Mr. Lim Chee Onn, the Chairman of the Advisory Board SKBI The family of Mr Sim Kee Boon : Ms Jeannette Sim, Mr Peter Sim The family of Prof Winston Koh, Prof Arnaud De Meyer, our host, Friends, Ladies and Gentlemen

It’s always a challenge for an ophthalmologist, an eye surgeon, to address an audience like this, who knows far more than me about financial services and financial institutions.

Mr Stephen Aguilar-Milan is a futurist with the World Futures Society, and he has a hypothesis that every 50 years or so, there is a major technological wave. My hypothesis is that every time there is major technological wave, you have a period of intense disruption, a period of increased opportunities, a period of great inequality and robber barons, and it takes some time before the middle class adopts the same technologies and creates more wide spread prosperity. My thesis tonight is that we are in the midst of such a wave.

So let’s start with Stephen’s hypothesis. If you go back to 1770 in England, the time of mills and canals – the canals that you can still see in London and England – that was the start of cottage industries, of early industrialization in England. The fact that it happened in England gave it a head-start in the Industrial Revolution.

You move forward another 40 or 50 years from there, you get to the early 1800s. The pivotal invention then was the steam engine, and with the steam engine came railways and railroads, and many fortunes were made by the successive rollout of railways in England, Europe and America.

Fast forward another 50 years to about 1870 – that was the age of steel, electricity and heavy engineering. That was also the age of large ocean-going ships, warfare, refrigeration and trade opened up on an industrial scale.

The 4th wave began sometime around 1910. That was really about oil, and oil opened up the possibility of the automobile, and especially in America, the age of the car, interstate highways, and the long American love affair with the car and all that it represents in popular culture.

If you stop to think about these waves, and think about some names associated with these waves – if you go back to 1910 and think about oil, what names come to mind? For instance, Rockefeller – that was how huge fortunes were made. If you go further back to the age of steel, the American name that comes to mind is Carnegie, and related to that, Mellon, the bank. And if you go back to the age of the steam engine and railways, there are pantheons of tycoons, technologists and early-adopters who made huge fortunes because suddenly, everything changed, and there was a period of big disruption - old industries were gutted, and new industries were made. The people who got in first made huge fortunes.

Now let’s move forward to the 5th wave. You can roughly date the 5th wave to the late 1940s, after the Second World War, in particular the invention of the transistor, which replaced the old vacuum tubes. By accident or design, this started off in Silicon Valley. I think it was William Shockley who moved back to Palo Alto from New York, because he had an ageing mother in Palo Alto. At the same time, Stanford University was also trying to find and define an opportunity for commercializing its academic pursuits, and finding daily relevance for the discoveries in the labs and the work that its professors did. The transistor in turn led to an explosion of electronics, and in a later wave, electronics in turn led to computers and much of what we know of modern electronics today. So starting from the transistor in 1947, we move all the way to today.

If you believe this theory of 50 years, we are clearly past 50 years. This is where I will take a risk, and posit that there is a 6th wave. The difference in technological waves is that they don’t come and go; each wave builds successively on preceding waves, and this 6th wave is actually about connectivity - meaning that the transistor led to the CPU, which led to the computer and now it is about the Internet, the World Wide Web, big data analytics, the Internet of Things, and telecommunications. We are moving beyond hardware to bits and ideas, and we are now living in a world which is far more densely connected than ever before.

Today, a lot of the political polemic is about inequality. My favourite theory is that inequality is not the result of a covert right wing conspiracy, but really just another episode of the fact that there is a major tectonic technological wave sweeping through our society, and the people who get it, the few people who understand and are first able to capitalize, will make fortunes as large, in historical terms, as the Rockefellers, the Carnegies and the rest. So it’s no accident today that the names you hear about, whether it’s Bill Gates, Mark Zuckerberg, Carlos Slim in Mexico, Jack Ma of Alibaba, are all people who are early riders of this emerging wave. The point I want to make, therefore, is that this is only just beginning. It will take some time for these tools and technologies to be democratised, commoditised and to be in the hands of ordinary people, and for the middle class to regain its wage-earning capacity, its productive capacity and its fair share of national wealth. So that is my hypothesis for what is currently happening in society and economics, and in the political arena as well.

Now let me cite a few examples. Many of these examples you will be familiar with, but they help make the point.

In the mobile banking space, many of you would have heard of Safaricom’s M-Pesa. Since Kenya’s M-Pesa brought banking-by-phone to Africa, this has grown from a novelty to a bona fide payment network. Even at a few dollars a transaction, mobile payments in sub-Saharan Africa will generate about US$1.5 bn in fees for mobile money providers by 2019, according to a report by the Boston Consulting Group. It was also reported that in sub-Saharan Africa, more people will have a mobile money account than Facebook account. Mobile phones are clearly spreading faster than bank branches, and especially in emerging markets like India, Bangladesh, Africa and other parts of Asia. It is no wonder therefore that many banks and telcos (such as Safaricom), and even Technology Giants (such as Google and Apple) are now focused on creating innovative financial services via the mobile channels.

