beijing, Shanghai and Shenzhen – in the top 10. This confirms that the turn towards Asia has continued despite the impact of the Covid-19 pandemic and uncertainties such as those caused by Russia’s invasion of Ukraine.
A closer look at the causes of this shift reveals that investors of every type have three foremost considerations when deciding where to relocate funds or explore alternatives.
The first is connectivity, as it affords easy access and allows both residents and non-residents to move investments to and from other financial centres without undue delay.
Advertisement
The second is predictability, which comes down to having a trusted legal code, a respected arbitration system and a sociopolitical environment that is not prone to unexpected change.
And the third is the vibrancy of a place that results from having an open economy and support for established industries, early stage start-ups and international opportunities, all of which offer good prospects for growth.
Hong Kong also ranks highly in the Global Financial Centres Index, followed by Beijing, Shanghai and Shenzhen in the top 10. Photo: Shutterstock
Hong Kong also ranks highly in the Global Financial Centres Index, followed by Beijing, Shanghai and Shenzhen in the top 10. Photo: Shutterstock
“It is clear that the centre of world economic growth is now in Asia,” says Professor Sumit Agarwal, the Low Tuck Kwong distinguished professor of finance, economics and real estate at the National University of Singapore. “There is so much production activity, and the demand for financial services – borrowing, lending and investment – is also enormous.”
EVERY SATURDAY
A weekly curated round-up of social, political and economic stories from China and how they impact the world.
GET THE NEWSLETTER
By registering, you agree to our T&C and Privacy Policy
He adds: “Countries from China and India to Vietnam, Thailand and Indonesia, with their large populations, are opening up and achieving higher levels of financial inclusivity. In India alone, 500 million new bank accounts have been opened in the last few years, and that creates a huge number of potential investors.”
The introduction of financial technology, or fintech, has been transformative. Empowered by the increasing speed and power of the internet, innovators have come up with solutions that make banking more accessible to everyone, from city-dwelling high-net-worth individuals (HNWIs) to new account holders in rural areas. Online transactions not only provide ease of use and increased efficiency, but they can also be done at a lower cost.
Advertisement
Research shows that investment activity via internet access in smaller towns in China and India is growing fast, and it is unlikely to peak any time soon. In addition, 2021 saw a record US$296 billion in private equity investments in the Asia-Pacific region.
As the internet makes banking accessible to more people across the Asia-Pacific, banks with a strong selection of digital services are well positioned to seize upon the opportunities presented by the region’s growing levels of online investment activity. Photo: Shutterstock
As the internet makes banking accessible to more people across the Asia-Pacific, banks with a strong selection of digital services are well positioned to seize upon the opportunities presented by the region’s growing levels of online investment activity. Photo: Shutterstock
These developments mean that major banks in the region with good international standing and strong digital offerings are well positioned to harness the growing opportunities. Singapore, for example, is home to some of the most widely trusted banks. Among them is DBS, which since 2009 has remained the highest-ranked Asian bank in the annual World’s Safest Banks list by New York-based magazine Global Finance. The rankings comprise the largest 500 banks worldwide by asset size, and are based on long-term foreign currency ratings issued by Fitch Ratings, Standard & Poor’s and Moody’s Investors Service.
Advertisement
As Singapore’s largest bank, DBS is regarded as being ahead of the curve when it comes to adopting technology, with 99 per cent of its applications being cloud-enabled, according to Steven Ong, managing director and head of DBS Treasures Singapore.
The bank leverages artificial intelligence (AI) and machine learning (ML) to gauge which investment alerts would be relevant to each customer, delivering only what makes sense for an individual based on analysis.
Data analysis, artificial intelligence and machine learning can be leveraged to create a personalised banking experience for each customer. Illustration: Shutterstock
Data analysis, artificial intelligence and machine learning can be leveraged to create a personalised banking experience for each customer. Illustration: Shutterstock
“We’ve created an internal data mart with 15,000 customer data points that stitch together a client’s profile – the pages visited, the content of interest, the frequency of visits and the amounts spent on different categories, among others,” Ong explains.
Advertisement
“We then convert the data into personalised, actionable insights – what we call ‘nudges’ – that are customised for the customer, to guide the customer in transactions or investment decisions.”
On the other end, nudges are sent to the bank’s wealth advisers to help them decide when it is time to engage a customer in “high-priority conversations”.
