By Scott Bales | Singapore has established itself as a financial hub and its strong reputation for tech innovation is not far behind. In fact, Singapore was ranked the sixth most innovative country in the world in a 2016 joint study by Cornell University, Insead and the World Intellectual Property Organization (WIPO). But are we doing enough to bring these two competencies together to develop a cutting-edge FinTech industry?
Singapore has the potential to become a global FinTech pioneer, but needs to react quickly to claim this position in the finance innovation market.
The Impact Of FinTech
Ravi Menon, Managing Director of the Monetary Authority of Singapore (MAS), recognises that FinTech needs to be at the heart of Singapore’s vision.
“If Singapore is to maintain its position as one of the top financial centers in the world, it must embrace fintech – maximizing its benefits, minimizing its risks,” he says at the Singapore FinTech Festival in November. The festival, the largest of its kind in the world, brings together members of the global financial community from organisations of all sizes.
This followed an announcement in September that MAS was creating a FinTech regulatory sandbox to provide financial organisations with a controlled environment for experimenting with innovative products and services. The Authority has also committed S$225 million towards FinTech development over the next five years.
Singaporeans are already benefiting from financial innovation with services like peer-to-peer fund transfers via PayNow; personalized health and life insurance packages with the help of FitSense; and the growth of AI in the sector through startups like Active.AI. Even wealth management and investment services are being re-imagined through FinTech.
Big banks are still in the running, but both they and startups have their struggles. For established organizations, the difficulty is in getting innovation to penetrate a company that’s set in its ways. For startups, the regulatory landscape poses problems when it comes to scaling up business operations.
The 2018 Budget
The Singapore Budget 2018 highlighted three major shifts that will impact Singapore’s future, one of them being: “The emergence of new technologies which will change the way we work, live and play.”
The budget included a Productivity Solutions Grant of up to 70% and a virtual crowd-sourcing platform that will help companies facing difficulties find ICT firms that can help them.
Other initiatives are being launched to support SMEs and startups who want to adopt or research new technology. These include an Enterprise Development Grant for product development and innovation and a Go Digital programme.
But the Singapore budget didn’t go as far as that of Hong Kong, announced around the same time, which pledged investment of HK$50 billion (S$8.4 billion) for the technology sector focusing on biotechnology, AI and FinTech innovation.
Future Of Financial Innovation
There are many exciting projects and initiatives already underway to keep Singapore at the forefront of innovation in finance.
For instance, fund transfer tool PayNow is soon to be expanded to allow B2B and B2C transactions. There are also plans to link it to the equivalent platform in Thailand, PromptPay, to facilitate cross-border transactions. Menon says Southeast Asia needs more such links – an attitude which could eventually bring about a single capital market in the region.
Blockchain, the technology used to store and record Bitcoin transactions, will undoubtedly play a part in Singapore’s financial future. The MAS has completed a study to examine how blockchain could be used for cross-border financial transactions without the need for an intermediary.
Many startups rely on their lower operating costs to give them a competitive advantage over the big banks. If blockchain is successfully implemented, however, it could reduce many financial activity costs to near-zero, evening out the playing field. Are the tides of disruption about to turn?
I believe we will also see great tech innovation in the insurance sector. AI-based underwriting and deeper data analysis will both help insurance companies make better and more efficient decisions. Preparing the industry to shift from risk control, to risk mitigation. I also see the industry branching out into preventative healthcare products, which will ultimately extend the lives of their customers and increase their revenue.
Small But Agile
Singapore may be small as a nation, but this makes us highly agile and able to respond faster than, say, Thailand and Malaysia. Right now we have a window of opportunity to push for financial innovation and become a global leader rather than just a global player. Key to the shift will be allowing greater flexibility in the non-bank financial institution (NBFI) space, which gives new companies more freedom to challenge the incumbents.
There are no limits to what fintech can achieve, given the right support.
What businesses or technology are you most excited about in FinTech?
About The Author
Scott Bales is an innovation and digital transformation evangelist, a global futurist, a strategist in digital innovation, a serial entrepreneur. He is the Managing Director of Innovation Labs Asia, a keynote speaker at TEDx, and has an upcoming book titled ‘Innovation Wars’.