SINGAPORE: The Monetary Authority of Singapore (MAS) is seeking public feedback on the creation of a “sandbox express” that will fast-track approvals for firms embarking on financial technology (fintech) experiments, giving them quicker access to its so-called sandboxes.
This, alongside the move to set aside S$35 million to help smaller financial players tap on regulatory technology (RegTech), was announced by Education Minister Ong Ye Kung at the Singapore Fintech Festival on Wednesday (Nov 14).
The MAS has been among the early adopters of “regulatory sandboxes”, where firms with novel fintech ideas can test them in a loosely regulated, contained environment with real customers before releasing them publicly.
Describing this as a learning experience for both the financial regulator and companies involved, Mr Ong said that the MAS will expand on this approach by creating a “sandbox express”.
Each sandbox will have pre-defined boundaries, and applicants can look forward to having their applications approved within 21 days.
The new scheme, which will complement the existing fintech regulatory sandbox, is designated for activities where the risks are low or already well-understood by the market and regulator, said Mr Ong, who is also a MAS board member.
As a start, this will include sandboxes specifically pre-defined for insurance broking, recognised market operators and remittance businesses, said MAS in a separate press release.
It added that it will consider two criteria when assessing applications: technological innovativeness; and the fitness and propriety of the applicant’s key stakeholders. Once approved, the entity will have to submit periodic progress reports to MAS, and ensure that the pre-defined sandbox expectations are adhered to.
Mr Ong said: “We can relax the system (to) allow tests and experiments to happen more quickly.”
Going on to explain why Singapore does not adopt a laissez-faire approach, Mr Ong said there can be various concerns in an urban environment and regulations can help to “harmonise” them.
Expanding on that, he cited e-payment as an example.
In a fully laissez-faire regime, e-payments can grow so rapidly that it takes over the entire financial system and bypasses traditional financial services. Despite its convenience, it can give rise to potential concerns, said Mr Ong.
For one, there is the issue of interoperability as different e-wallets or mobile wallets tend to be closed-loop systems, which do not “talk” to each other.
Over time, this actually stifles competition.
Hence, Singapore “decided very consciously to take a little bit more time” when it comes to e-payments, said Mr Ong.
Singapore's system is “unique”, with the difference lying in its back-end infrastructure called the Fast and Secure Transfers (FAST) transaction system, he said.
Introduced in 2014, FAST is the underlying network powering PayNow – the service that has paved the way for instant fund transfers through mobile phone numbers or NRIC numbers.
“One e-payment system with one (back-end system) and one QR code, but with many players in between,” said Mr Ong.
“We took some time to get this architecture right because payment is fundamental. We all use payments and we use it in every sector of the economy. We have to get it right.”
He added: “By ensuring that we have an open architecture and interoperability, we encourage competition and over time, promote innovation. Therefore, laissez-faire does not equal innovation in our context.”
MAS has been encouraging financial institutions to leverage RegTech as a way to overcome regulatory pain points, such as submitting data requested by the Singapore central bank.
In relation to a previous announcement on making all data machine readable and eliminating duplication of data requests, Mr Ong said the MAS will set aside S$35 million to help smaller banks and insurers to tap on technology.
For this, more details will be announced in coming months.