Financial systems across the world have undergone major changes as technology has strengthened its influence. In a Singaporean context, this statement resonates well with the development of eGIRO.
eGIRO, like GIRO, is an interbank payment system. However, eGIRO facilitates the entire process electronically. Consequently, it is:
- Faster, in terms of transaction rate & application acceptance process
- Less prone to manual errors
- More convenient compared to the traditional paper-based GIRO.
While the advantages mentioned above are well understood, their broader applicability in strengthening the Singaporean economy is less discussed.
How does the increased efficiency of eGIRO benefit the economy?
- Improved cash flow for businesses:
eGIRO, being completely digital, eliminates the need for businesses to invest in resources for manual payment initiation and tracking. Businesses may not need to invest extensively in accounting systems or managers. Lower operational costs for companies could mean greater profits, which in turn can free up funds for investment in research and innovation.
- Enhanced data collection for economic analysis:
The electronic nature of eGIRO benefits everyone involved in the corporate economy. While companies benefit from improved accuracy in financial record-keeping, tax agencies benefit from accurate data collection. Financial data collected by the government can be used for financial forecasting. The more accurate these forecasts are, the better the decisions made by policymakers for financial inclusion and upliftment will be.
- Reduced paper waste, supporting sustainability goals:
As per an infographic report by the ABS, eGIRO helps save approximately 22 million paper sheets every year. This could be a result of electronic systems taking over paper-based financial files, receipts, GIRO forms, etc. Reducing paper waste can help achieve the UN’s sustainability goals. In the long run, pro-Earth countries may get the upper hand in attracting eco-conscious investors and improving living conditions.
- Attraction of foreign investment due to advanced financial systems:
Other than eco-friendliness, the completely digital payment model enabled by eGIRO can increase the affinity of foreign investors. eGIRO greatly contributes to increasing the ease of doing business, enhancing financial reporting, and reducing operational costs. All these factors could make it reasonable for foreign investors to view Singapore as a low-risk and more stable investment destination.
- Improved liquidity management for companies:
Liquidity management entails many things, including tracking and forecasting cash flows. eGIRO can be particularly useful in this context. Given its quick speed of execution and low error probability, adapting to eGIRO can result in more accurate reports and predictions. With a more realistic view of the companies’ financial whereabouts, stakeholders can be sure when to make informed decisions on investments, expenditures, and other critical financial actions. Prompt decisions can help ensure that the company never runs out of cash.
- Faster disbursement of government subsidies and benefits:
eGIRO’s utility can manifest at the intersection of private and government sectors. Government agencies can use eGIRO to distribute subsidies to eligible companies swiftly. In times of economic stress, the speed of fund transfer can be crucial. Quick economic intervention can help maintain economic equilibrium and minimize the long-lasting repercussions of financial instability.
Additionally, eGIRO can reduce errors in transactions and allow better tracking and accountability of public funds. Greater transparency in the utilization of government-distributed funds can help policymakers optimize different development schemes available for businesses. These features of eGIRO can enable more effective and responsive government support.
- Support for the development of new financial products and services:
Increasing the utility of eGIRO can pave the way to innovation. If eGIRO became a standardized payment system for most businesses, financial agencies would have more data to analyze and provide insights to businesses. Budgeting and financial management tools could become more efficient and easier to use. The standardization of eGIRO can also spur the creation of API-driven financial services. This could lead to more seamless integration between different financial platforms. Moreover, as more data is gathered, smarter cybersecurity tools could also be devised.
What are the major takeaways from this write-up?
Each of the effects brought about by the increased usage of eGIRO can create a positive feedback loop for the economy. For instance, increased usage can result in better reporting, which can lead to product innovation and the development of stronger security measures. This, in turn, can position local businesses for success and attract foreign investment.
