Said to be the smartest city in the world, Singapore is using technology to enhance its resilience and sustainability – not least in financial services. From investing US$2billion in green funds to collaborating with near-neighbours in developing crossborder payments systems and setting up a National Office of AI to oversee artificial intelligence, it’s determining its future with brave, bold steps. The strategy was evident at the Singapore FinTech Festival, organised by the Monetary Authority of Singapore, where Neha Mehta, Founder of FemTech Partners, Singapore, filed this report
With investment thriving and regulation just about playing catch-up, Singapore is rapidly emerging as a Southeast Asian hub for financial technology.
The wealthy city-state played host, in November, to the world’s largest fintech festival, underscoring its ambitions as a regional springboard for innovation in the financial sector.
Organised by the Monetary Authority of Singapore (MAS) and the Association of Banks in Singapore, the Singapore FinTech Festival (SFF) saw participation grow from around 130 countries with 45,000 visitors in 2018, to 60,000 visitors from top financial institutions, fintech startups, policymakers and investors from across the world, in 2019.
The festival featured more than 400 speakers and 900 exhibitors, with more than 40 international pavilions to showcase the latest trends in the fintech space. The key speakers included Heng Swee Keat, Singapore’s deputy prime minister and minister of finance; Queen Máxima of the Netherlands, the United Nations secretary general’s special advocate for inclusive finance for development; Agustin Carsten, general manager of the Bank of Internal Settlements, and Ong Ye Kung, the education minister of Singapore and MAS board member. The event was also attended by regulators and public agencies, unveiling the initiatives being undertaken to promote and regulate the fintech industry. Visitors also got chance to interact with 20 international financial regulators to learn about the business opportunities and regulations in their countries.
Sustainable finance: From green loans to esg investing
Growing concerns around sustainable development and climate change were reflected in the theme of SFF 2019, its content, the design of the event space and even the provision of food from sustainable sources.
Around 50 speakers discussed the way forward for a more sustainable future in the finance industry. Not least, Singapore announced that it would be investing US$2billion in green funds to further its objectives of achieving a greener financial system. The MAS also announced the development of various initiatives to encourage green and sustainability-linked loans and other schemes to ensure that financial services result in positive returns and environmentally positive outcomes.
Minister Ong said climate change poses two main risks to the financial system. The first is the physical damage that could be caused by climate change itself. Damage to assets and properties could result in large insurance claims and lower the collateral value of bank loans. The second is transition risk arising from policy changes, technological advances or changes in consumer preferences. For example, old fossil fuel assets could become stranded and result in the devaluation of loans and investments in the energy sector. This could be further compounded by other risks, such as deforestation, land contamination, water and air pollution, and could threaten the stability of the entire financial system. Financial institutions need to build up their resilience to climate change threats, he said, by measuring, mitigating and disclosing these risks. MAS is intensifying its supervisory focus in these areas, and is working with counterparts to enhance global practices.
Mitigation involves fostering new financing practices. To this end, the Association of Banks in Singapore (ABS) has issued guidelines, and the three local Singapore banks have ceased financing new coal power plants and stepped up funding for renewable energy projects. Lastly, with regards to the disclosure of risks to better inform investors, the Asian exchanges have implemented sustainability reporting for listed companies to enhance transparency.
MAS introduced a Green Bond Grants scheme two years ago and, to date, more than S$6billion of green bonds have been issued. This scheme has recently been expanded in scope but, globally, more work needs to be done to harmonise standards for better comparability. MAS has been taking the lead in the following areas:
Green loans: There is a need to shift green lending into a mainstream activity for financial institutions. MAS will develop incentives to encourage growth in green and sustainability-linked loans.
Risk transfer solutions: In insurance, there is a need to develop a new risk transfer solution that will help meet disaster protection needs, while creating alternative investment opportunities. To catalyse growth in the insurance-linked securities (ILS) market in Singapore, MAS introduced an ILS Grant Scheme last year to fund upfront issuance costs.
