The financial sector is an integral part of Singapore’s ambition to be a Smart Nation. Money Authority of Singapore (MAS) seeks to create a Smart Financial Centre where technology is used universally in the financial industry in order to increase efficiency, create opportunities, allow better risks management, and improve lives for technology savvy user. Therefore, understanding their implications, and the harness of their potential will gain a competitive edge. Financial Technology (FinTech), which involves using technology to devise new financial services and products, is a key ingredient in building a Smart Financial Centre.
“Singapore’s FinTech Journey – Where We Are, What Is Next” at Singapore FinTech Festival 2016
Conference Day 1 (16 Nov): Dialogue with technology and finance leaders on digital and mobile payments.
Mr Ravi Menon, Managing Director of Monetary Authority of Singapore (MAS) mentioned about Singapore Fintech in his speech. First of all, Singapore have a world-class infrastructure for electronic payments. Infrastructure for electronic payments such as UPOS, CAS are 24/7, real-time inter-bank fund transfer system. It is known as FAST which stands for Fast and Secure Transfers. However, FAST is utterly under-utilised and Singapore is still heavily dependent on cash and cheques as their primary means of payments.
Singapore is in the process of creating a national KYC utility. A National KYC Utility is to recognize the identity of a customer. It is one of the biggest agonies in the financial industry. The process is not only costly and laborious, it is also hugely duplicative. The pain is pervasive because KYC and identity authentication are involved in many financial services: from opening a bank account to making a payment to making insurance claim. Problem should have been solved. Obviously, this process involves several layers of identity verification depends on the purpose of the transaction, the extent of information involved, and the degree of rigour required.
Next, the basic building block is the MyInfo service, jointly developed by the Ministry of Finance and GovTech, the lead agency for digital and data strategy in Singapore. MyInfo is a personal data platform, containing government-verified personal details, e.g. the national ID number, residential address, and so on. MyInfo enables residents to provide their personal data just once to the government, and retrieve their personal details for all subsequent online transactions with the government. MAS is collaborating with MOF and GovTech to embark on pilot that will expand the MyInfo service to the financial industry for more efficient KYC using trusted government collected personal data.
In 2016, LATTICE80, Singapore’s first FinTech innovation village is launched. LATTICE80 offers dedicated physical space in the heart of Singapore financial district for FinTech start-ups to work, connect, and co-create with the financial industry and VC investors. Moreover, Singapore is enabling Digital Financial Advice and Insurance. The digital offering of financial advice and insurance is becoming more popular, catering to the needs of a growing segment of technology-savvy, self-directed consumers.
In June last year, MAS launched a regulatory sandbox for financial institutions as well as new FinTech players to test innovative ideas. The sandbox serves two purposes: First, it provides conducive environment for experimenting with innovative technology to take place, even when it is not possible at the outset to anticipate every risk or meet every regulatory requirement. Secondly, if an experiment fails, it fails safely and cheaply within controlled boundaries, without widespread adverse consequences.
APIs, or Application Programming Interfaces, are likely to be one of the most important building blocks for innovation in the future economy. An open API Architecture and saving the best for the end create an API economy. APIs are basically a set of protocols that define how one system or application interacts with another, usually from the perspective of information exchange.
Furthermore, MAS, the Singapore Exchange, and eight banks have embarked on a proof-of-concept project to use blockchain technology for inter-bank payments, including cross-border transactions in foreign currency. Under the pilot system, banks will deposit cash as collateral with the MAS in exchange for MAS-issued digital currency. The banks can later redeem the digital currency for cash. The banks also have the option of using the existing common payments gateway provided by BCS Information Systems to transact on the blockchain.
In a nutshell, he also stated that in an industry facing the headwinds of lower economic growth and heavier regulatory burdens, innovation must be the way to refresh and re-energise the business model. Innovation is not always about high-tech. It is about seeking newer and better ways to do things – about a spirit of enterprise. It is about hope in the future. The financial industry needs that. Innovative finance must be one purposeful finance.