FinTech Development in Singapore – Building A Smart Financial Centre

We have already witnessed the profound and widespread changes digital advancement has brought to the different market sectors. The Uber taxi service has already changed the way car rental works and has ripped off traditional taxi service system, which at times has proved to be murky and very inconvenient for the consumers. Then, there is Airbnb and Booking.com that has made holiday place rental much more trustworthy and hassle-free.

Similarly, FinTech, which is an abbreviation of financial technology, aims to make financial services more accessible and efficient. Over the last decade, the global investment in the FinTech sector has increased by twelvefold. Being one of the traditional gateways to the Asian financial market makes Singapore an attractive option in the region for this revolutionary financial ecosystem.

By conservative estimate, more than 200 banks have operational offices in Singapore. The leading multinational banks such as UBS and Citigroup have started innovation labs in the city-state. The business-friendly tax system, availability of highly skilled labour and presence of sophisticated infrastructure further enhances the viability of Singapore for any financial services.

Credit should be given to the Singapore government for actively supporting the FinTech initiative and understanding the positive impact of the digital financial innovation. The government has publicly stated its ambition to make the city-state first smart nation and FinTech is key for the realisation of any such ambition.

Another factor that has driven Singapore to strengthen FinTech infrastructure is a genuine threat to its status as an offshore banking centre. That threat comes from the neighbouring Malaysia, which has been at the centre of multi-billion money laundering racket. Indonesia has been particularly enthusiastic to take those undeclared billions under its patronage.

Keeping these factors in mind, Singapore has been working tirelessly to become a smart financial centre. The Monetary Authority of Singapore (MAS), which doubles up as a financial regulator along with being country’s central bank, has established a FinTech Innovation group, focussed on regulating digital financial policies and regulating strategies about it.

As part of five years’ plan, the MAS has set aside $225 million for FinTech infrastructure development in the country. As part of these initiatives, MAS has worked in partnership with National Research Foundation to establish FinTech Office, which is supposed to be a single virtual platform for all digital financial matters.

This office also focuses on improving FinTech related government funding schemes and marketing Singapore as a FinTech hub. Any start-up looking to work in this sector can approach FinTech Office for assistance, guidance and get information about any government grant or scheme.

MAS has also proposed the implementation of the regulatory sandbox that will help reduce friction to new FinTech experiments and policies and at the same time will provide a safe and secure environment for the same.

The regulatory sandbox will also encourage innovation in the field without stakeholders having to worry about bourgeois rules and regulation that inherently opposes changes.

However, it doesn’t mean that it will turn a blind eye to any violations or unethical practices. The goal is to balance security and advancement and make the whole process of innovation and evolution sustainable. The key is to maintain a delicate balance.

There are also plans in place to make it easier and simpler for start-up businesses to use secure crowdfunding platforms to raise funds. For the same purpose, the private accelerators such as Plug and Play Singapore and Startupbootcamp FinTech Singapore have been actively encouraged.

These accelerators not only provide much-needed support to the start-ups in the development phase but also help in the growth of the digital financial market.

All these favourable factors have helped Singapore become home to some of the most successful FinTech organisations. In fact, Singapore can boast of having 10 out of 15 most funded such start-ups in Southeast Asia on its shores. Overall, there are currently around eighty FinTech startups operating in Singapore.

The most crowded FinTech sector is of payments and remittances with around 20 companies working in that sector. One of the most significant ventures in this sector is Fastacash, which is a mobile money transfer platform and has managed to raise around twenty-three million American dollars in funding.

The personal wealth and finance management sector is populated by the companies such as Dragon Wealth, iFast and HomePay. We Invest, Ripple, Call Levels and Flag Forex are some of the leading lights in the retail investment and banking sector.

One of the main players in the banking infrastructure market is Fundwave, which offers a great alternative to the traditional funds such as equity funds and venture funds. Another major player in this sector is Tembusu Systems, which uses its TRUST framework to implement digital currency payments. It helps verified users to manage and transfer assets in real time – securely and conveniently.

To further encourage FinTech development in the country and to attract new stakeholders, the MAS is organising FinTech festival. The event is organised in collaboration with the Association of Banks in Singapore (ABS) and will last for a week, starting from November 14, 2016.