In January 2020, Singapore, Chile and New Zealand signed the first Digital Economy Agreement (DEA) to strengthen connectivity, remove barriers in the digital economy, and support the commercialisation of new technologies. The deal was followed by similar alliances with Korea in June 2020 and Australia in December 2020, and the announcement of DEA negotiations with the UK in June 2021.
DEAs have been a necessary response to the unprecedented economic challenges of COVID-19. They are also the acceleration of a previous trend toward the digital transformation of banking and trade amidst the rise of neobanks intent on disrupting financial services for a new generation of consumers.
The stakes couldn’t be higher, nor the upside greater. Singapore, a global commerce hub dependent on international trade, experienced its worst-ever recession in 2020, contracting nearly 6% due to the global pandemic. Now, with 80% of its population vaccinated, Singapore is determined to do everything it can to stay open as an international hub.
According to a September 2020 report from TRPC, the value of Singapore’s DEA with Australia alone “could increase to a total projected AUD216.2bn by 2030, while for Singapore, a similar totaling of digital trade components could conservatively reach AUD95.6bn by 2030.”
Singapore’s government has been exemplary in advocating for a more connected, interoperable future, and the DEAs represent a major bet that the global economy will be increasingly digital in the post-COVID era.
As companies begin planning for 2022, they’ll need a technical roadmap, built around the priorities of Singapore’s Ministry of Trade and Industry. The priorities include e-invoicing, e-payments, cross-border trade digitisation, automation, and other banking processes that would benefit from clear digital transformation strategies.
According to a recent study of cloud transformation in financial services, Google and the Harris Poll surveyed more than 1,300 financial services executives around the world, many of them in Singapore and its DEA partner countries.
The key finding for stakeholders eager to create the next generation of cloud-enabled financial services is when it comes to cross-border invoicing and e-payments, companies need secure, reliable cross-border connectivity without the need to manage and deploy physical infrastructure.
Hyperscalers like AWS and Microsoft Azure make this possible with their global cloud computing infrastructure. But among the executives Google/the Harris Poll surveyed, the consensus was that one-size-fits-all cloud solutions can be a double-edged sword. On the one hand, they offer rapid execution and network resiliency, compared to incumbent on-premises solutions. On the other, they give providers too much influence over the system and place too much trust in a single platform.
For Singapore and its DEA partner countries, the solution is clear: Software-defined networking (SDN)–which allows companies to turn up connections in multiple clouds with a click of a button and without having to deploy physical infrastructure–supports key business functions with multicloud deployments that leverage Singapore’s existing infrastructure. They also free financial institutions (FIs) from the need to predict traffic profiles for years at a time, or get locked into a specific network topology. Instead, FIs can scale requirements according to usage and enjoy optimal pricing, such as increasing bandwidth during peak business hours and decreasing it during off-peak hours, all behind the comfort of a computer screen.
Next generation of financial services
For Singapore, as with the use cases Harvard Business Review recently profiled, the goal is not simply bringing invoicing, payments and cross-border trading into the cloud to reduce costs; it’s virtualising these processes to find new revenue opportunities.
For FIs in particular, cloud-powered businesses give stakeholders access to non-siloed data, which is the lifeblood of a new generation of hyper-targeted products.
Did a customer express interest in a loan? An investment plan for retirement? A 403(b) account for their daughter who just turned two? Customer data, sourced from multiple cloud applications, empowers stakeholders to offer products that holistically fit customer goals. It’s what neobanks do so well, and why financial incumbents know cloud-based, data-driven services are the future of its business.
Singapore’s digital infrastructure, combined with the rich banking possibilities of its DEAs, place it in a unique position to transform quickly.
With FI incumbents lagging at 40% cloud deployment despite bullish predictions from Deloitte, Singapore nonetheless has the tools to ascend as a digital banking leader, provided that along with SDN-enabled multicloud deployments of rich-data applications (APIs, chatbots, AI), it secures every transaction to the highest possible standard.
Starting with trust
The technical roadmap we have been describing implies the transformation of nationhood. With DEAs with Chile, New Zealand, Korea, and Australia, and another under negotiation with the UK, Singapore has open-sourced its infrastructure to form virtual trade zones. From one analogue economy has blossomed five virtualised economies, which retain their individual characteristics while becoming indistinguishable from Singapore, their core DEA partner.
At the heart of the transformation: Trust. It’s the common denominator, whether you are processing an invoice from the vendor, approving a trade or authorising an upscaling of network capacity.
Singapore’s ability to move forward depends on digital verification that accommodates globally recognised standards for secure cross-border e-commerce, e-invoicing, digital identities, data protection, and e-procurement.
This is no small task. It requires infusing the software-defined multicloud networks we have been describing with security that protects banking processes without hampering the ability to respond to ever-changing business needs.
According to a recent NVIDIA report on AI in financial services, Singapore must build the right intelligence into its roadmap. Along with AI to automate low-level business processes and locate opportunities, AI for security and process-specific tools can protect individual components, as well as create a wider perimeter of trust.
On the network level, Singapore’s roadmap must allow FIs and other stakeholders to choose connectivity that reflects their risk profile and industry standards. For some, a public cloud deployment using internet-based VPN tunnels will suffice. For others, private, dedicated connections are the only option.
Singapore’s DEA transformation must enable native preference, in addition to what Forrester has called “intrinsic security and privacy.” This final, essential element of a transformed cross-banking roadmap not only creates trade opportunities in digital products and services, it also increases trade in physical goods and services through digital enablers, thereby bringing Singapore’s transformation strategy back into the real world, where it can see the greatest upside.