Countries around the world have been building connections through globalisation. There are several concerns regarding this: what infrastructures are necessary to help with globalising FinTech, cultural differences, challenges, and issues on security.
Infrastructure as the foundation
With the increasing numbers of businesses operating online, how does FinTech come into play and what infrastructures are necessary for globalised Fintech?
The answer: innovation.
Innovation, coupled with complementary collaboration and regulation will help to reduce obstacle when doing business. “We have better opportunity to provide services at lower costs,” stated Simon Kirby, Economic Secretary to Her Majesty’s Treasury, UK, and City Minister, London. Singapore has a growing and changing market; the focus on industries change as well. Hence, it is essential to form partnerships that are forward-looking and open to change and innovation.
Then there is the question of people working at incumbent banks, and like the institutions they work for, they are affected by the rapid innovation of FinTech. It is said that banks have three to five years to become digitally proficient or risk entering a spiral of decline.
According to Sopnendu Mohanty, Chief FinTech Officer, Monetary Authority of Singapore, everyone has to “learn, learn, learn”. It doesn’t matter whether you’re the highest in rank or the employee that serves the frontline—there is no escape from keeping yourself up-to-date. You have to be ready for the job and the changes, or you will risk being “left out”.
While the constant upgrading and connectivity keep everyone well-connected, the next issue that may arise is that of cultural differences. When we discuss globalisation, let alone bringing FinTech into the mix, the entity remains unequal in different parts of the world. Attitudes towards globalisation and FinTech are mixed.
“It is exciting and happening as we speak… We have to accept that the world is becoming a smaller place and we have to celebrate our differences. We have different qualms, different solutions. What might work well in Singapore might not work well in London. It’s about creating a framework that will embrace change and differences. There is something for everyone… One size doesn’t fit all but you can make moves towards harmonising, create a framework to make the route as easy as possible.”
— Simon Kirby
Challenges—Manpower, Security and Disruption
Nevertheless, FinTech is a growing industry and with that comes various challenges. One of which is manpower. People who have an interest in FinTech should be encouraged to join the industry and increase the talent pool. Cutting-edge technology always requires highly-skilled people and creative environments.
“We should collaborate,…globalise talents. Challenges are a deeper issue. If you look at startups, there’s a 90% rate of failure. The issue is: are the right talents doing the right things? We need to make opportunities for talents,” shared Mohanty.
There should be the creation of programmes aimed to engage and make people aware of what FinTech does. According to him, startups have a long way to go. “The startups in the FinTech industry are there, but regarding software engineering, it is still somewhat shallow, as compared to their counterparts in other industries,” Mohanty lamented.
The engineering behind FinTech is one of the most important, or most important aspects, even. This is because of the personal and sensitive nature of the products and services the industry deals with. Massive amounts of personal, private information—FinTech has a hand in everything from basic savings to wealth management.
Privacy and cybersecurity become crucial. Some people see regulations as safeguards and regulations are now providing appropriate attention to protecting consumers and striking a balance between security and innovation. A lack of security is bad for business. “Always remember and never forget that maintaining people’s privacy is paramount,” stated Simon Kirby.
“The responsibility of security falls on the product/programme. Security should be part of the design. It should be integrated into the design since everything is digital now. Innovation is not going to succeed if you divide everything up into parts.”
— Sopnendu Mohanty
Apart from the concern over hacking and cybersecurity, there has been concern over FinTech being a disruptive element in the industry that has roots that date to a few hundred years ago.
Mohanty shared that he felt the impact would be most evident in the insurance industry. Although he doesn’t feel FinTech is a threat to jobs, it will alter the operations as it will lead to higher efficiency which should result in higher returns. FinTech can help to streamline the back and middle offices.
Simon Kirby shared that these impacts can be lessened as it is “about moving with the times”. Data should be made ready and used for innovation. Banking can be done as easily on mobile phones as in physical banks.
Creation of jobs seems minimal – is this a big challenge?
The speakers advised that you would have to move quickly if you want to provide cutting-edge finances. Regulation institutions would have to change as well. They said that people lead their lives differently now as compared to what they did five years ago. In 10 or 20 years, lifestyles would be different too.
Fintech is going to grow. Including innovation in infrastructure will help with job creation and attracting talent to the industry. Investments may shift about, but there will still be investments.
On a global scale, however, it is important to create a “sandbox”, an environment for start-ups to interact with real customers to actualize their concepts into reality.
The Singapore FinTech Festival 2016 was held at Singapore Expo Hall 1 & 2 from 14 – 18 November 2016. The above article was based on the conference dialogue:
The global FinTech stage is set. Discover how FinTech connections built between major financial centres support a culture of innovation in financial services and help FinTech solve difficult problems at scale.
Manisha Tank, Television Presenter, CNN
Simon Kirby, Economic Secretary to Her Majesty’s Treasury, UK, and City Minister, London
Sopnendu Mohanty, Chief FinTech Officer, Monetary Authority of Singapore