If you move into the retail space, you’ve heard of the names: eBay, Amazon and Alibaba. Alibaba has come to dominate Internet Retailing in China, and frankly anyone who dominates any sector in China is going to be huge. Just to give you some idea of scale, Alibaba has moved beyond its remit of just connecting businesses to each other, which is how it started. It has moved far beyond that. It now allows companies to sell directly to the public, and for the members of the public to transact with each other. We’ve heard of Tmall, we’ve heard of Taobao. Taobao and Tmall processed 1.1 trillion yuan – which I think is about US$170 bn - in transactions in 2012, and in Sept 2014, Alibaba’s market value was measured at US$231 bn. I am sure the numbers have changed since then, but these are numbers with many zeros.

In the crowdsourcing space, you have heard of Kickstarter and Indiegogo, and nowadays artists, entrepreneurs, communities, even people in trouble with the government can raise funds from crowdsourcing sites – to raise funds from the “4F Bank”. You know what the 4Fs are? Fans, Family, Friends and Fools. We laugh about it. But the point is that it allows everyone to mobilize funds and it goes far beyond this 4Fs, because in this world currently awash with liquidity and low interest rates, people are looking for ideas and services to take a bet on. According to the Crowdfunding Industry Report by Massolution, in 2012, US$2.7 bn was raised online through crowdfunding, and this number can only grow.

In the virtual currencies space, Rajendra mentioned Bitcoin, and I think you had a convention or a seminar on it. Frankly, I am not sure about the future of cryptocurrency, although clearly if you think about the way governments are managing paper currency, it doesn’t give you great confidence either. But actually what intrigues me more is the technology behind Bitcoin. I am not sure how many of you are familiar with the Blockchain Technology. Blockchain technology is a computational algorithm that enables distributed verification of the integrity of ledger items. Whether that item is a transfer of money, or cryptocurrency, or contracts, or services, it is in fact a generic platform technology which I believe has not yet found the most appropriate use case. But nevertheless, further breakthroughs in this area will open up the world and will disrupt services in a major way.

And for those of you who are involved in banking and finance, you know that some key competitive advantages which banks have had are (i) funds (ii) reputation (iii) some kind of protection by government regulations and (iv) knowing your customers’ businesses because you were lending them money - in other words you had access to information. But if you were to stop and think about it, what this technological wave has done is that it potentially disintermediates all those competitive advantages which banks and traditional financial institutions have had. You want access to funds, you can go to crowdfunding portals. As for having information on what businesses are doing, it is not just banks, and it is not just the consultants like Accenture, it is the people who have accurate pulse on the flow of bits, data, and transactions who know what is going on. I think David Lee was telling me just now that Alibaba employs hundreds of PhDs to do data mining. Is Alibaba really a retailer or is it actually in the information business? Are telcos really just selling you voice or are they preludes to the mobile banking business? Even Amazon or take any logistics company, are they really just delivering pizzas and electronics or are they really in the fulfilment business? So the point I am making is that if you can find the centre of gravity between money, information, fulfilment, and then the elusive quality called trust, that is where a huge focal point of opportunity is.

So I hope I have given you enough food for thought. I just want to appeal for you to do three things.

First, please for the sake of Singapore and Singaporean institutions, find new ways to deliver new services to our people and the people beyond Singapore. If our banks, financial institutions and businesses are doing exactly the same thing next year as they were doing last year, we are going to be swamped, because the pace of change is not slowing down. So please find new ways to deliver new services.

Second, please focus on this field of data science and data analytics. Whether you are a bank, financial institution, consultancy firm or university, we now live in the age of big data. And I used to joke with my medical colleagues that you almost do not need to do a clinical trial now, when you can measure the universe. Why settle for a sample and then engage in fancy statistical gymnastics to prove your conclusions, when you can measure everything in real time. So pay attention to data analytics and data science.

Third, we need more rational, careful, and technologically-based conversations on the issues of cybersecurity, protection of privacy, and especially protection of identity. Because you cannot have a world that is fully able to take advantage of financial innovations, information revolution, even electronic medical records, if a decent level of security, protection from identity theft, and protection from a loss of privacy and confidentiality is not guaranteed. In other words, security is the essential flip side of the coin of utility; and if we can get that done right here, then we have a head start.

So my final point is why Smart Nation. The answer is: we do so because we have no choice. Like many things we have done in Singapore for the last 50 years, all the way back to the time when Mr Sim Kee Boon was a pioneer senior civil servant working for Mr Lee Kuan Yew, we had to break new grounds, we had to be adventurous, we had to be innovative because we have no choice. Jobs were going to disappear in the early 1970s as the British forces pulled out of all ports east of the Suez, and that’s why we industrialized. Similarly, what I have described now is potentially another occasion when 20 to 30 percent of previously stable, good, middle class, white collar jobs are at risk because you cannot out-compete a robot, a machine, or a computer for routine, white collar work.

So we need to do all these things, and we believe we have an edge because we are small, and we have a single layer of government. Half of our cabinet ministers are engineers. Our PM is a mathematician who can still code. If you do not believe me, you can check his Facebook account and so far after five days, people have only found a little boundary error in his algorithm. But it is a very elegant program.

So the point is that we get it, we understand technology, we are not afraid of Science and Technology, but we need to have not just the PM coding, we need an entire society that is capable of understanding and exploiting the opportunities that this wave provides for us. So I wish you all the very best and I hope SMU, and especially the Sim Kee Boon Institute, continues to break new ground, not just because it is fun, but because it is essential for our continued prosperity and progress as a nation. Thank you all very much.