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At the 5th Annual Sim Kee Boon Institute for Financial Economics Conference 2015 held by SMU on May 6, DBS Bank chief executive officer Piyush Gupta said that Asian banks, which have been left largely unscarred by the global financial crisis, are innovating and rolling with regulatory changes more quickly, even as they deal with competition from non-traditional lenders and a younger clientele who demand for digital services. Citing the various profound changes that are washing over the banking industry, such as the rise of digital banking, shifts in consumption patterns and the issue of data privacy, Mr Gupta said: “I believe quite strongly that we are at the cusp of momentous change in our industry. In the next five years, our industry is going to go through cataclysmic disruption, and within the next decade, I strongly believe there will be banks that will make the transition, and banks that will die.”

At the conference co-organised by the Sim Kee Boon Institute for Financial Economics (SKBI) at SMU and China Europe International Business School, SMU President Professor Arnoud De Meyer said that the digital economy in China has grown tremendously over the years. Companies like Alibaba started from non-finance related industries such as e-commerce, to encompass many aspects of digital finance including mobile payments, peer-to-peer lending, crowdfunding, investments and fund management. Alibaba grew their small and medium enterprise loans to USD 16 billion in three years. It also raised USD 87 billion to be the largest fund manager in China, capturing 20 per cent of all new renminbi deposits only nine months after its launch. Mr Tian Tao, advisor of Huawei Group, Mr Loh Long Hsiang, Head of CEO Office at Standard Chartered Bank China, and Professor David Lee, Executive/Academic Director of SKBI, also spoke at the conference.

In a commentary, SMU Sim Kee Boon Institute for Financial Economics Executive/Academic Director Professor David Lee Kuo Chuen and SMU Senior Lecturer in Strategic Management Yan Li wrote about the importance of Singapore as a global financial hub, as well as innovation in digital financial inclusion in traditional banking. Professor Lee and Senior Lecturer Yan said that traditional banks must change their organisational structure to one that depends less on key performance indicators, but which focuses more on the “LASIC” principles of Low Margin & Low Barrier; Asset Light; Scalable, Innovative and Compliance Easy.

At a post-Budget forum organised by the Economic Society of Singapore on February 25, SMU Professor of Quantitative Finance and Director of the Sim Kee Boon Institute for Financial Economics David Lee, who is also the Vice President of the Economic Society of Singapore, said that the focus of this year’s Budget measures on productivity points to an increased emphasis on encouraging innovation and building the future. The productivity trend in Singapore in recent years has illustrated the limitation of raising productivity without innovation. As such, with the increased focus on small and medium enterprises (SMEs) and innovation in the Budget, this could mean that the Government will be helping SMEs with innovation and globalisation, as an important step in Singapore’s economic development.

In a commentary, SMU Sim Kee Boon Institute for Financial Economics' research fellow Xie Taojun discussed the issue of a cashless society and its implications for Singapore's monetary policy.  He noted that in terms of the degree of cashlessness, Singapore may not be as ready to enter a negative interest rate environment as Japan and the European countries, but its capacity in responding to foreign monetary shocks has certainly improved over the past two decades. He added that as much as Singapore welcomes a cashless society, it should not rush into it for the sole purpose of tackling negative interest rates.

In a joint commentary, SMU Lee Kong Chian School of Business Professor of Quantitative Finance (Practice) David Lee, SMU Lee Kong Chian School of Business Senior Lecturer in Strategic Management Dr. Yan Li and SMU Sim Kee Boon Institute for Financial Economics (SKBI) Research Fellow Dr. Li Ching discussed the significance of Government-linked REITs (GLREITs). They noted that research by SKBI/SMU had found that the Tobin's Q Ratio, return on equity and return on capital of GLREITs are significantly higher than other types of REITs, and therefore the firm value and overall profitability of GLREITs are also higher. Although the Chinese government has started pushing for financial reforms and financial innovation in recent years, especially asset securitization, it is rare to find REIT entities and products in China similar to those in Singapore, or are trading in the international market. They are of the view that China can learn from the experience of Singapore's GLREITs. Given that China's state-owned companies own the best property projects in China, they can undertake asset securitization through the REIT process, and allow their high-quality properties to enter the Asset Management Market, and become a part of Asset Allocation with the right incentives. 

SMU SKBI Research Fellow and R3 CEV Director of Market Research Mr Tim Swanson said that the biggest challenge when working with banks to design protocols for a working blockchain, the technology underpinning bitcoin, is managing expectations while at the same time pushing to build a working platform as quickly as possible. Mr Swanson noted that member banks are interested in testing the R3 blockchain for a range of applications, including trade financing, processing syndicated loans, the settlement and clearing of over-the-counter derivatives, and marketplace lending. He added that the technology could also assist regulatory monitoring for systemic risks in financial markets by offering regulators a window into real-time data, which they can read and react to and create policy towards.

In a commentary, Sim Kee Boon Institute for Financial Economics (SKBI) Executive/Academic Director and SMU Professor of Quantitative Finance (Practice) David Lee Kuo Chuen was quoted as saying that the rise of FinTech companies has increased awareness of disruption and opportunities in areas such as digital banking, Internet finance and blockchain. Prof Lee estimated that global investments in FinTech ventures have grown three times from US$4.05 billion in 2013 to US$12.21 billion in 2014. Working with SKBI Research Fellow Dr Ernie Teo, Prof Lee has identified some crucial factors for the success of FinTech ventures and termed LASIC (Low margin, Asset light, Scalable, Innovative, and Compliance easy). The research conducted by Prof Lee and Prof Teo concluded that the application of FinTech will result in lower business costs and profit margins. Hence, companies will need to expand their business by embracing financial inclusion, as well as the delivery of financial services at affordable costs to sections of disadvantaged and low-income segments of society.