Gan Kim Yong: Banking in a time of transition - how banks can drive opportunity, innovation and inclusion in a changing world
Central bank: mas | Type: speech | Date: 2025-06-25

## Gan Kim Yong: Banking in a time of transition - how banks can drive opportunity, innovation and inclusion in a changing worldKeynote address by Mr Gan Kim Yong, Deputy Prime Minister and Minister for Trade and Industry, and Chairman of the Monetary Authority of Singapore, at the Association of Banks in Singapore (ABS) Annual Dinner, Singapore, 25 June 2025.* * *Chairman and Council Members of the ABS,Distinguished guests,Ladies and gentlemen

## IntroductionGood evening to all of you.

I am very happy to join you this evening at the ABS Annual Dinner.First and foremost, let me congratulate ABS and MAS on the launch of the Singapore Payments Network Limited (SPaN).- a.

Today, our national payments schemes such as FAST, GIRO, PayNow and SGQR are an indispensable part of the daily lives of both consumers and businesses, supporting payment transactions in Singapore and beyond.- b.

The formation of this new entity is indeed a timely move to strengthen our national payments infrastructure and drive further innovation within our payments sector.Our banks are critical enablers for growth, transformation and mobility.- a.

Over the past six decades, Singapore's banking sector has been the cornerstone of our position as a global financial centre.- b.

Today, our banks are among the best-capitalised, most digitally advanced, and most regionally connected in the world.- c.

This has enabled Singapore to become a key node for capital in Asia, which in turn reinforces our position as a hub for trade, investments and talent.However, we cannot take our achievements for granted.- a.

Even before the US' 'Liberation Day' tariffs, we have seen in recent years a raft of protectionist measures over trade, technology and resources, including import quotas, export controls, or investment screening requirements.- b.

Regardless of the outcome of the tariff negotiations, we must be prepared forfundamental re-alignments in production and supply chains that will reorder both goods and capital flows.These accelerating geo-economic disruptions are happening amidst other fundamental changes, including -- a.

Climate change, that necessitates a transition to a low-carbon future;- b.

The rising pace of technological change including AI and GenAI; and- c.

An ageing population here in Singapore and around the world, and the concomitant demand to better support their financial needs.Let me speak on each of these in turn, and how our banks can respond to these shifts.

## Global Trade TransitionLet me start with the global economy.- a.

For now, the US has imposed a 10% baseline tariff on almost all countries while reciprocal tariffs have been deferred temporarily.

The US has also imposed product specific tariffs - 50% on steel and aluminium; and 25% on auto and auto-parts and has also signalled that it may introduce other sectoral tariffs in time to come, such as on semiconductors and pharmaceuticals.- b.

Thankfully, the two largest economies of the world, the US and China, have reached an interim agreement on the tariff rates for their respective exports to each other, although negotiations between both sides are continuing.- c.

We are also still awaiting the outcome of the US' negotiations with its other key trading partners on reciprocal tariffs, including the EU, India, Japan, as well as a number of our Southeast Asian neighbours such as Malaysia, Indonesia, Thailand and Vietnam.- d.

Notwithstanding the outcome of these negotiations, it is not likely that the US will return to the status quo ante any time soon.- i.

There is growing bipartisan consensus within the US on the use of tariffs to achieve fair and balanced trade with the world, as well as to 'reshore' or 'nearshore' critical industries.- ii.

While many businesses are pushing back against the new tariffs, once they have invested in the US, they will have an even greater incentive to ensure that these tariffs will stay on to protect their investments.- iii.

And given the rising fiscal deficit, tariffs will increasingly be an important source of tax revenue for the US government - in fact, the latest projections indicate that these new tariffs will reduce the US budget deficit by US$3 trillion over the next decade.Businesses must therefore adapt to a more sophisticated, complicated as well as protectionist global economic order.- a.

Tariffs will undermine market efficiencies, and therefore distort investment decisions based on traditional economies of scale.- b.

The growing emphasis on "security of supply chains" will further raise costs for businesses, given the need to invest in resilience.- c.

Firms will also face higher compliance costs due to new regulations and trade restrictions, and higher inventory costs to guard against disruptions.As a small and open economy, our role as a hub is critical for our survival and success.

These changes in the geo-economic landscape will therefore have profound implications for Singapore.- a.

This is why we have set up the Singapore Economic Resilience Taskforce to enhance our collective response and sense-making, help businesses and workers navigate these choppy waters, as well as to support them to reposition themselves in the longer-term this new landscape.- b.

For the financial services sector in particular, while our banks and other financial institutions may not be directly affected by the tariffs on goods, they may still be affected by the slowdown in overall economic activity.- i.

