On Monday, the Monetary Authority of Singapore (MAS) announced that it is collaborating with the Economic Development Board (EDB), Infocomm Media Development Authority (IMDA) and Institute of Banking and Finance (IBF) to accelerate the adoption of artificial intelligence (AI) in the financial sector. The four agencies will jointly facilitate research and development of new AI technologies and adoption of AI-enabled products, services and processes. The effort will encompass three key initiatives: developing AI products, matching users and solution providers and strengthening AI capabilities.
The increased use of AI and data analytics by financial institutions, including Singapore’s three-largest banks, DBS Bank Ltd., Oversea-Chinese Banking Corp. Ltd. and United Overseas Bank Limited (UOB, will help them achieve greater operational cost efficiencies and tap new revenue opportunities, and is positive for their profitability. In addition, the banks will also benefit from a greater number of financial technology (fintech) companies with AI capabilities with which they can work to strengthen AI capabilities in their digital transformation.
In the collaborative effort, the EDB will augment MAS’ Artificial Intelligence and Data Analytics programme by providing support for AI solution providers locally and globally to conduct both upstream research and product development activities and create new AI products and services for Singapore’s financial sector. The MAS will work with EDB and IMDA to facilitate link-ups between companies in the financial and technology sectors, and pair local companies seeking AI solutions with credible AI solutions providers. The MAS will work closely with IBF and IMDA to equip financial industry professionals with the necessary skill set to transition into new jobs arising from the use of AI in financial services.
As part of their digital transformation, the three Singapore banks already have adopted the use of AI and analytics across various parts of their organizations and businesses. According to the banks’ managements, leveraging AI technology, for instance for machine learning and data analytics, has allowed them to automate repetitive and time-consuming manual tasks and processes, strengthen their risk management capabilities in handling complex surveillance activities and improve the productivity of their sales force and marketing efforts.
In November 2017, UOB reported that it adopted robotic process automation to handle repetitive data entry and computation tasks for its trade finance operations and retail unsecured loan processing function, which were able to substantially cut down processing time compared with the time taken to complete the tasks manually. Also in November 2017, OCBC unveiled its plans to work with fintech company ThetaRay to implement an algorithm-based solution to detect suspicious transactions in its anti-money laundering monitoring. According to the bank, the accuracy of identifying suspicious transactions increased by more than four times using the new technology.
OCBC also set up an AI-powered chatbot application in April 2017 that is able to address customer questions and compute debt-servicing requirements. The application managed to convert customer enquiries into new loan approvals totaling more than SGD100 million in 2017.
DBS reported that its sales productivity improved after relationship managers were provided with customer analytics on a mobile platform, raising the income per head by 57% over three years.We expect Singapore’s banks to remain committed to their digital growth strategies to keep pace with customer expectations for more digital services and solutions, and remain competitive given the increasing number of fintech companies in the ecosystem. At the same time, we expect that banks will actively engage fintech companies in collaborative ventures to enhance their digital capabilities.
