8 March 2021

Bank on digital, financial literacy to propel wealth

Having grown steadily over the past 20 years, South-east Asia’s personal wealth is at an inflection point.

The region’s economy is maturing with increased adoption of technology.

For example, South-east Asia’s access to the internet is at 58.6%, higher than the global rate of 50%1, and its digital payments are expected to exceed US$1 trillion in transaction value by 20252.

The region’s personal wealth now needs to grow in lockstep with this wider economic maturing, but digitalisation is proving to be both a blocker and an enabler of prosperity.

In a work context, improved digitalisation means manual labour and paper-based processing roles will inevitably become obsolete and workers marginalised. In terms of personal wealth, digital illiteracy could hinder the ability of many South-east Asians’ access to wealth literacy and wealth creation solutions.

As more processes become automated and companies invest increasingly in technology, people need to have a digital-first, growth mind-set to thrive at work and grow their personal wealth.

But, governments and corporates will also play a vital role.

Developing skills of the future

Upskilling and reskilling is a critical part of the post-COVID recovery. The impact of the pandemic, and the rapid rise of digitalisation, has transformed how we work and the skills companies require.

Governments, the education sector and companies must work together to address this challenge and prevent an increase in the skills gap which creates greater inequality.

Corporations need to help their employees develop key skills in transferrable areas like creativity and connectivity, because they underpin agile ways of working. Other high-tech skills, like data analytics, cloud computing and blockchain, will continue to increase in demand. People who have expertise in these areas, combined with strong transferable skills, will be even more employable.

But corporate programmes must also be supported by governments, whether through subsidies, incentives or the creation of a network where companies can learn from each other’s best practices.

For example, HSBC has worked with the Singapore government-funded Technology in Finance Immersion Programme3 (TFIP) to help individuals gain experience in key technology areas such as AI and Cyber Security.

To address the issue of job displacement, training grants or initiatives like the Singapore government’s Professional Conversion Programme4 (PCP), targeted at PMETs and mid-career switches to move into new growth sectors relevant to a digital economy, must be more prevalent and easily accessible across the region.

This will help the growing population and their disparate levels of digital literacy remain competitive, employable and economically mobile.

The impact of ASEAN’s digitalisation on accessing personal wealth solutions

While employability is a key factor in improving financial wellbeing, access and awareness of financial products are also essential to help individuals preserve and grow their money.

Across South-east Asia, better access to banks and growing smartphone penetration has resulted in greater engagement in the digital banking and payments space. Financial services are reacting accordingly by boosting digital.

For example, financial services including lending, investment and insurance - while still emerging - are expected to grow by more than 20% annually through 20255.

The future of wealth is about blending the best of technology with the expertise of people to deliver a seamless wealth management and investment planning experience.

The risk is that individuals who lack the necessary financial or digital literacy may fall behind. Financial institutions should focus on creating simple and safe digital wealth solutions, while working with governments to create initiatives and resources on financial literacy.

This is particularly the case in countries like Indonesia and Vietnam, who are projected to have a large emerging middle-class segments. In these emerging countries, basic skills around budgeting, saving and investing will become very important, and they lend themselves to being learnt through digital channels. High mobile penetration rates means digital wealth management solutions are likely to thrive in these countries too.

At the same time, cybersecurity awareness needs to be stepped up. Rapid digitisation brought about by the pandemic has resulted in new opportunities for cybercrime. In Singapore, e-commerce scams saw a 19.1% jump to 3,354 reported cases compared with 20196.

One step in the right direction is the Singapore Financial Data Exchange7 (SGFinDex), which links various data sources from participating banks and MyInfo to financial planning applications. This enables individuals to consolidate their financial information, providing a holistic view of resources for effective financial planning.

Banks and financial institutions need to strike the right balance between what technology can achieve to meet customers’ expectations, with the need to actively address potential risks.

The region needs to take action to capture this wealth opportunity

While the COVID-19 pandemic has accelerated the adoption of digital technology, it has also highlighted the gap in skills and literacy across ASEAN. Governments across the region should take strong leadership in bridging the digital divide and creating more open, inclusive yet also accountable digital economies.

This should include focusing on enabling digital infrastructure, building digital skills and literacy, and strengthening labour and social protections.

Similarly, businesses and financial institutions need to move at pace with the region’s digital transformation ambition. Be it transforming how we manage and facilitate cross-border trades and payment, to making it easier and simpler for consumers to manage their finances and wealth through the introduction of more secured digital banking and investing platforms.

Most importantly, financial and digital education is key for individuals to protect their wealth and secure their financial resilience.

A contribution piece by Anurag Mathur, Head, Wealth and Personal Banking, HSBC Bank (Singapore). A version of this piece was first published in The Straits Times on 8th March 2021.

1ISEAS – AseanFocus: Digitalisation in Asean, Pg 28

2 The future of Southeast Asia’s digital financial services

3 https://www.ibf.org.sg/programmes/Pages/TFIP.aspx

4 https://www.wsg.gov.sg/programmes-and-initiatives/professional-conversion-programmes-individuals.html

5 The future of Southeast Asia’s digital financial services

6 https://www.straitstimes.com/singapore/courts-crime/record-number-of-scams-in-2020-pushed-overall-crime-rate-in-spore-to-highest

7 https://www.mas.gov.sg/development/fintech/sgfindex