How financial technology will impact Singapore in 2016

How financial technology will impact Singapore in 2016

Financial technology is seeing explosive growth. The Monetary Authority of Singapore wants to cultivate this growth as part of its Smart Financial Centre initiative. Channel NewsAsia looks at what this means for the financial industry in 2016.

By Patrick John Lim
Posted 28 Dec 2015 22:43 Updated 28 Dec 2015 23:25

SINGAPORE: Financial technology, which is also known as fintech, is seeing explosive growth.

New technologies in payment, data management and security have sprung up over the past year, and a few local banks have set up Innovation Centres to keep abreast with developments.

The Monetary Authority of Singapore (MAS) wants to cultivate this growth as part of its Smart Financial Centre initiative. Channel NewsAsia looks at what this means for the financial industry in the coming year.

BECOMING A SMART FINANCIAL CENTRE

As Singapore pushes on to be a Smart Nation, it is important that industries keep ahead of the curve. This is especially true for the finance industry, where new technologies are challenging the way business is being done.

Embracing new technology is also important for Singapore to maintain its status as a regional financial hub, and MAS recognises that Singapore needs to be a Smart Financial Centre.

Said Mr Thomas Zink, a research manager at IDC Financial Insights: "It will strengthen its position, it will create new jobs and it will grow their expertise in the market. For start-ups, it also makes a lot of sense because of the ease of doing business in Singapore as well as the access to a lot of financial institutions that are headquartered here as well as Singapore's geographic location at the heart of ASEAN.

"Lastly for financial institutions, it will make sense to have access to new ideas, new businesses, new concepts that will help them to transform their business in light of the digital change we're going through."

Much of the fintech developments in 2015 have centred around improving services, from mobile banking to payments. MAS hopes to take this one step further by laying the groundwork for banks and financial institutions to leverage information to serve consumers better.

This includes developing a set of common standards to allow different applications to operate together seamlessly, paving the way for data-sharing between organisations.

SECURITY, CYBER SECURITY NEED TO MOVE FORWARD TOO

As new technologies continue to surface, an expert said it is critical for security and cyber security to move in tandem with new innovation.

Said Gartner’s principal research analyst, Anmol Singh: "We will see more comprehensive risk management for the digitalisation that we are seeing in the banking industry. We are definitely going to see more of fraud detection and identity proofing technologies ... Security approaches are going to innovate and provide you with better solutions.”

Going forward, the central bank is placing the onus on banks to drive innovation. It said financial institutions are free to experiment with new ideas without seeking regulatory endorsement, as time to market can be critical.

"MAS will most likely follow through with the approach that (MAS managing director) Ravi Menon pointed out - that we are very supportive of banks partnering with fintech but it's ultimately the responsibility of banks to make sure that everything is in order, they are compliant, they assess the risk properly that comes from such a solution,” said Mr Zink.

“They also said they are open to provide guidance where necessary, but what they don't want to get into is give some form of approval to a specific vendor for a specific solution. That might incentivise banks to neglect their due diligence to some degree, and that's a very smart approach from MAS,” he added.

MAS has formed a new arm, the Fintech & Innovation Group, aimed at creating a conducive ecosystem for innovation.

The central bank has also committed S$225 million over the next five years under its Financial Sector Technology and Innovation Scheme, to support this innovation ecosystem.

- CNA/dl

- wong chee tat :)