This week, the inaugural Singapore Fintech Festival – an ambitious, week-long event – is being held in the city state. According to the Monetary Authority of Singapore (MAS) it will be the world’s largest financial technology event to date, attracting around 11,000 participants from more than 50 countries.
The MAS organised the festival to create a platform for financial institutions, fintech start-ups and investors to network and explore innovations aimed at making financial services more efficient in the digital era.
“The festival will foster the thriving fintech ecosystem in Singapore and beyond, as we strive towards establishing Singapore as a smart financial centre and a world class fintech hub,” said MAS chief fintech officer Sopnendu Mohanty said.
The Authority is now seeking to follow through on implementing the vision it first laid out in June 2015 of Singapore as a smart financial centre, said MAS managing director Ravi Menon as he kicked off the conference portion of the festival on 16 November.
MAS is focusing on two areas. One is to provide regulation that is conducive to innovation while fostering security; the other to foster infrastructure and new technologies.
Regulation conducive to innovation
To develop the right environment for financial innovation, MAS is focusing on five concrete initiatives:
- First, it is taking an activity-based approach to make payments cheaper, faster and better. MAS is introducing streamlined payment licencing under a singular framework that allows fintechs to conduct multiple activities with just one licence, while adhering to common standards for consumer protection and cybersecurity.
- Next, MAS has overcome its initial objections to financial institutions using cloud computing. Indeed, said Menon, “cloud delivers efficiencies and cost savings. A secure cloud is an enabler for fintech innovation.” MAS has set up specific guidelines for usage of cloud technology.
- For digital financial advice and insurance, the MAS has the goal of making it easier for consumers to benefit from lower cost and greater choice, while ensuring adequate safeguards for usage of solutions such as automated algorithm-based, robo-advisors. Additionally, insurers can offer their full suite of insurance online without advice.
- To further innovation, Menon said MAS launched its regulatory sandbox to allow experiments to take place while also providing an environment where experiments can fail safely and cheaply. “We are issuing our final guidelines today,” he said.
- Finally, Menon stressed that a smart financial centre must also be a safe financial centre. “There will be growing security and privacy concerns. Users will have confidence only to the extent they have confidence in cybersecurity.” He announced that the US-headquartered Financial Services – Information Sharing and Analysis Center (FS-ISAC) will set up the only cyber-intelligence centre in the region in Singapore in order to provide better intelligence support.
Fostering infrastructure and new technologies
To enhance Singapore’s infrastructure and develop an ecosystem where people can connect and collaborate, Menon said, “we need common standards and interoperable systems. We formed a new fintech and innovation group. MAS has committed 225m Singapore dollars (SGD) (US$159m) over the next five years.” Also, in April this year, MAS and the National Research Foundation (NRF) set up a fintech office to provide a one-stop point-of-contact for all FinTech matters.
MAS is again focusing on five areas.
- First, it is supporting the developing of physical spaces that facilitate collaboration and partnerships. Prominent among these is Lattice 80, a non-profit initiative led by Asian private investment group Marvelstone, which launched last week and is billed as the world’s largest fintech co-working space.
- Along with physical space, the infrastructure also includes systems such as Singapore’s FAST platform for real time payments, which is modelled on the UK’s Faster Payments Service (FPS) initiative but has been vastly underutilised since its launch in 2014.
- MAS is supporting initiatives by the Association of Banks in Singapore (ABS) to develop a central addressing scheme that allow consumers to make payment any using a mobile or identification number. It is also working on a unified point-of sale (PoS) system so that merchants can accept any payment on a single device.
- Next, Singapore is in the process of creating a national know-your-customer (KYC) framework called MyInfo that will contain government-verified personal details and allow residents to provide data to the government just once, then use it for all subsequent online applications with financial institutions or other organisations.
- On the blockchain front, MAS and the Singapore Exchange (SGX) are working with eight banks to launch a proof of concept (POC), supported by the bank-backed R3 CEV consortium, whereby banks will deposit cash as collateral with MAS in exchange for digital currency and can use the currency to pay each other directly, instead of sending instructions through MAS.
Finally, said Menon, application programming interfaces (APIs) are “likely to be one of the most important building blocks for innovation.” MAS is also seeking to establish Singapore as a centre of excellence for APIs and has just published the Finance-as-a-Service API Playbook to facilitate development and standardisation.
The bigger picture.
While Singapore talks a lot about technology, Menon said, the key is fostering a culture of innovation. “Innovation must be the way to energise and refresh the business model.
“The purpose of innovation – increase efficiency, cheaper, better, faster, keep our financial system safe, create new opportunities to generate growth and good jobs. Most of all, we want to improve peoples’ lives. Innovative finance must be purposeful finance.”