SGFinDex launch: More people likely to invest with improved financial planning tools, banks say

• Banks expect consumers to invest more when they can better plan their finances
• This is the goal of newly launched digital system, the Singapore Financial Data Exchange (SgFinDex)
• A few banks said the number of customers planning and investing their money with financial planning tools already in use has gone up

SINGAPORE — With the launch of a new public digital system called the Singapore Financial Data Exchange (SGFinDex) to consolidate financial information for use by residents here, some banks said that it is a business opportunity as they expect consumers to invest more. 

Mr Piyush Gupta, chief executive officer of DBS bank, said on Monday (Dec 7) that the fees the bank charges when people invest could hit S$1 billion over the next three to five years. 

That is a projection made based on the growth in the use of its services since the bank launched its financial planning tool, Nav Planner, Mr Gupta said during a virtual press conference. 

Oversea-Chinese Banking Corporation (OCBC) made a similar observation, with its head of financial services, Mr Sunny Quek, saying that it expects to double the number of customers starting to plan their finances using OCBC’s digital tools such as Life Goals. 

The forecast made by these banks comes with the launch of SGFinDex on Monday by Deputy Prime Minister and Finance Minister Heng Swee Keat at the opening of the Singapore Fintech Festival and Singapore Week of Innovation and Technology (Switch) event.

With SGFinDex, users who have a SingPass — the national passcode system for e-government services — will be able to retrieve and see their financial information from the accounts they have with different banks on one single platform. 

The Monetary Authority of Singapore, the Smart Nation and Digital Government Group and the Association of Banks in Singapore said in a joint media statement on the same day that the aim of creating SGFinDex is to enable people to plan their finances more effectively.

Once they log in with their SingPass and give their consent for the bank to facilitate the transfer of their personal financial information to their chosen platform, they can view all their funds and investments across different banks in one place. 

These platforms could be the banks’ own financial planning tool or a government financial planning service called MyMoneySense. 

Based on the banks’ prior experience with their own financial planning applications and digital banking services before the launch of SGFinDex, they have noticed that more customers have started investing using these tools. 

“As you get people into the ability to put their money to work, and as people start investing their money, the bank charges a fee to help people make the investment,” Mr Gupta said. 

Mr Quek told TODAY that OCBC is seeing investment volumes on the digital stream grow by three times compared to a year ago.

While United Overseas Bank (UOB) did not make any future projections as to how SGFinDex would help them, Ms Jacquelyn Tan, its head of personal financial services, said that there was a 30 per cent jump from July last year to July this year in the number of customers who used its Mighty Insights tool — a data insights feature driven by artificial intelligence (AI) — to help with their financial planning.

Mr Brian Thung, financial services leader for Southeast Asia at professional services firm EY, said that SGFinDex addresses a “pain point” of retail investment advisory. 

“In the past, these investment advisers were not able to easily obtain holistic, detailed data from customers on their financial assets and liabilities. This ability to access customer financial information on one platform allows the investment advisers to better identify gaps and improve the customer experience on long-term financial planning,” he said.

That being said, Ms Tan of UOB noted that there is still a desire among customers to connect with their wealth advisers, who use the bank’s AI-powered advisory tool and guide them in their financial decisions face-to-face.

INNOVATIONS CREATE DATA EFFICIENCY, HELP BANKS REDUCE COSTS

SGFinDex is the latest initiative by MAS and the finance sector as a whole to build more consolidated systems that bring convenience to consumers. 

Others were in the digital payment space, such as the launch of e-payment platform PayNow in July 2017 and, about a year later, the SGQR Code — a QR code that unified various payment QR codes into a single label.

When asked why banks decided to be part of such public-service oriented initiatives, Mr Gupta said that innovations in the digital payment space do not help banks make money at all. 

However, they create data efficiency in the entire economy and help banks reduce costs.

The launch of SGFinDex, which is Singapore’s version of open banking, is a separate category because it is a “systemic infrastructure change”, Mr Gupta said. 

Mr Sam Kok Weng, financial services leader at professional consultancy PwC Singapore, said that these initiatives remove the various friction points in the industry that are costs ultimately borne by the consumers. 

Some of these costs include having to circulate coins and notes, opportunity costs arising from delays in clearing cheques, and funds transfer and transaction costs for processing. 

With utility products or technological solutions such as PayNow or SGFinDex, Mr Sam said that service fees can come down for consumers as banks sometimes charge a marked-up rate for having to deal with these associated costs. 

For banks having to bear the brunt of some of these costs such as cash handling, Mr Sam said that centralised digital channels help them focus on more value-added activities, such as seamless processing of loan applications, opening of accounts, instant payments and the provision of financial advice to consumers. 

“Such services also open up new jobs in Singapore and in the region as our neighbouring countries ride on the coattails of such transformation,” he added.