MAS prepares infrastructure to drive innovation

The Monetary Authority of Singapore (MAS) has highlighted how it will support the digitalisation recommendations of the Committee on the Future Economy (CFE) and help to position the financial sector for the future.

MAS will facilitate infrastructure projects to drive innovation, boost market efficiency, enhance customer service, and extend Singapore’s connectivity with the region. Specific projects include:

An electronic marketplace for trade finance assets
An electronic trade finance platform will enable participating banks to distribute trade finance assets internationally, unlock capital to originate new trade finance lending, and increase the supply of trade finance for the region. A local fintech firm with international experience in trade finance is developing such a platform with a grant from the Financial Sector Development Fund, and aims to go live in the next few months, the MAS disclosed.

Electronic trading platforms for foreign exchange (FX)
MAS is working with banks to anchor e-FX trading platforms that can help to enhance price discovery and FX trade execution, especially for Asian currencies. This will enable market participants to benefit from better liquidity and greater efficiency in executing FX transactions, and sharpen Singapore’s edge as Asia’s leading FX hub, MAS stated.

Data infrastructure for natural catastrophe and cyber risk insurance
The Natural Catastrophe Data Analytics Exchange seeks to expand the availability of high-quality data on catastrophes in Asia by pooling industry loss data and collecting economic data through remote sensing technologies. This enhanced data will help increase catastrophe insurance penetration in the region.

The Cyber Risk Management Project aims to develop industry-wide cyber risk definitions, databases and models to better quantify cyber risks. This will help to accelerate the growth of cyber risk insurance in Singapore and across Asia.

Exploring the feasibility of developing an industry know-your -customer (KYC) utility
KYC is the process by which financial institutions identify and verify the credentials of their clients, an increasingly costly and resource-intensive although critical process. It can also be inefficient – clients are required to repeat the same KYC processes and provide the same information to every financial institution when opening a bank account, or applying for a credit card or insurance policy.

MAS is working closely with the industry and other government agencies to study the feasibility of developing a centralised KYC utility for the industry. Such a utility can enable participating financial institutions to leverage government-registered information based on client consent. It will also help to simplify and automate KYC processes, reduce compliance burden and enhance efficiencies within financial institutions, MAS noted.

Infrastructure for the pervasive use of electronic payments
MAS has been working with the financial industry to promote the broad use of electronic payments to enhance consumer convenience and business productivity. Singapore already has a strong payment infrastructure in the form of Fast and Secure Transfers (FAST), which enables secure, real-time, inter-bank payments. The banking industry will implement in the third quarter of this year a Central Addressing Scheme that will allow users to make fund transfers through FAST by using proxies such as mobile numbers and national identity (NRIC) numbers instead of bank account numbers.

In view of the growing prevalence of QR-code payments in Singapore, MAS is also looking to work with the industry to develop interoperable standards for such payments.

"The underlying thrust of MAS’ various initiatives is to provide a conducive environment for innovation – which is critical for the future of financial services. We do this through a judicious regulatory framework and enabling technology infrastructure. And even as we allow more risk-taking, we want to do so without compromising the safety of financial institutions and the stability of the financial system,” said Ravi Menon, MD, MAS.

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