##trants. conventional wisdom holds that banking business is intricately tied to economies of scale. size, scale and barriers to entry are thus traditional key determinants of competitiveness. this conventional wisdom or axiom is very much dated. in the future, competitive advantage will come from those who are able to harness the power of technology and be bold enough to venture into uncharted territories. the rules of the game have been reset, and more players are getting into the game. regulators around the globe are very mindful of this trend and are willing to take calculated risks on innovative ventures, going beyond the banking system for solutions. there is thus, a more level - playing field and more business opportunities for non - traditional companies that are responsive and effective in meeting the financial services needs of consumers. for example, new robo - advisory businesses are now providing high quality investment advice at low cost, while payment technology companies are making cross - border payments cheaper, 1 / 5 bis central bankers'speeches quicker and more efficient. transferwise, a cross - border payment company is now moving to offer ‘ borderless ’ bank accounts for businesses that operate across border. this is a challenge for many incumbents. the second observation is that data could be the ‘ king - maker ’ of finance. companies that are able to control and leverage on data to deliver superior customer experience will possess the greatest advantage. successful startups over the past decade such as airbnb, grab, snapchat and uber have all utilised technology and data to improve business models and customer interactions. for the financial sector, this could potentially mark a highly interesting shift of mantra in the future from “ cash is king ” to “ data is king ”. the arms race of the 21st century is really big data. firms on wall street and the city of london are now employing data scientists en masse. they are the new breed of ‘ bankers ’. the bankers of the future. the use of data with superior software will enable financial services to be unbundled and increasingly custom - made for individual consumers. data will enable increased transparency and better assessment of credit worthiness as well as reduction of risks, thus extending financing to previously underserved segments of society. the third observation is that finance may display ‘ winner takes all ’ characteristics over the long term. this characteristic is apparent in silicon valley and the digital economy in general. market leaders such as google and facebook control over two - thirds of the market. this is due to ‘

would include underserved groups and segments that are currently deemed too ‘ risky ’ by traditional risk metrics. advancements of any sort always come with trade - offs. for one, with the rapid progress of genetic sciences, it is only a matter of time before chronic diseases such as cancer and diabetes can be predicted even before birth, thereby potentially denying affected individuals of insurance coverage. automation and artificial intelligence may also result in the displacement of certain segments of the workforce or some segments of society being denied medical protection. finance, when used properly is an enabling tool. but if abused, it can be a destructive tool with devastating consequences. finance without ethical considerations will magnify the negative aspects and lead to lasting consequences as the global financial crisis demonstrated. technological progress would mean excesses can be magnified even further, spreading the risks to a wider segment of the society. regulators, therefore, stand at the nexus between magnifying the benefits of access to finance and managing the excesses of finance. there are moral and ethical considerations that regulators and policymakers will have to confront as we go forward. four possible future scenarios let us conceptualise these themes into four scenarios, an approach that could provide a peek into what is in store, as we visualise the future. the first scenario is “ tech - savvy incumbents ” a. the pace of technology adoption by incumbent banks is high, while level of fragmentation among finance providers is low. this is a more ambitious, albeit possible, scenario where banks successfully adopt the best strategies and emerge as the dominant winner in all finance segments ; b. here we see banks as incumbent institutions responding quickly to technology shifts, realigning their business processes and delivery channels to meet customer expectations. they succeed in nurturing both tech - literate management personnel and digitally - savvy talent ; c. emerging tech firms remain important sources of innovation but are acquired by the incumbents. as a result, these institutions can successfully retain and expand their customer base ; and d. in this scenario, although we will not see a dramatic change in terms of players in our financial system, the functions and ways in which they conduct businesses will be dramatically different. the second scenario is “ plugged - in finance ” a. both technology adoption by incumbent banks and fragmentation among finance providers are high. finance is marked by an ecosystem of “ co - dependence ” between banks and tech start - ups that target specific, profitable segments of the market rather than the whole suite of financial services