Development of trust is paramount for the industry
Innovation is a key priority for Singapore as the country aims to become a smart nation, with a smart financial centre. An attractive place to do business and the hub of the ASEAN region, there is no other place where digital transformation is more evident than Singapore. And there was certainly no better place to host a SWIFT Business Forum with a focus on innovation in Singapore and ASEAN payments.
Digital transformation, however, comes with challenges: cybercrime, new technology, fierce competition; challenges that SWIFT and its community are addressing together, as shown by recent initiatives such as the Customer Security Programme and SWIFT gpi. In a region like ASEAN, on its way to integration, with economies at different stages of maturity, challenges are only exacerbated. SWIFT released a discussion paper on achieving financial integration in the ASEAN region to examine the landscape.
Challenges in regionalisation
The ASEAN community is still facing a number of problems when it comes to cross border trades, for a variety of reasons, ranging from customs procedures to regulation, but also because moving money around the region can be challenging at times. Chris Humphrey, Executive Director, EU-ASEAN Business Council, explained: “Large MNCs can manage to find ways around those problems because they have the resources and they have experience working elsewhere around the world. But in ASEAN, where you have 90% of the economy coming from SMEs, they cannot always find ways around those problems.”
Large MNCs can manage to find ways around those problems because they have the resources and they have experience working elsewhere around the world. But in ASEAN, where you have 90% of the economy coming from SMEs, they cannot always find ways around those problems.
Challenges are real and the pace of integration varies significantly by sector. But despite all these, there are reasons to remain optimistic. “ASEAN is a large economic block, the 6th largest economy in the world, the 2nd largest source of FDIs globally”, said Fraser Thompson, Director, Alphabeta, “furthermore, ASEAN integration has some very sound business logic, and if they are able to achieve it, the gains will not be small, they will be very significant. In some sectors it’s a change of 30-40% in productivity.”
ASEAN integration has some very sound business logic, and if they are able to achieve it, the gains will not be small, they will be very significant. In some sectors it’s a change of 30-40% in productivity.
Balancing technology and trust
Since blockchain – the technology underpinning the digital currency bitcoin – first emerged, people have recognised its potential to transform financial services. ASEAN banks have been paying attention. Around the world, we have seen banks set up labs to test blockchain solutions, carrying out proofs of concept and publishing papers. They are also forming or joining blockchain consortiums to work together. And whilst recognising the need to explore new technologies, many banks are realising that a number of challenges remain. The panel agreed that DLT today is still in its infancy stage as market participants are still grappling with many unknown elements. The technology does look promising but issues such as decentralised governance remain and need to be assessed further.
The bottom line for the industry is, and will remain on trust. “Trust leads to trust. Development of trust and trust in technology are going to be very important for this industry”, said Michael Moon, Head of Payments Markets, APAC, SWIFT.
Trust leads to trust. Development of trust and trust in technology are going to be very important for this industry.
In parallel to the emergence DLT, the SWIFT gpi initiative has been developed in just a year-time as a strong response from the industry to pressing issues when it comes to cross-border payments, such as speed, transparency of fees and end-to-end traceability. By fixing some of the friction that existed in the business processes, the initiative helps improve the customer experience for corporate treasurers and optimise their liquidity, while leveraging the existing secure, resilient and reliable SWIFT infrastructure that has been in place for over four decades. “SWIFT gpi is a very good example of how the industry can collaborate across geographies and move pretty fast”, said Navinder Duggal, Managing Director, Global Transaction, Cash & Trade, DBS Bank.
SWIFT gpi is a very good example of how the industry can collaborate across geographies and move pretty fast.