Heading in the right direction: Singapore's drive for financial resilience

By: The WFE Focus Team Oct 2021

Name: Chan Kum Kong

Title: Head of Research, Singapore Exchange

1. When did SGX start looking into financial literacy?

We started SGX Academy back in 2008 as a platform to drive financial literacy and address a growing need to empower the retail communities to make important and educated financial decisions. Back then, financial literacy was a fledging initiative amongst exchanges and, today, we remain one of the few exchanges in Asia that has dedicated investor-education and professional training programmes.

We started small, with weekly face-to-face investor-education seminars. Today, we conduct more than 250 investor-education online events annually. Our SGX Academy programmes have supported more than 800,000 individuals since 2008, and continue to support individuals in their investing journey. We aim to provide practical content that is tailored to investors’ demographic profile, life stages and individual proficiency.

2. What are some of your priorities? What are some of the outcomes that you seek to achieve? 

We aim to build financial resilience across all segments of society. This starts with financial literacy – the key building block of financial resilience – to equip people with practical skills and tools to prepare for a sustainable financial future.

We make sure that our programmes are inclusive, and accessible to people from all walks of life, ranging from students to working professionals. To that end, we recognise the need to form partnerships to increase outreach. We have since worked with many government agencies and institutions, such as with the Singapore Sports Institute, to enhance the financial literacy of national athletes as part of their continuous learning alongside their sporting careers.

Over the years, we have launched and co-organised several large-scale investor education events and campaigns. This year, together with InvestingNote – Southeast Asia’s largest community-driven platform for investors and traders – we hosted the inaugural Singapore Trading Festival, a five-day simulated trading competition.

In partnership with the National University of Singapore (NUS), we also organise the NUS-SGX Stock Pitch Challenge, which saw its seventh edition in 2021. This challenge is an initiative that involves students pitching their stock recommendations to a panel of judges, comprising academics, equity research analysts, and financial professionals. It aims to encourage the younger generation to consider investing and learn how to analyse financial information.

A key goal for us is to empower and encourage the retail community to embark on their investment journey early. Time is an important factor when it comes to compounding wealth, and individuals need to be equipped with the knowledge to start investing and managing their finances early.

3. How has Covid-19 reshaped the need for financial literacy?

The pandemic has upended lives and affected livelihoods across the world. This has emphasised the importance of promoting financial literacy as an essential life skill for individuals to build greater financial resilience.

In particular, during the height of the pandemic in 2020, employees who faced job losses and pay cuts would have managed their personal finances better if they had cultivated desirable financial behaviours, such as setting aside emergency funds, proper budgeting, debt management, savings, and investing.

For the younger and tech-savvy investors, the proliferation of fake financial information on social media has also led to misguided investing. Proper financial education will help these investors to be more discerning in assessing and consuming online information.

The pandemic has certainly reshaped how we deliver our educational programmes. With safe-distancing measures in place, all our training has pivoted online, and we have accelerated the expansion of digital platforms for our educational efforts. Harnessing digital channels and technologies to increase financial literacy, resilience and well-being is now a given.

I believe that as a nation we are going in the right direction. For example, SGX supports the Singapore Financial Data Exchange, an initiative that links data from participating banks to financial planning applications. Having a consolidated and holistic view of financial information and resources allows individuals to manage their finances more effectively.

4. What are some of the trends, challenges and opportunities you see in financial literacy? 
Financial literacy is a broad topic, and there is no one-size-fits-all approach to implementing such programmes. Individuals have varying proficiency levels, and given that this isn’t a topic that is emphasised in the national curriculum, many would simply not know when or where to start.

This has led us to design education and training programmes tailored to the different needs of individuals and professionals. These are delivered in different formats, such as seminars, courses, and e-training that enable participants to choose their preferred mode of learning and achieve the desired learning outcomes.

A case in point is financial education for women. Based on feedback from our partners and research, we realised there was a gender gap in financial literacy, whereby women were reportedly either less knowledgeable or less confident in investing than men. Hence, we have partnered with financial institutions and most recently with non-profit organisation SoGal Foundation to curate educational programmes that are “for women by women”.

We also find that individuals tend to pick up financial knowledge fairly rapidly, although that does not necessarily translate into financial confidence. In that regard, we offer training that can easily be understood and, more importantly, put into practice. It is important to ensure that students see the practical applications of sound financial planning and, more crucially, develop the right attitudes towards money management.

In line with SGX’s focus on capacity building in sustainability, we also see the need to educate retail investors on the various aspects of sustainability, including understanding the link between financial decisions and sustainability.

5. Any advice for other exchanges? 

Despite Southeast Asia’s economies rapidly maturing along with the accelerating adoption of technology, surveys have found that Southeast Asia is among the regions in the world with the lowest financial literacy. Given that the broader Asia region will be home to the majority of the globe's middle class in less than a decade, it is even more critical that financial literacy be brought to attention.

The role of financial exchanges in economies is an important one. The core function of a stock exchange is to help businesses raise capital and give investors opportunities to grow their wealth – given that exchanges are so woven into a society’s fabric, exchanges should provide the necessary platform to promote financial literacy and investor education. In Asia, there is room for exchanges to come together to scale and harmonise financial literacy programmes and efforts.

The World Federation of Stock Exchanges plays a role in facilitating the spread of ideas and best practices throughout the financial services industry and is the definitive platform where exchanges can come together to collaborate.