"Fintech is not just about technology – though technology is very important in all that we do and will help to solve many real problems. Fintech is not just about finance – though we want to create a world where financial services are built around us, and we want empower hundreds of millions of people to participate in the modern economy," he said. "It is about innovation, inclusion, and inspiration."
Payments can be 'invisible' as well when shoppers can just walk out of the store without formally paying with cash or cards. "Fantasy? Just visit Amazon Go – it is already happening," he said.
When it comes to insurance, payouts can be instantly and automatically triggered by events. "MetLife’s Lumenlab here in Singapore is already making this a reality for gestational diabetes insurance. They are testing this out in MAS’ regulatory sandbox," he shared.
"This is the financial sector we want to create... customised for our needs, invisible to our eyes, and an absolute delight," he said.
"Innovation and technology are key to realising this future. But they are not enough. We need a fintech ecosystem to make this happen. We need common standards, open architecture, and inter-operable infrastructure. We need collaboration across government, financial industry, research institutions, and the fintech community at large. We need a free flow of ideas, knowledge, investment, people. And growing this ecosystem is what we have been hard at work for the last three to four years in Singapore with private and public sector coming together in collaboration."
Menon further elaborated that the fintech ecosystem is based on:
People, because without them there is no fintech.
Singapore is taking a multi-pronged approach to the talent crunch:
Institutes of higher learning are adapting their curriculum with industry input to train students who are able to work with emerging technologies;
Financial institutions (FIs) are putting in place programmes to help reskill mid-career professionals to take on the jobs of the future; and
Top talents from across the world are welcomed to augment the talent pool and raise the game.
Identity, as establishing who we are dealing with and authenticating information about the person is key to any digital transaction.
The MyInfo digital service is a key component of Singapore's National Digital Identity (NDI) system, and solves the personal know-your-customer (KYC) challenge. This digital service enables citizens to authorise third parties to access their personal data held across different government agencies.
"With consent, third parties can use MyInfo APIs to access data that is government-verified to authenticate their customers and make business decisions relating to that customer," Menon explained.
"Last year, MAS and the Government Technology Agency of Singapore (GovTech) started a pilot with four banks to enable individuals to open a bank account online using MyInfo. Today, we can open a bank account or apply for a credit card – online and instantly – when we give consent to the bank to access our data through MyInfo. More than 20 FIs are now using MyInfo to provide more than 110 digital financial services."
MAS had worked with banks on addressing the corporate KYC challenge with a shared services utility, Menon added. While progress was made "in harmonising various banks’ KYC systems and integrating the proposed KYC utility with the banks’ infrastructure", the proposed solution would cost more than the savings that banks would get out of it, so the project has been paused.
"We tried, we failed, we will learn, and we will do better next time. Innovation is about experimenting and learning from setbacks," he said.
MAS and GovTech are now working with the industry to facilitate FIs’ credit assessment of small and medium sized enterprises (SMEs) using trusted government data. "We will help pool trusted data from government sources on the business and key individuals associated with the SMEs to facilitate a more informed credit assessment. We will run a pilot with three banks in the first half of next year," he said.
Singapore’s national e-payment infrastructure is largely complete, Menon said. Singapore has FAST, a 24x7 real-time funds transfer infrastructure, and PayNow, which rides on FAST to enable instant money transfer to an individual or business, using their personal ID number, mobile phone number, or unique entity number. UPOS, or unified point-of-sale terminal, accepts all major credit card brands, whether using a smart chip, near field communications (NFC), or QR code, and most recently, the SGQR standardised QR code which can represent multiple payment schemes was launched.
"The pain point that remains – for banks, businesses, and individuals – is the cross-border payments and settlement of assets. Cross-border payments involve multiple currencies and cross-border settlements involve multiple assets, and there is no single trusted central party to do this," Menon said. "This is why we think distributed ledger technology holds promise in this area."
Project Ubin, established to make cross-border payments and settlements cheaper and faster at no compromise in security or privacy using Blockchain technology, has seen new milestones in 2018.
Project Ubin has successfully harnessed Blockchain technology for the settlement of tokenised assets. This is significant, Menon said, because there is now a digital counterpart for analogue “delivery-vs-payment” or DvP. When payment and exchange of goods are done at the same time, sellers cannot take the money and fail to deliver the goods. When digital currencies and securities assets are both tokenised so that they can be simultaneously exchanged, final settlement and DvP are secured in the digital world, he explained.
"This has potentially powerful implications for not just the financial sector but also the broad spectrum of economy. We have published a report from the experiment. Please take a look, consider the findings, and work with us to advance this cause of real-time settlement. It is still a holy grail in the world of finance that we must collectively solve," he said.
MAS is also working with likeminded central banks to explore faster, cheaper, and more efficient cross-border payments, and will report on progress at next year’s SFF.
Data governance, overseeing the responsible use of data as well as the seamless and secure flow of data.
MAS has released a set of principles to promote fairness, ethics, accountability & transparency, or FEAT, in the use of AI and data analytics. "I’m told this is the first of its kind in the world – where the regulator and industry have come together to set guidance on the responsible use of AI and data analytics. And I am sure this is a living document that will be continually updated as we learn more," Menon said.
Menon also touched on data sovereignty, saying "we need more data connectivity, and less data localisation". In Singapore, UOB Bank is collaborating with Intel to test out a solution where the bank’s staff in Singapore can run a federated analysis of data residing in other countries and obtain an integrated output of that analysis, without seeing any actual data, he said.
"MAS and Bank of Thailand are very keen on this project and are participating as observers of the project. We need common data standards across countries so that data can flow freely in environment of trust and security. In the digital economy of future, data connectivity agreements among countries will become as important as today’s free trade agreements," he said.
