The Fintech World Series: Singapore

Fintech is exploding.

It is a global industry, striving to change the future of finance.

…And the future is now. At Kurtosys, we’ve set out to cover exactly what’s happening in the financial industry the world over, one country at a time. With so many places contributing to the advancement of our digital world, each deserves their own time in the spotlight.

Now, we touch base in Asia, and the forerunner in Asian fintech development: Singapore . The sovereign city-state is small but mighty, with an unbelievably supportive government allowing its innovative businesses and regulatory environment to flourish.

Known as the Lion City, Singapore is not only one of the most financially-savvy hubs in the world, it is also the 5 ^th least corrupt country, and has a government-backed Singapore Kindness Movement which started in 1979 as the ‘National Courtesy Campaign’ – very humbling people. Although a city-state, Singapore consists of 63 islands and held the first ever F1 night-race in 2008; one of the main highlights in the annual F1 calendar. Their national icon is a Merlion (you can guess what this is, rather strange) and home to the youngest person to pass the chemistry “O-Level” at only 7 years old. In similarly awe-inspiring news, a sixth of the population are millionaires. Crikey. I guess that’s why it remains the world’s most expensive city for the fourth year in a row .

The Leading ‘Tiger’

Between the 1960s and the 1990s, rapid industrialisation and economic growth occurred in Hong Kong, South Korea, Taiwan and Singapore, collectively coined the Four Asian Tigers. Singapore’s modern-age innovation can most certainly be attributed to this time, and it surpassed the three other Tigers by having the highest GDP per capita – the World Bank has ranked it as having the 3 ^rd highest in the world. Like many of the countries already covered in this Fintech World Series, Singapore is a tiny place certainly punching well above its weight, particularly when sparring with monumentally important technological powerhouses in Asia such as China and Japan. Here’s exactly why Singapore’s fintech ecosystem is a haven of ever-growing activity.

As is customary here, let’s start with some fintech stats courtesy of Statista . Singapore’s transaction value in 2017 in the fintech markets amounts to US$13,476 million and is expected to show an annual growth rate of 19.9% by 2021, which will be US$27,859 million. The expected users of fintech by that year is 5.2 million; considering the entire population of Singapore is around 5.7 million, that’s a pretty strong majority.

In my research, I’ve encountered a huge amount of praise for Singaporean fintech, although that is indeed back up by the facts about just how Singapore’s ecosystem has built such a solid reputation for itself. Deloitte’s 2017 review of emerging fintech hubs goes so far as to say that the Lion City is a “serious contender for the global number one spot in fintech”, which would rank it just as highly as London, New York, Silicon Valley or Stockholm. Deloitte has given it 3 ^rdplace in its ranking of Global Financial Centres (!), and it ranks 6 ^th on the Global Innovation Index giving it an Index Score of 11 – on a level par with London therefore (big time). Continuing on the statistics front, the International Trade Administration (ITA) gives Singapore an overall fintech sector rank of 20. In terms of the Global Financial Centres Index, the city is ranked 4 ^th. To put their influential position amongst the ASEAN cities in context, Kuala Lumpur ranked 45 ^th, Bangkok 48 ^th and Manila 55 ^th. It seems almost light years ahead.

Fintech en MAS(se)

So, what is it that’s causing Singapore to be such a fintech stronghold? For starters, the ASEAN area in general is phenomenal forward-thinking financially; as is stated in the aforementioned report , the ASEAN Financial Integration Framework (AFIF) is an initiative that aims to create a more integrated financial region by 2020. In order to achieve this, each member country is allowed to nominate a local bank (or more) to be a Qualified ASEAN Bank (QAB) to expand its operation within the whole region. The plan is for ASEAN capital markets to integrate and grow, and entice fintech firms from the United States to use Singapore as a launching pad for innovation throughout the whole of Southeast Asia. Indeed, as of January 2015, it is reported that the ASEAN central banks have adopted principles for “product transparency and disclosure on cross-border trade settlements”, which not only makes the region close-knit in the communication between their financial institutions, but also their customers have easy access to data and it promotes the use of local currencies.

As well as this, the actions of the Government of Singapore and, in particular, the Monetary Authority of Singapore (MAS) – Singapore’s Central Bank – are fundamental to the city-state’s almost chart-topping fintech success story, perhaps best displayed in the fact that Singapore hosted an inaugural Fintech Festival in November 2016, ready to return this year. In 2009 the Government of Singapore introduced the Contactless e-Purse Application – an attempt for a nationwide standard platform for micro-payments. It certainly seems to have worked to increase e-money usage. The ITA gives Singapore a worldwide “payments rank” of 31 and in 2013, 3.8 billion digital transactions were made. Given the fact that Singapore has the highest smartphone penetration in Asia at 80% (and, believe me, China’s is seriously high), this e-payment trend will surely only continue. Indeed, the MD of MAS, Ravi Menon, wants Singapore to be an electronic payments society. This has all surely had a knock-on effect as to how business is conducted there, leading to the World Bank dubbing it the easiest place in the world to do business and the 10 ^th easiest place globally to start a business. In a further act of valour, the government is keen to support Singapore’s drive to become a “smart nation”, allowing for the collaboration of the private and public sectors.

