As the financial services industry continues to adjust and transform in response to critical challenges prompted by COVID-19, firms are now racing ahead to reassess and rewrite evolving operating models in preparation for future disruptions. Given today’s highly interconnected environment, the business course that firms undertake may expose the entire industry to threats that undermine the stability and proper functioning of the global and regional financial systems.
In the first part of an exclusive discussion, Chan Boon-Hiong, Director, Global Head of Securities Market Development and Advocacy, Securities Services, Corporate Bank (CB), Deutsche Bank AG Singapore, and Nigel Gnoh, Associate Director, Business Development – South East Asia, DTCC, discuss how COVID-19 is impacting the macro environment in Asia.
Gnoh: While Asia is not new to virus outbreak, the region has been hit hard by COVID-19. How are countries reacting and responding to COVID-19, and are they doing enough to deal with the global pandemic?
Chan: COVID-19, which first started out as a health crisis before spiraling into much deeper financial and economic crisis, has wider and deeper impacts than previous health crises. Drawing from hindsight and lessons learnt, countries in Asia took prompt and decisive policy measures to cope with market volatility and contain liquidity risk triggered by COVID-19. Openness and collaboration took centerstage in fighting the crisis with regulators in India, South Korea and South East Asia coming together to assist the industry to address the situation.
We have also witnessed the speed in which manual processes and paperwork were swiftly replaced with electronic processes to enable optimal operational support required for remote working. Aside from collectively navigating the crisis, COVID-19 has also brought out the best in humanity that saw people in Asia and around the world reacting to COVID-19 with grit, compassion and generosity.
Gnoh: With so much emphasis on social distancing measures to curb the outbreak, does social distancing justify moving from internationally accepted standards and best practices – with countries now adopting an inward-oriented growth strategy? Is this a phenomenon in the making in Asia?
Chan: While it is tempting to push towards nationalism in the wake of the crisis, financial market markets are more open and engaging today. Regulators have been using community outreach to provide domestic and global investors with market updates on investment policies and guidance on directions amid the current uncertainties. A case in point was a recent webinar covering the latest policies and updates on Vietnam’s capital markets, jointly hosted by Deutsche Bank and the State Securities Commission of Vietnam.
Regulators and policy makers are also advancing plans to boost digital connectivity and digital capabilities to help individuals and firms stay connected and remain relevant in the COVID-19 world that includes deepening cross-border channels. To illustrate my point, Singapore and Australia have recently inked a digital economy agreement to collaborate on artificial intelligence, cross-border data flow and digital identities aimed at enabling interoperability between the countries’ digital systems and promoting freer cross-border digital data exchange. We hope to see more of such collaborations in the future.
Despite the current pandemic, China and India continue to liberalize their respective markets and ease global access, while Vietnam remains relentless in its pursuit to be included in the emerging indices (like the Morgan Stanley Capital International and Financial Stock Times Exchange Russell ) to raise its profile with international investors. While the extent of financial damage – inflicted by COVID-19 will vary across countries, it is difficult to envisage financial markets deliberately cutting themselves off from the rest of the world. Finance is global in nature and being more interconnected will spur greater growth opportunities than if financial markets were inward looking. Economic interdependence aside, emerging trends point to a world of uncertainties and potential volatilities that will dramatically change the economic and business landscape from pre-COVID-19 days. The road ahead will require building inclusive and sustainable economies and capital markets that would stand resiliently together in the face of any crisis.
In the concluding part of this exclusive one-on-one with Chan, he will discuss the effect of the pandemic on automation and digitalization.