Being headquartered in Singapore offers an advantage for DBS, as the city state has become a global wealth management centre for investors and fund managers, according to a September 2022 report by accounting firm PwC. Its data showed that Singapore’s assets under management reached a record S$4.7 trillion (US$3.5 trillion) at the end of 2020, growing 17 per cent year on year. Of those assets, 78 per cent were sourced outside of Singapore, with more than half coming from the Asia-Pacific region.
Advertisement
Over the years, Singapore has also seen its number of single-family offices (SFOs) grow rapidly. The Monetary Authority of Singapore (MAS) estimated there were 700 SFOs in the city state as of the end of 2021, up from 400 the year prior. Recent industry reports estimate the number has likely climbed to well above 1,000, and possibly as high as 1,500.
Singapore has put itself on the map as a global wealth management centre for investors and fund managers, and has also drawn a growing number of family offices. Photo: Shutterstock
Singapore has put itself on the map as a global wealth management centre for investors and fund managers, and has also drawn a growing number of family offices. Photo: Shutterstock
Policies have been put in place to make Singapore an attractive place for SFOs to set up operations, including tax incentive schemes for those allocating at least 10 per cent or S$10 million of their assets to be put towards local investments.
“This money doesn’t just sit there; it goes into active investment portfolios,” Agarwal says. “These top-end people may be moving their money to Singapore because of political stability, or to take advantage of the favourable tax regime with no capital gains or inheritance tax. But we also notice the ‘peer effect’. For example, if someone makes a return of S$5,000 to S$10,000 on an investment, people living in the same building hear about it and try the same thing. You see that happening at all levels of society.”
Agarwal adds that, during a time of geopolitical tensions and other disruptions, Singapore in particular has been able to benefit from its “safe haven” status. Investors have no need to worry about the role of the authorities, sudden rule changes or the fraud and corruption sometimes seen in other countries.
Over the years, MAS has put much emphasis on ensuring that Singapore’s financial institutions are transparent and adhere to best practices. Its Guidelines on Fair Dealing for the board and senior management of such institutions set out their responsibilities for delivering fair dealing outcomes to customers “in the selection, marketing and distribution of investment products, and the provision of advice for these products”.
“The financial institutions [in Singapore] can say: ‘Your money is safe with us’,” Agarwal says. “Transparency is also a key part of that, ensuring customers understand any costs and fees in advance, and know the team advising them can be trusted. Overall, though, the cost of ‘parking’ your money in Singapore is very low, so I would ask: why go to a tax haven or somewhere like Dubai instead?”
Singapore does not have any inheritance, estate, capital gains or net wealth taxes, although there are progressive property tax rates for residential properties and high taxes linked to car ownership.
Singapore has long been leveraging its geographic location and multiculturalism to develop into an international business and financial hub, and as a result has built a strong ecosystem that is able to support the growth of private banking and wealth management. Agarwal notes that the expertise is readily available in the city state to advise clients who may be looking to invest anywhere throughout the Asia-Pacific region, from Australia to Vietnam or India.
Sound wealth management services are also about being in tune with what investors are looking for. Around the world, the push by financial regulators for companies to disclose their environmental, social and governance (ESG) performances has played no small part in increasing the public’s appetite for sustainable finance.
Investment in solar energy work in China is one example of sustainable finance, for which there has been increased demand from the public. Photo: Shutterstock
Investment in solar energy work in China is one example of sustainable finance, for which there has been increased demand from the public. Photo: Shutterstock
According to a survey conducted last year by global consulting firm Accenture with 3,200 wealthy investors across eight Asian markets, only 32 per cent said they were investing along ESG lines, which lagged behind the global trend. However, the responses also pointed to tremendous opportunities to capitalise on increased demand for ESG investment products.
DBS has been supporting green initiatives such as geothermal power in Indonesia and solar energy in China. In August 2022, the bank reported that its sustainable finance portfolio had grown to S$52.7 billion, exceeding its 2024 target of S$50 billion well ahead of schedule.
“The Monetary Authority of Singapore is pushing banks to be much more involved in green finance,” Agarwal says. “Investors are looking for that, and it’s all there if you want it.”
As Asia’s economies continue to grow, investors are bound to keep their eyes on the region as a favourable place to park their money. This, in turn, is expected to drive up demand for wealth management expertise and services – and the institutions with proven track records will be set to reap the benefits brought about by this growth.
