The future of finance companies in Singapore.

• Main Authors: Chua, Sze Chieow., Lee, Weng Foo., Lim, Francis Yong Sing.
• Other Authors: Nanyang Business School
• Format: Final Year Project
• Language: English
• Published: 2013
• Subjects: DRNTU::Business::Finance::Banking
• Online Access: http://hdl.handle.net/10356/51901
• Institution: Nanyang Technological University

In the early years, the fundamental role of finance companies was primarily to provide funds for hire purchase financing of motor vehicles and housing loans. Since then the types of facilities have expanded over the decades and have developed into a comprehensive range to include commercial and industrial financing and leasing. The finance companies industry in Singapore is highly regulated in order to maintain the integrity of the financial system. Governed by the Finance Companies Act, finance companies operate under strictly defined laws and regulations. In view of the intense competition faced by the local finance companies in the dynamic environment and the present restrictive conditions, this report attempts to strategically analyze the competitiveness of the industry as well as to examine how the finance companies can prepare themselves for the more challenging and highly sophisticated era ahead. As the local finance industry approaches saturation, competition among the finance companies and among all the financial institutions is expected to become more intense in the near future. Finance companies have to contend with the narrowing spreads on their loans and advances especially in view of the inroads made by the commercial banks into their traditional areas. They have to be innovative and must constantly seek out new areas of financing but within the scope of the Finance Companies Act. The trend towards takeovers and mergers will continue in this current decade. This will lead to the emergence of a smaller number of finance companies but they will be financially stronger with larger capitalization and greater sophistication. These companies which are armed with strong financial backing and both excellent managerial and technical expertise will be better placed to meet future challenges and better service their customers in an increasingly competitive environment. They are expected to continue to feature prominently not only in the domestic market but probably in the rapidly expanding ASEAN region as well.