29 - 11 - 2016 | |
With the proliferation of smartphones, finance is increasingly mobile, with people consuming financial services on the go.
In addition, the increased utilisation of the Internet has driven usability, connectivity and driven real-time. But where does Singapore’s fintech ecosystem really stand in comparison to global counterparts? How do elements of its ecosystem like capital, talent, demand and policy match up to counterparts elsewhere?
The recently concluded Singapore Fintech Festival, which was held from 14 November to 18 November, emphasisied on the potential of fintech in transforming financial services.
In a speech on 16 November 2016 at the Singapore Fintech Festival, Ravi Menon, managing director of the Monetary Authority of Singapore (MAS) said: “We have unprecedented computing power. The devices in our hands or on our wrists are literally pokemons - pocket-sized monsters that pack more data and more processing power than super computers just a couple of decades ago.”
He continued: “Digital payments are becoming more widespread, propelled by advances in near-field communications, identity authentication, digital IDs, and biometrics.Blockchains or distributed ledgers are being tested for a wide variety of financial operations, to make them faster, more robust, more efficient: to settle interbank payments; to verify and reconcile trade finance invoices; to execute, enforce, and verify the performance of contracts; to keep an audit trail and deter money laundering.”
According to Menon, the MAS intends to streamline regulations to spur innovation, as well as create an activity-based modular framework for regulating payment services and develop a national KYC utility in the city-state.
In addition, there are plans for enabling digital financial advice and insurance, developing and refining a regulatory sandbox for idea testing, strengthening cybersecurity, expanding the innovation infrastructure for fintech and driving the creation of workspaces to facilitate partnerships and collaborations amongst different ecosystem players.
Menon observed: “Be it countries, businesses, or people - those who are alert to technology trends, understand their implications, and harness their potential will gain a competitive edge. To be sure, many of these technologies are disruptive to existing jobs and existing business models. But if we do not disrupt ourselves - in a manner we choose - somebody else will - in a manner we will not like.”
Singapore’s fintech ecosystem
With the vision of the city-state being positioned as a Smart Financial Centre , the MAS is collaborating with stakeholders in the financial services and fintech space,
In a separate speech at the event, the Deputy Prime Minister and Chairman of the MAS, Tharman Shanmugaratnam, emphasised that the city-state wants to “provide a fertile ground for more new ideas and solutions to keep cropping up,” highlighting MAS’s support for proof-of-concept trials, grants from SPRING Singapore and co-investment from the National Research Foundation (NRF).
Highlighting the investments that the city-state was making in developing the educational and human infrastructure to develop the local talent pool for fintech ventures based in the city-state, Shanmugaratnam had shared in an earlier speech: “Singapore’s strategy is not to choose between financial institutions and new FinTech players but to provide the conditions for both to innovate, compete, and collaborate.”
At the opening of Lattice80, reportedly the largest fintech co-work space in the world, he had explained: “Our aim is to create a FinTech ecosystem where innovation thrives. This is an ecosystem comprising the innovation centres of our financial institutions, the mushrooming FinTech start-up scene, our institutes of research and higher learning, the VC/PE community of investors, and connectivity to regional markets.”
At this time, Singapore is competing with international centres such as New York City, London and Hong Kong, amongst others, to established itself as a fintech hub.
According to an EY report, ‘UK Fintech: On the cutting edge’, Singapore is characterised as a preferred gateway into the Asian market, as well as a progressive regulatory regime, in the form of a dedicated fintech team in the MAS focused on establishing public and private partnerships to drive fintech growth.
With recent moves to improve the relevant pillars of its ecosystem in the talent pipelines in the city-state, the latest developments are seeing the city-state drive improvements to both capital and demand, where it lags behind several counterparts. The UK is a significant leader in the fintech ecosystem category space, as are California and New York.
But two areas that may drive deeper and more qualitative improvements for the fintech ecosystem, as well as the startup/entrepreneurial ecosystem in the city-state may be implementing a startup visa scheme similar to what Israel has done, or otherwise recalibrating the existing Entrepass scheme to synchronise with the visa’s implemented by countries like the Netherlands and Canada.
These are crucial in light of the city-state losing its edge to attract and retain talent, which has led Hong Kong to become more competitive as Singapore tightens its restrictions on foreign labour.
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