Singapore Prime Minister Cites Bitcoin As A Sign Of The Future During Speech

November 16, 2015 8:14 AM UTC

Singapore Prime Minister Lee Hsien Long cited bitcoin and block chain technology as innovations changing the banking industry during a congratulatory speech at the United Overseas Bank (UOB) 80th-anniversary dinner. Hsien Long emphasized the banking industry’s importance to his nation’s economy.

He began his talk by reviewing the history of UOB, one of the country’s first banks. In 1935, during the Great Depression, a group of Chinese businessmen pooled their resources to set up the bank now known as UOB. It had a single branch in rented premises, and it engaged in short-term loans. It has much to celebrate, Hsien Long said. It now has 76 branches in Singapore and 520 offices in 19 countries. It holds $300 billion USD in assets, making it one of the world’s top banks in terms of assets.

One reason the banking industry has been successful in Singapore is that the country has a vibrant economy and is a nation that has a sound regulatory regime governed by the rule of law.

In 1997, the government took measures to strengthen the financial sector. The industry was not as efficient and responsive to the market as it could have been.

The government opened up the banking sector to foreign players, a move that forced domestic banks to consolidate and to innovate.

Local banks held their own against tough competition and have grown, Hsien Long said. They are now among the strongest and safest financial institutions in the world.

Banks Face Big Challenges

Looking ahead, banking is entering a challenging phase. “Global growth is lackluster,” he said. There is a chance of a regional economic slowdown. Interest rates have been low for a long period, crimping investment.

“Banks are facing tighter regulations, post (banking) crisis,” he said. “There are higher capital and liquidity requirements.”

On top of that, “technology is moving very fast, with new business models disrupting traditional banking.” People are doing all sorts of financial transactions on smartphones.

“Payment modes are changing,” he said, noting the rapid growth of Alibaba in China, the world’s e-commerce leader. In one day recently, Alibaba shoppers racked up more than $14 billion USD in sales.

Banking operations are also changing. Companies are finding new ways to assess customer loan worthiness. They are using data other than credit bureau reports, such as phone use data, information from social networks and consumers’ living habits to assess creditworthiness.

The insurance industry also is finding new ways to assess risks.

Bitcoin And The Block Chain Affect Business Activity

That’s just on the consumer side of financial services, Hsien Long said. On the business side, there are new technologies like the block chain that is used for bitcoin but have other uses such as real time settlements and trade finance verification.

Banks and regulators must keep up to date with these developments. Banks have to keep upgrading technology, services and business models.

There are banks in other parts of the world using technology better than in Singapore, Hsien Long said. Banks in Australia and America have outstanding digital banking models that offer a wide range of products and services. They have clear and simple interfaces and help customers tackle financial decisions.

Institutions in the U.S. and China are making pervasive use of technology for credit assessments.

Singapore’s institutions must face the balance of risk taking and caution, and there are positive signs this is happening. “I’m happy that several leading banks and insurance companies have set up innovation labs to test services for Singaporean and global customers,” he said.

Also read: Block chain will revolutionize capital markets beginning in 2016

A Time For New Leadership

“The bank must continue to move forward and a new generation must build and expand,” he said, noting a challenge that UOB faces.

Banks, like governments, must plan for their leadership succession. At UOB, a new team in the last two years has built on its past achievements. “UOB can scale new heights and continue to succeed for many years to come.”

He thanked UOB for its $2 million donation to the Peoples Action Party Community Foundation, which aims to give children a good head start with preschool education and child care.

Images from Shutterstock & UOB.

Last modified: August 9, 2020 5:58 PM UTC

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