As the new normal slowly becomes the status quo, new ways of working and doing business have taken over. Consumer tastes have evolved. Social media has become a major influence on how people live their lives and set goals for the future. Customers also have higher expectations, especially on how businesses provide services.
Here are the financial trends in Singapore and how they affect lending businesses:
1. The Rise of Ubiquitous Financial Technology
Current financial trends are tied to lightning-fast technological innovations. These changes are quickly weaving its way into the daily lives of consumers. There are mobile applications and websites which are easily accessible and some can even influence how individuals manage finances and businesses conduct transactions.
For example, with the advent of technology, it is now easy to look for a Singapore online money lender. One no longer has to physically go to a lending company’s office to apply to know more about their loan products. From researching product features and lender reputation to comparing interest rates and terms and conditions, everything can now be done digitally.
15 years ago, it would have been impossible to get someone to lend you instant cash in a few minutes. Background and credit investigation has to be done and can painstakingly take weeks. Now, there are instant loans you can avail of with just your phone.
Same with banking, the advent of digital banks has changed the game. Mobile banking applications has removed stressful queues and time spent waiting for transactions to be processed. With this, consumers also now expect faster turn around time and may not wait much longer for results.
2. Rise in Interest Rates
With the overwhelming uptick in demand for loans, lenders are in a good position to dictate trends in interest rates. The steady rise in the cost of living only increases the need for instant cash, especially for those in the low-income bracket.
Fortunately, in Singapore, interest rates cannot be set unreasonably high. This is highly regulated by the Monetary Authority of Singapore (MAS) which sets the benchmark interest rates in the country. Changes in these rates can directly affect the cost of funds for lending businesses. When interest rates rise, it becomes more expensive to borrow money. Although this may seem good for the business in the short term, the long-term effect is that borrowers will struggle with repayment.
3. State of Economic Growth
Based on data from the Ministry of Trade and Industry, Singapore’s GDP rose by 0.7% on a year-on-year basis in the second quarter of 2023. Its overall economic performance plays a crucial role in lending businesses.
Strong economic growth usually leads to increased demand for loans, while economic downturns can result in reduced lending activity. People setting up businesses need loans for their capital. Families buying and building houses apply for loans to augment savings and complete the purchase price for a house. If the economy is in tatters, these financial activities would not be present. People will prioritize essentials over investments. There will be no room to set up a business or to purchase property if the economy is in bad health.
4. Changes and Updates in the Regulatory Environment
Stricter lending criteria or new regulations may affect the availability and terms of loans. Lenders will have to spend more time, effort and even resources to ensure they comply with government requirements.
Lending companies already have to watch out for exisitng regulations on Data Privacy and Security, Consumer Protection, Financial Technology and Anti-Money Laundering. With the nature of the lending business, it would be easy to exploit consumers especially those who are in dire need of cash. This is why government regulations are strictly implemented.
Financial trends have a way of disrupting the current lending environment, but they can also improve it at the same time. So, as Singapore continues to proactively embrace technological advancements and enact laws and regulations that will protect its citizens and consumers, lending businesses must also keep up. Otherwise, lenders may find themselves left behind in a fast-changing financial landscape.