As published on sbr.com.sg, Wednesday 3 June, 2020.
Financial institutions must prepare to operate in a prolonged environment of health and safety management, Managing Director Ravi Menon of the Monetary Authority of Singapore (MAS) in a Zoom video conference at the Fireside Chatat ACI Live Aid: Financial Markets Give Back.
In his speech, Menon recognised that it will take some time before a vaccine is made for the COVID-19 virus, which meant that banks and other finance firms must prepare to operate in a safe manner amidst the ongoing virus risks.
“This could include changes in office layouts, the way transactions are carried out, everything we do has to take into account public health considerations,” he added.
MAS’ managing director praised the financial sector for its ‘remarkable resilience’ in the face of the pandemic. Close to 85% of workers in the financial industry have been able to work from home, whilst MAS itself is close to having 90% of its staff working from home, according to Menon.
During the circuit breaker period, MAS said that it focused on talent development and upskilling the industry workforce. For example, in April, MAS announced a $125m package, basically to support smaller financial institutions and fintech firms, through the downturn.
They also launched a training allowance grant as part of the package, as well as a new digital acceleration grant. For the latter, more than 120 applications have come in whilst the first batch of applicants have already gotten their grants, according to Menon.
Despite this, areas of good growth remain for the banks and finance firms. For example, the pandemic has spurred digitalisation take-up, according to Menon.
“There has been more digitalisation in the last two months than people had expected to see over the next five years,” noted Menon, adding that once people have gotten used to living digitally—remote working, e-commerce, tele-medicine—the economy and society are going to change in a variety of ways.
He added that financial institutions that adopt deeper end-to-end digitalisation, use digital platforms for their business operations that are today still conducted in person or on paper, are going to have a strong competitive advantage.
Impact investing and pandemic risk insurance are other areas that may see stronger growth.
“There is now a much-heightened awareness of pandemic risks. Although pandemic risk insurance has been around for some time, it never really took off,” Menon noted. “I think you are going to find demand for risk management and insurance solutions to address some of these pandemic-related areas of risk.”
“The financial sector is fundamentally in the business of risk management. Covid-19 represents the materialisation of an extreme kind of risk,” he continued.
Further, the financial sector will have an important role to play in years ahead as demand for effective risk management solutions rise.
“It is hard to tell at this point what the specific growth opportunities will be. We just have to watch very closely how these trends unfold. But overall, MAS is undiminished in its optimism and confidence in the prospects for the financial industry in Singapore,” he concluded.