Applied research, directed at solving real-world problems.
Last year, MAS launched a S$27 million grant scheme to support research and development in AI and data analytics for the financial sector. "We have received more than 30 applications from financial and research institutions," Menon disclosed.
MAS has since released five calls for applied research proposals, in econometrics and data science, back-testing methodologies, quantum computing for the financial sector, and explainable AI*. Last year, MAS and the industry also began collaborating with MIT Media Lab on developing prototypes that look into applications of AI and distributed ledger technology in the financial sector, including use cases in smart contracts, trade finance, and central bank digital currencies.
The Intellectual Property Office of Singapore separately launched a fintech fast track initiative for patents in 2018. This allows fintech patents to be granted in as little as six months, against the industry average of up to two years.
"Once patented in Singapore, applicants can leverage on our global patent highways to expedite the registration of their patents in more than 30 overseas markets," Menon said.
Platforms for innovation which foster collaboration and co-creation.
The ASEAN Financial Innovation Network (AFIN), spearheaded by MAS, the ASEAN Bankers Association, and the World Bank’s International Finance Corporation, brings banks and fintech firms together to develop solutions for the unbanked. Of the 1.7 billion adults globally who are unbanked, one in three comes from Asia – China, India, Pakistan, and Indonesia, Menon said.
Menon shared that AFIN will launch API Exchange, or APIX on 14 November. "It is the world’s first cross-border, open architecture platform to enhance financial inclusion. APIX is both an online fintech marketplace and fintech sandbox," he said.
"As a marketplace, it will enable FIs to discover and connect with fintech firms through APIs on a globally curated platform. As a sandbox, it provides a platform for FIs and fintech firms to collaborate and experiment on solutions in a contained environment. Please step forward to participate in this exciting enterprise to deepen financial inclusion in ASEAN and the Asia-Pacific region."
Next, MAS and the InfoComm Media Development Authority (IMDA) are working together to create a cross-border innovation platform for SMEs called Business sans Borders. "Business sans Borders will do two things: it will enable SMEs to connect in a global services marketplace, where they can explore synergies in digitalising their business processes and mutualise costs.
"It will allow solution providers to more effectively reach out to SMEs who tend to be highly dispersed and are sometimes hard to reach," Menon said.
Business sans Borders will begin with a proof-of-concept next year, with three features:
A sandbox where startups and established players come together to experiment and build relevant solutions;
A marketplace where SMEs can access a wide range of services, from finance and logistics to human resources; and
An AI engine to match SME suppliers with buyers for products and services, across ASEAN and beyond.
The third edition of the Singapore FinTech Festival brought over 250 speakers, 450 exhibitors, 16 international pavilions and 40,000 participants from 100 countries. A three-day FinTech Conference, from 12-14 November, featured nine key themes across 70 sessions: AI in Finance; ASEAN FinTech Opportunities; Cyber-Security, TechRisk and RegTech; Financial Inclusion; Future of Banking; Future of Money; Global Investor Summit; InsurTech and Market Infrastructure.
Narendra Modi, PM, India, and Christine Lagarde, MD, International Monetary Fund, addressed the audience on the third day of the FinTech Conference.
The expanded Global Investor Summit (13-14 November) is curated for the investment and enterprise communities.
The Artificial Intelligence (AI) in Finance Summit (13-14 November) debuts at the FinTech Conference this year with the theme of AI in Finance Driving Global Progress. The summit highlighted AI and data themes that power the future of financial services and the digital economy. Topics to be discussed included cloud and quantum computing, AI investment, ethical and responsible AI, and predictions for an AI-driven future.
A Global FinTech Hackcelerator Demo Day on 12 November showcased 20 market-ready fintech solutions shortlisted from 304 submissions. The solutions solve real-life industry problems in four categories, Financial Inclusion, Insurtech, RegTech and SupTech (supervisory technology) and General.
The FinTech Awards (12-14 November) recognise innovative fintech solutions that have been implemented by fintech companies, financial institutions and technology companies. With a greater emphasis on ASEAN this year, the awards nominees include winners of the ASEAN PitchFest** as well as ASEAN companies in the SME and Open categories.
An Innovation Lab Crawl (15-16 November) features 30 innovation labs across Singapore which will be open for visits.
Sopnendu Mohanty, Chief FinTech Officer, MAS, said, “The Singapore FinTech Festival is now a global knowledge platform extending beyond fintech to include topics such as LP investing***, venture capital and capital raising strategies. This year, it has expanded to attract a more diverse crowd of international regulators, policy makers, industry leaders and academics from fintech and beyond. Going forward, the Festival will continue to champion financial inclusion through innovation and digital transformation to achieve a more global and all-embracing fintech ecosystem.”
Mrs Ong-Ang Ai Boon, ABS Director, said, “Last year, we made history as the largest FinTech Festival in the world with more than 30,000 participants from over 100 countries. This year, participants can look forward to an exciting Festival featuring world class speakers and specially curated programmes to suit their interest. ABS is encouraged by the steadfast support from both local and overseas communities in the fintech ecosystem, and look forward to yet another milestone in Singapore’s journey to grow the fintech industry.”
Explore:
Read the TechTrade Asia blog post about FEAT
*AI typically makes decisions after being trained, but there is little explanation of how those decisions are arrived at. Explainable AI aims to create a standard way to determine what is actually happening.
**The ASEAN PitchFest, which was powered by PwC, was launched this year to recognise innovative talent in ASEAN countries. At the Singapore FinTech Festival Roadshows that took place between June to September 2018, 37 fintech companies were selected to present their solutions to a judging panel and their respective local fintech community. Nine winners emerged from the ASEAN PitchFest and were included in the final round of the FinTech Awards.
**LP investors are investors in venture capital funds.
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