Singapore is home to over 200 banks with total assets of $2 trillion. Luckily, the Central Bank – MAS – is absolutely bonkers about fintech. There’s so much going on in terms of regulation and fintech disruption for Singaporean banks, with MAS at the helm, that it is easier to plot in a list-format, so here we go…

The MAS has actively “taken a risk-based approach to regulation in order to ensure it does not front-run innovation”.
The payment services sector is not automatically regulated. It is not subject to the ‘Banking Act’ but rather more bespoke “customised payment regulations”.
Other fintech sectors that are (currently) fairly unregulated include online marketplace lending and non-equity crowdfunding.
The MAS invested $225 million of public sector funds to build a “Smart Financial Centre”. It aims to boost the collaboration between fintechs, financial institutions, universities, government agencies, legal professionals, universities and think tanks.
The government is adopting a regulatory sandbox. This is, to the fintech world, an extremely big deal and a major influence on London’s success. To find out more about its role in Singaporean financial regulation, read all about it here .
There’s an aim to open banking platforms via APIs which enables faster integration of IT systems within the traditional financial sector.
The MAS is developing, with other banks and fintechs, an all-in-one addressing system which will allow customers to transfer money using only their mobile number or email.
Singapore has an extremely supportive immigration regime. In fact, 70% of fintech companies’ founders are ex-pats.
Global banks have already established incubators there. These include MasterCard, UBS, Wells Fargo CitiBank, HSBC and JP Morgan Chase.
MAS itself has also launched the FinTech and Innovation Group (FTIG) and the FinTech Office .
MAS’ own innovation lab exists and is called the “ Looking Glass @ MAS ”.
As reported by Forbes , in 2016 MAS intended to “merge and simplify money exchange, remittance and payments system law into one legislation to regulate old and new payments services”.
Last year saw a partnership between MAS and the Swiss Financial Market Supervisory Authority (FINMA).
As well as financial institutions, tech giant IBM partnered with INVICTUS to leverage IBM Cloud and Blockchain technologies and IBM Bluemix Garage is to design a distributed ledger platform prototype for transactions between SMEs and banks.

In March 2017, MAS joined with French regulators Autorité de Contrôle Prudentiel et de Résolution (ACPR, which monitors French banks and insurance companies) and the Autorité des Marchés Financiers (AMF – the French stock market regulator). As reported by CryptoCoins News , these collaborations are for the sharing of regulatory information and to discuss its problems and solutions, as well as setting up joint innovation projects to expand these companies in each country’s markets. Singapore has also signed similar pacts with the South Indian Government of Andhra Pradesh, the central bank of South Korea, the financial regulator of Abu Dhabi and Japan’s financial regulator, the FSA. Wow. Singapore has managed to build a worldwide group of close financial and technological associates, catapulting it into the fintech stratosphere.

There’s more where that came from. The ABS (the Association of Banks in Singapore) have strived to assist the fintech sector by providing a string of industry guidelines on this page , the attached PDFs included covering ‘Finance-as-a-Service: API PlayBook’, blockchain and its application, a presentation from a Digital Forum organised by the ABS and hosted by the Thai Bankers’ Association, and a Financial World API Conference Post Event e-Book.

Elsewhere, as is reported by Banking Technology, a culmination of the Smart Nation and Digital Government Office, the Government Technology Agency and the MAS are piloting a new initiative for banks to simplify online banking transaction using the government’s MyInfo website service. MyInfo is a website whereby customers can fill personal details into a government-verified form, and since 2016 it has been allowed for use by SingPass users (online account management for access to Singapore government e-services). The aim is to extend MyInfo for use in other transactions, such as credit cards or home loans, and in other sectors such as insurance.

Finally, here’s a comprehensive list of noteworthy Singaporean investors, accelerators and startups:

Investors

Accelerators

Banking Accelerators

Startups

Cashshield – A SaaS based self-learning fraud prevention solution for online businesses. Big data, analytics and machine learning optimise the fraud management process. It was founded by Junxian Lee, Irene Brime, Wee Chian (Justin) Lie in 2008

Crowdonomic – Connects up-and-coming businesses with a global community of investors, and it is Asia’s largest crowdfunding platform for P2P Lending and Equity Crowdfunding. Founded by Renoa (Leo) Shimada and Nicol Castelnuovo in 2012.

Fastacash – A payments platform where users can securely transfer any type of payment via social networks and messaging platforms, founded in 2012 by Michael Wee and Shankar Narayanan.

M-DAQ – This enables multi-currency trading cross-border, founded by Woo Joo Seng and Richard Koh in 2010, and valued at over $250 million.

MatchMove – MatchMove allows businesses the ability to offer a fully branded mobile wallet and payments system. Known as “the OS for Digital Cash”, it partners with Mastercard to launch mobile, virtual and physical payment cards across the world. Founded by Shailesh Naik in 2009.

MoolahSense – An online crowd-lending platform, powering businesses and investors, founded in 2013 by Lawrence Yong and Chung Wei Tuck.

soCash – A cash circulation platform that allows access to cash digitally beyond ATMS. Its system integrates with a bank’s mobile app and pairs the customer request with the nearest cashpoint. It was founded in 2015.

And the ‘emerging star’ from the KPMG Fintech 100 2016 :

Bluzelle – Blockchain powered apps for banks and insurance companies focusing on real-time payments, smart contracts, records management. It taps into all Blockchain protocols (e.g. Ethereum or Ripple) and was founded in 2014 by Pavel Bains (CEO) and Neeraj Murarka (CTO).

So that’s that: Singapore’s fully government-backed fintech ecosystem with the additional help of its innovative central banks shows exactly why it is (almost) the definitive world leader in fintech development. Other countries wanting to reach a greater world rank should take note from the city-state’s remarkably forward-thinking digital strategies in the world of finance.

If you have any thoughts about fintech in Singapore, let us know in the comments below, or you can tweet us .

Check back soon for more instalments of The Fintech World Series!

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