For example, financial institutions could see reduced trade-related financial services because of weaker trading activity.- ii.

Lending activities may also be weighed down, as firms hold back on their investment plans.- c.

At the same time, banks play a critical role in helping companies ride through these challenges.- i.

Some companies, especially SMEs, may face cashflow issues because of cancelled or deferred orders as a result of the tariffs, and may therefore need more working capital during this period.- ii.

These companies will need flexible financing options, so that they can have sufficient liquidity to overcome the tariff-induced disruptions.- iii.

I am heartened that our banks have stepped forward in this time of need.

For example, some banks have offered temporary extensions of trade bills to SMEs, while others have provided temporary lines for working capital to their customers.Banks should also take the opportunity to deepen the relationship with their customers, by supporting their growth and expansion into new markets.- a.

For example, banks can draw on their in-market expertise to assist companies looking to explore new opportunities overseas.- b.

This can then lead to new financing solutions to help companies enter new markets, diversify their supply chains, and develop new products and services.- c.

Banks can also help companies de-risk cross-border trade through trade finance instruments such as Letters of Credit; supply chain and receivables financing; as well as hedging tools to mitigate against currency risks.- d.

Last but not least, banks can guide companies to adopt digital trade platforms such as SGTraDex as well as TradeTrust.- i.

Such platforms can help reduce administrative and compliance costs for businesses, through tools such as electronic Bills of Lading and e-invoicing.- ii.

They can also enhance trust and inter-operability by providing real-time verification of trade documents.I hope that our banks will empower companies in Singapore and in our region to turn uncertainties into opportunities, not just to manage their immediate risks but also to build new capabilities, expand into new markets, and strengthen their supply chains.

## Climate TransitionLet me now talk about the low-carbon transition.Even though some countries have rethought their climate commitments, particularly in light of the US pulling out of the Paris Accords, the pace of climate change unfortunately has not slowed down, and in fact is accelerating.

It is therefore important that we stay the course and remain committed to climate action; otherwise, we might be forced to make an even more drastic move and more costly transition in time to come.Singapore is well-placed to catalyse the low-carbon transition within Asia.

Over the years, we have established ourselves as a leading sustainable finance centre, with a well-developed ecosystem of international infrastructure development organisations, global financial institutions, and multilateral development banks.In addition to building a strong network of like-minded public and private institutions, we need to establish clear, consistent and credible guidelines to drive effective climate financing action.- a.

In 2015, the ABS first published its industry guidelines on responsible financing, setting out minimum standards for banks to incorporate ESG considerations into their business and lending practices.- b.

Two years ago, MAS launched the Singapore-Asia Taxonomy (SAT) as a foundation to facilitate transition financing, with clear, credible, and science-based definitions of what constitutes green and transition activities.- i.

I am glad that our three local banks have integrated the SAT in their sustainable financing frameworks.- ii.

I am also heartened that major regional banks and global banks are using the SAT as a key reference document to engage their clients in this region.To promote the use of the SAT, the Singapore Sustainable Finance Association (SSFA) will be launching its Guidance for Leveraging the SAT in Green and Transition Financing.- a.

Supported by MAS, this industry-led initiative provides practical guidance on how to apply the SAT.- i.

For example, the Guidance offers industry-agreed interpretations in areas where data gaps may exist or where further clarity is needed, such as on sunset dates and grandfathering rules.

This will give market participants greater confidence to raise and deploy green and transition financing that are aligned to the SAT.- ii.

The Guidance also shares early thinking and emerging practices from industry players on the recognition of green and transition enabling and valuechain activities.One example of an enabling activity is the financing of vessels that are dedicated to the construction, maintenance and operation of offshore wind farms.While some of these enabling activities have not been recognised as green or transition activities under the SAT, they play a critical role in advancing the broader low-carbon transition.

We hope that financial institutions can offer financing to support such activities, in line with their own sustainable financing frameworks.We must also, at the same time, equip our professionals in our banks and financial institutions with the skills that are needed for sustainable finance in the region.- a.

Last year, MAS, together with the Institute of Banking and Finance (IBF), launched the Sustainable Finance Jobs Transformation Map (JTM).- b.

The JTM lays out the impact of sustainability trends on jobs in our financial sector, and identifies the skills that our workforce will need to develop in order to serve the growing sustainable finance market in the region.- c.

We have made good progress in advancing our upskilling efforts.- i.

Since the launch of the JTM, more than 4,000 financial sector professionals across 100 financial institutions have been trained in sustainable finance.- ii.

The IBF has also issued more than 8,000 Skills Badges to individuals who have completed IBF-accredited sustainable finance courses.

