Bank on digital, financial literacy to propel wealth in South-east Asia

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SINGAPORE – Having grown steadily over the past 20 years, South-east Asia’s personal wealth is at an inflection point, with the region’s economy maturing as the adoption of technology accelerates.

For example, South-east Asia’s Internet access is at 58.6 per cent, higher than the global rate of 50 per cent, and its digital payments are expected to exceed US$1 trillion (S$1.34 trillion) in transaction value by 2025.

The region’s personal wealth now needs to grow in lockstep with this wider economic maturing, but digitalisation is 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, marginalising some workers.

In terms of personal wealth, digital illiteracy could hinder the ability of many South-east Asians to get 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 mindset to thrive at work and expand their personal wealth.

But governments and corporates will also play a vital role.

Developing skills of the future

Upskilling and reskilling are a critical part of the post-Covid-19 recovery. The impact of the pandemic and rapid rise of digitalisation have transformed how people work and the skills that companies require.

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

Corporations need to help their employees develop key skills in transferable areas like creativity and connectivity because they underpin agile ways of working.

Demand for other -tech skills, like data analytics, cloud computing and blockchain, will continue to rise. 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 one another’s best practices.

For example, HSBC has worked with the Singapore Government-funded Technology in Finance Immersion Programme to help individuals gain experience in key areas such as artificial intelligence and cyber security.

To address the issue of job displacement, training grants or initiatives like Singapore’s Professional Conversion Programme, which targets professionals, managers, executives and technicians (PMETs) and mid-career switches to new growth sectors relevant to a digital economy, must be more prevalent and easily accessible across the region.

This will help the growing population remain competitive, employable and economically mobile.

Impact of digitalisation

While employability is a key factor in improving financial well-being, 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 have resulted in greater engagement in the digital banking and payment space. Financial services are reacting accordingly by boosting online offerings.

For example, financial services including lending, investment and insurance are expected to grow by more than 20 per cent annually through 2025.

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 nations like Indonesia and Vietnam, which are projected to have a large emerging middle-class segment.

In these 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 mean online wealth management solutions are likely to thrive in these places too.

At the same time, cyber security awareness needs to be stepped up. Rapid digitalisation brought about by the pandemic has resulted in new opportunities for online crime. In Singapore, e-commerce scams saw a 19.1 per cent jump last year to 3,354 reported cases compared with 2019.

One step in the right direction is the Singapore Financial Data Exchange (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, and the need to actively address potential risks.

While the 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 keep pace with the region’s digital transformation ambition – whether it is transforming how people manage and facilitate cross-border trades and payments, or making it easier and simpler for consumers to manage their finances and wealth through the introduction of more secure digital banking and investing platforms.

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

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