The challenge for central banks however, is to filter out noises from the mass of data and extract meaningful information that will assist in better policy-making. The Bank has embarked on a journey to adopt big data and analytics across all functions of the organisation. This includes establishing a dedicated statistics team to drive this agenda, enhancing the capabilities of staff and exploring new areas and methods of data collection. We continuously strategise to ‘future-proof’ the financial system through our policies, frameworks and initiatives. Three principles are worth mentioning; a. Firstly, we will continue to strongly advocate for the adoption of technology to enhance the efficiency, effectiveness and resiliency of the financial sector. Our FinTech sandbox and Financial Technology Enabler Group is an example of this. This also reflects our philosophy that innovations work best through collaboration between the industry and policymakers; b. Secondly, as a regulator and trustee of the financial sector, we will remain focused on ensuring that the financial sector is inclusive for all segments of society and contributes effectively and positively to the economic growth and development of the nation; and c. Thirdly, we will continue to ensure that financial stability and consumer trust and confidence are preserved at all times. Conclusion These are the cornerstones of the central bank’s role and functions and the adoption of any policies, past or future, will continue to have an unbreakable link to these objectives.
However, not all incumbent banks are able to fully bridge the technology gap, particularly for newer services; d. This results in migration towards digitally-focused challenger banks such as Atom, Fidor and Monzo that will provide similar services of traditional banks, but utilise technology to deliver faster and cheaper services that better meet the needs of customers; and e. The implication of this is that the landscape of finance will remain largely filed by banks, but a new breed of purely digital banks will gain in significance. The names that we immediately think of for financial services will change from the current banks that we are so familiar with. The fourth scenario is what I call ‘the Tech take-over’ a. Like scenario one, this is a more extreme and less probable scenario, but still one that is worth a thought. In this scenario, technology adoption by incumbent banks is low, with a high level of fragmentation among finance providers; b. However, in contrast to scenario three, technology firms enter as the new preferred provider, successfully capturing the loyalty of consumers due to superior ability in using data to deliver customer-centric solutions; c. Financial services will thus be offered via a wide range of providers such as social networks (e.g. Facebook, Wechat) and e-commerce platforms (e.g. Amazon, Alibaba); and d. Growing comfort with the ability of technology to ensure secured transactions also gives rise to the popularity of peer-to-peer financial services.