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The New Era of Electronic Finance Transaction

Yong Ying-I, Chief Executive Officer, IDA Singapore - Speech Dollardex's Public Announcement of 1st Round of Financing, Tower Club

Yong Ying-I, Chief Executive Officer, IDA Singapore - Speech
Dollardex's Public Announcement of 1st Round of Financing, Tower Club

Singapore, 15 February 2000

1. I am happy to be here this afternoon to recognise dollarDEX's public announcement of its first round of financing, and to celebrate this auspicious occasion with you and your investors during the season of the Chinese New Year.

2. I believe that we are now in the take-off phase of online transactions. IDA's recent IT household survey showed that 59% of homes own a PC, and 42% of home have Internet access. These numbers that I cited were a substantial increment over our previous surveys. This indicates that Singaporeans are rapidly adopting the Internet lifestyle. Our current statistics show that only a small % of Singaporeans have tried their hand at on-line transactions, but given the rapid pace of development, I believe the figures for this will similarly surge. Whether it is to buy groceries and cinema tickets, or pay the bills, the Internet offers us a chance to improve our quality of life. Anybody can log onto the Net for all types of financial services such as checking of bank accounts, transferring money among your different bank accounts and even trading in stocks and shares. The potential of what the Internet can offer is drawing in people from all walks of life to use online services. This will accelerate the growth of e-commerce.

3. Research companies such as the Boston Consulting Group are predicting that the growth in e-commerce across Asia will outstrip even that of the USA this year; and they have noted that the engine of greatest growth would come from the financial sector. Financial products and services can be easily offered over the Internet, bringing consumers not only convenience but also price benefits. It is therefore important to IDA that Singapore's financial services sector is a leading regional player in online financial services.

4. We are seeing Singapore companies join the race. 5 local banks and one foreign bank now offer Internet banking. According to MAS' projection, Internet banking accounts are growing rapidly and are projected to grow from 3.4% of retail and corporate accounts to 20% in the next two years.

5. Our stock trading companies have also been quick to introduce on-line trading services, and for employing the latest technology for on-line stock trading and e-banking. Singapore was the first to introduce technology for mobile online banking services. M1 and Citibank launched their comprehensive mobile phone banking services in January last year. Other banks and trading houses are also offering mobile trading of securities, another world's first. Our trading firms have also been the first to introduce an automated voice-activated roaming share-trading service using the latest voice recognition technology.

6. dollarDEX is neither a bank nor insurer in the traditional sense. Its emergence is testimony to the changing face of the financial service market brought about by the Internet tsunami. It is an Internet intermediary that has created a value by aggregating products and services offered by the banks and financial companies. I am told that in January 2000, when dollarDEX's housing loan auction was launched in Singapore, hundreds of unique borrowers accessed the site for a total loan amount of US$105 million, compared with the usual US$90-130 million transacted through the normal channels in a typical month in 1999. In addition, more than 20% of the "influenced loans" were converted into actual applications.

7. The Government welcomes the electronic channels offered by the traditional financial institutions as an alternative service delivery channel. This shows the financial industry's progress towards embracing e-commerce. IDA is, however, especially pleased with the emergence of non-traditional players like dollarDEX. This is because we believe that the Internet will change financial services, not incrementally, but radically. The Internet will provide a platform of the invention of totally new businesses, which in some cases may even sweep away traditional businesses. We see this happening at a dramatic pace globally. In line with Singapore's ambitions to be one of the leading financial centres in our time-zone, it is good that we are seeing rapid innovations and the offering of creative new services and products in our market.

8. IDA's interest in dollarDEX is that you are an indicator of the new wave of innovative services in this sector that are challenging our definition of financial services. Second, dollarDEX's strategies look beyond the Singapore market, and include plans to become a regional player on the Internet, beginning with the launch of services in Hong Kong next month. With this move, dollarDEX will enable its local financial partners to bring their products and services to an international market at low cost and in an efficient way. We believe that our companies have to go regional if we are to maintain our position as a dynamic financial service hub.

9. This new era of course creates new challenges for the Government, for example as to what the appropriate regulatory model should be. First, what is or isn't financial services may be blurred. Second, regulations of cross-border services have to be re-invented. We believe that with MAS' encouragement and pioneers like yourselves showing the way, innovation in the financial services sector will grow.

10. On that note, let me wish dollarDEX every success in its business pursuits.

11. Thank you.