SINGAPORE: While financial technology (fintech) is upending many different aspects of the financial industry, it does not necessarily pose a challenge for traditional banks and financial services companies, said a senior Monetary Authority of Singapore (MAS) executive on Tuesday (Mar 29).
Instead, fintech – which involves using technology to devise new financial services and products – can be seen as a partner that will enable banks to create better products for customers.
"Fintech firms are not here to challenge you. They are here to partner you,” MAS Chief Fintech Officer Sopnendu Mohanty said at the Financial World: API Conference 2016.
APIS "CRITICAL" TO INNOVATION
For further collaboration to take place, Application Programming Interfaces (APIs), which Mr Mohanty described as an “unstoppable force” will be a "critical gateway".
APIs – defined as sets of requirements that specify how one application interacts with another – will enable financial institutions to integrate their systems internally, and pave the way for seamless interaction with third parties such as start-ups or service providers for the development of better products.
"We recognise API as an unstoppable force," Mr Mohanty, a former Citibank banker, said. “It is a non-negotiable contract between the technology architectures and the banks. They got to build it, there’s no way out or an alternative (way) to do innovation."
He added that countries such as the United Kingdom and Japan have mapped out policies in relation to API, and the MAS is keen to “partner with industry players to make it work” in Singapore. However, Mr Mohanty noted that there’s a gap in terms of how much regulation can drive change, and businesses will ultimately have to take the lead.
Ong Whee Teck, partner of Technology Consulting at PricewaterhouseCoopers, agreed: "The days are here to collaborate, otherwise fintech is here to eat your lunch. Change will require a grassroots-style uprising."
He added: “There’s still dissent among banks internally and the reluctance comes from the fear of investing too much in an unclear strategy. The key is not about assuaging fears, but showing them the art of possibility. Businesses should feel the need to be digital and (understand) how API will take the journey forward.”
Currently, local major lenders have started to build up their fintech capabilities. DBS has organised hackathons, while UOB launched a 100-day accelerator programme for 30 start-ups last month. OCBC also recently set up a fintech unit called The Open Vault at OCBC.
COSTS, SECURITY CONCERNS REMAIN
However, concerns such as costs and security remain among local players that Channel NewsAsia spoke to.
“We definitely think this is one core way of innovating, but it’s not easy because after all, we are a profit-making organisation,” said Janet Young, Managing Director and Head of Group Channels and Digitalisation at UOB. “In terms of security, there are those who see it as horrendously large and cannot be managed. But in all things we do, there will always be risks.”
She added: "As such, you can’t just run the bank and don’t build the bank. We will never be as innovative inside if we don’t collaborate with the external ecosystem, which is changing according to market needs. The insights they have, coupled with the output expertise we have, will create a win-win situation.”
Held at the Ritz-Carlton, the two-day conference focusing on API is organised by the MAS and the Association of Banks in Singapore (ABS), and has invited more than 100 industry players to share their corporate strategy, implementation experience and key insights on information security and data governance.