SINGAPORE: The Monetary Authority of Singapore (MAS) rolled out a number of initiatives on Tuesday (Nov 14) as part of efforts to establish itself as a regional leader of fintech.
Speaking on the first day of conferences at this year's Singapore Fintech Festival, Managing Director of MAS Ravi Menon said that the central bank will sign 16 cooperation agreements with other governments, with the aim of facilitating information on fintech trends and issues.
In one of the tie-ups, MAS and the Bank of Thailand will link Singapore's PayNow with Thailand's PromptPay. With the deal, Singaporeans would be able to send money securely to someone in Thailand and vice versa with just their mobile numbers.
INNOVATION IN FINANCIAL INSTITUTIONS
Besides consumer services, several initiatives were aimed at helping financial institutions become more efficient.
For example, the regulator says it is looking to make its compliance requirements less painful for banks, especially in the area of data collection. Mr Menon said regulators sometimes request for the same data more than once under different data collection exercises.
"We'll aim to achieve zero duplication in our data requests to financial institutions. If we ask for the same data twice to any banks, you will be allowed to gently turn us down," he added. "All data requests from MAS will eventually be in machine-readable templates."
Mr Menon unveiled plans to make Know-Your-Customer (KYC) processes less costly and laborious for financial institutions. These are processes to verify the identity of clients, such as when opening an account, which can take weeks. This would, in turn, better help the industry crack down on money laundering incidents.
MAS is working with both local and foreign banks to explore a KYC shared-services utility that aims to streamline the process.
UOB's head of digitalisation Janet Young said: "Compliance costs is always one of the most hefty in the world of banking."
Trade finance is another area that could be made more efficient through digitalisation, Mr Menon highlighted, stressing that blockchain technology has the potential to make trade finance safer and more efficient. Using blockchain technology, MAS and the Hong Kong Monetary Authority will develop a cross-border platform for trade finance.
Mr Menon also shared that the central bank will be working with the Bank of Canada on cross-border payments using blockchain technology.
As for Singapore's goal to be a regional fintech hub, MAS will be working with the International Finance Corporation to establish the ASEAN Financial Innovation Network, which will allow banks to search for innovative fintech solutions.
Fintech firms will also have opportunities to grow their business across borders.
MAS Chief Fintech Office Sopnendu Mohanty said that Singapore may not be a large market, but it can be the centre for startups.
“We want to be the centre of experiments, where a startup can start the journey they want to aspire to. They start the journey here, build the product here, they raise capital here, and they expand.
"So Singapore becomes the centre for growth, Singapore is the gateway to Asia in many ways. And the regulation here is gold standard in many ways. So if they do the product well here with MAS regulations governing them, they get very strong credibility when they go to other markets,” he added.
CYBER-RISKS TO INCREASE
As more financial services go digital, Mr Menon highlighted that cyber-risks will increase.
To manage these risks, Mr Menon announced the launch of the Asia-Pacific Regional Information & Analysis Centre in Singapore.
The new centre is "a global intelligence gathering and sharing initiative for the financial sector with over 700 members worldwide", he added.
"The new centre in Singapore will facilitate the sharing of cyber threat information in a timely manner, and enable a rapid and coordinated response to emerging threats," Mr Menon said.
For the first time, the central bank will also work with the Association of Banks in Singapore to develop guidelines for cyber-risk management.
GROWING FINTECH TALENT
Mr Menon also announced several initiatives to build a pipeline of talent in the fintech sector.
The central bank and the Massachusetts Institute of Technology (MIT) will be collaborating on fintech research and development so that Singaporeans will be able to work alongside world-class researchers.
It is also launching a S$27 million grant to support the adoption and integration of artificial intelligence and data analytics in financial institutions.
NEW PAYMENT SERVICES BILL FOR PUBLIC CONSULTATION
Mr Menon also said that MAS is going to publish a new Payment Services Bill next week for public consultation. The purpose of the Bill is to update appropriate regulations to fit new developments in the electronics payments space.
"Our aim is to right-size the regulations, to fit the various new developments that are taking place in electronic payments," he said.
He added that fintech companies will be regulated based on their commercial activities because "different activities pose different risks", and that fintech developments are forcing regulators to review the way regulation is done.
"If fintech is unbundling the financial services value chain, then regulators may have to 'unbundle' their regulations too," he said.
Co-founder of cryptocurrency startup TenX, Dr Julian Hosp, said more clarity on regulations is definitely needed.
"What's allowed, what's not allowed, I think that new type of fintech is really, really important. Many other areas have been covered. I think the same kind of measure should be taken in areas like cryptocurrency as well," he added.
Besides the new Bill, Mr Menon said that MAS has also concluded phase two of Project Ubin, a project that would facilitate payments using distributed ledger technology.
Phase two successfully produced three software prototypes and MAS will be releasing the source codes of these prototypes for free to the public. Project Ubin will also be extended beyond Singapore.