This Skills Badge serves as an industry benchmark to recognise individuals' skills mastery and support skills-based hiring by our financial institutions.To complement our ongoing efforts to upskill our existing workforce, we are also strengthening the talent pipeline of our future graduates.

I am pleased to announce that NUS Business School will be introducing an undergraduate specialisation in Sustainable Finance.- a.

This specialisation will equip our students with key Sustainable Finance Technical Skills and Competencies identified by the JTM.- b.

NUS intends to enrol about 50 students in each academic year in this programme at the onset, and we hope to scale this up further over time.These efforts will help to reinforce our role as a hub to drive climate finance, and catalyse our transition to net zero.

## AI TransitionLet me now speak about the AI transition.In the short span of the past five years or less, AI has grown to become a core enabler of transformation within the financial sector, reshaping how financial institutions operate, how customers engage with financial services, and how banks drive innovation and productivity.But to fully harness the potential of AI in the financial sector, we must identify potential ways that AI can drive greater business value, as well as potential use-cases that can bring value to our customers.

One such area is in scams and fraud detection.- a.

Today, many banks are using AI and machine learning to improve their fraud surveillance capabilities to better detect suspicious fund transfers.

However, these efforts are currently siloed within respective institutions.- b.

Together with the ABS and participating banks, MAS is studying the feasibility of combining interbank transactions across banks to enable real-time scam detection capabilities such as through transaction risk scoring and scam account detection.- c.

By harnessing AI and pooling data across banks, we can potentially detect the suspicious movement of funds across multiple accounts, and trigger prompt action to investigate or even pre-empt criminal activities.As we leverage AI to transform the financial sector, we must also reskill and upskill our workforce to help our workers acquire the skills to use AI and take on higher value work.- a.

MAS, together with the IBF and Workforce Singapore (WSG), are partnering key stakeholders, including financial institutions and unions, to uplift AI and GenAI proficiency and drive workforce transformation within the sector.- b.

I am glad that six banks 1   have come forward to work with us on this pilot to identify job roles that will be impacted by AI, and to take steps to upskill and reskill their employees.- c.

We will share our learnings from this pilot with the wider industry, and develop upskilling and reskilling pathways that other financial institutions can reference and adopt.We must also have in place appropriate guardrails to guide the development and adoption of AI.- a.

MAS is developing a set of guidelines on AI risk management that will provide financial institutions with greater clarity on our supervisory expectations.

We will consult the industry on these guidelines later this year.- b.

In tandem, MAS is also collaborating with the financial industry to develop an AI governance handbook, that will serve as a practical guide for our financial institutions develop and deploy AI solutions properly.

This will also be ready later this year.- c.

Together, these materials will establish guardrails to support the safe and ethical use of AI within the financial sector.

## Demographic TransitionBanks also play a key role in serving the needs of the community.- a.

I am very happy to note that the latest results of the Banking Trust Index for Singapore shows that public trust in the Singapore banking industry remains high.- b.

At the same time, the survey had indicated growing expectations for banks to positively impact society - in particular, it suggested that banks could strengthen public trust by enhancing customer centricity.One segment that banks will need to pay closer attention to in the coming years is seniors, given our rapidly ageing population.

It is important to enable our seniors to age well, and to do so, banks must enhance the accessibility, inclusivity and sensitivity of their services.- a.

From stationing dedicated ambassadors that are trained to connect with seniors, to the use of larger font sizes, high contrast displays and simplified interfaces for online platforms, banks can enhance the accessibility of their physical and online touchpoints to our seniors.- b.

Banks should also step up their outreach and support for the less digitally savvy, so that these seniors may also access digital banking services and not be left behind amidst the digital transformation.- c.

Banks can certainly do more to support seniors coping with cognitive decline, bytraining frontline staff to recognise such customers and to handle them with respect and dignity.I am happy to note that ABS will be setting up a taskforce to look into the evolving needs of our ageing population.- a.

Besides addressing the needs of our seniors, the taskforce will also look into estate administration issues, so that we can make this difficult process simpler and more convenient for their next of kin.- b.

I look forward to the recommendations of the taskforce in time to come.

## ConclusionFriends, stakeholders, ladies and gentlemen.

We have come a long way in establishing Singapore as a leading global financial centre.This same spirit of agility, creativity and determination must continue to guide us.

We must be bold to rethink old models, nimble to respond to emerging risks and opportunities, and unwavering to upholding trust and integrity.This way, we can continue to build a financial system that will drive innovation and growth that will benefit our businesses and our people.Thank you.- 1

DBS, OCBC, UOB, Citibank, HSBC and SCB.