Green funds: MAS will launch a US$2billion Green Investment Programme (GIP) under which it will place funds to public market investment strategies that have a strong green focus, with asset managers who are committed to deepening green finance activities and capabilities in Singapore. As part of the GIP, MAS will allocate US$100million to the Bank for International Settlements’ Green Bond Fund, to support its global green finance initiatives.
Green capabilities: Singapore is collaborating with education institutions to build up capabilities among financial professionals. MAS will develop a scheme to support external reviewers and rating agencies that assess and certify green financing instruments. It will work towards having a local Centre of Excellence to contribute to Asia-focussed climate research.
Startup agency expands into London
Enterprise Singapore, a government agency supporting the development and internationalisation of Singapore startups and small and medium-sized enterprises (SMEs), has announced the expansion of its Global Innovation Alliance (GIA) network to London.
Enterprise Singapore signed a memorandum of understanding with UK-based accelerator IoT Tribe, which will be running two GIA Acceleration Programmes. Enterprise Singapore is also working with three new GIA partners in Beijing, Jakarta and Tokyo.
Enterprise Singapore and the Infocomm Media Development Authority (IMDA) run the Open Innovation Network (OIN), an online directory that aggregates nationwide open innovation challenges across sectors such as sustainable development and advanced manufacturing. The OIN aims to match corporates, government agencies, trade associations and chambers looking for tech and digital solutions, with solution providers including SMEs and innovative startups.
A NEW BLOCKCHAIN-BASED PAYMENTS NETWORK
Among several major announcements at SFF 2019 was that a prototype blockchain-based platform would enable payments to be made in different countries, on the same network, with the aim of improving cost efficiency.
The prototype network, developed by MAS in collaboration with J.P. Morgan and Temasek, is the fifth stage of Project Ubin – an industry collaboration, led by MAS, to explore the use of blockchain and distributed ledger technology for the clearing and settlement of payments and securities.
The payments network will provide interfaces for other blockchain networks to connect and integrate with seamlessly. It will also offer additional features to support use cases, such as delivery-versus-payment (DvP) settlement with private exchanges, conditional payments and escrow for trade, as well as payment commitments for trade finance.
The project report on the prototype network will be published in early 2020. The applications that have so far been successfully tested were showcased at the Singapore FinTech Festival 2019 and the network is expected to be integrated with commercial blockchain applications after the testing period is over.
Beyond technical tests, this fifth phase of Project Ubin sought to determine the commercial viability and value of the blockchain-based payments network.
TransferWise lifts the fintech prize… and gives it away
The Monetary Authority of Singapore (MAS) announced the three winners of the Global FinTech Hackcelerator during the festival. MAS and the Association of Banks in Singapore also announced the 12 winners of the FinTech Awards.
For the Hackcelerator, there were 200 submissions from 30 countries to address 70 problems in the categories of banking and finance, insurance, financial inclusion, and a general category of challenges. There were two tracks – local and global – with 10 finalists selected for each, who then went through a 12-week mentorship programme to further define their products for the ASEAN market.
The winners of the Global FinTech Hackcelerator, supported by KPMG Digital Village, were selected at the Global FinTech Hackcelerator Demo Day. They were: MindBridge Analytics, Pula Advisors and DiligenceVault.
The winners of the FinTech Awards, supported by PwC Singapore, were selected from a total of 245 submissions from more than 30 countries. Twelve winners were selected across four categories – Singapore Founder, ASEAN SME and ASEAN Open and Global, by an international panel of industry experts.
TransferWise came first in the Global category but immediately announced it was giving the S$150,000 prize money to Singaporean individuals and small businesses hit by hidden bank fees at home and abroad.
The money will be paid to those who can show they have suffered from hidden exchange rate markups by a bank in a crossborder transaction over the past year, up to a total of S$500 per applicant.
A startup pitching competition, SLINGSHOT 2019, was also part of SFF 2019, focussing on providing opportunities for startups to connect with global investors.
The Smart Approach: EmBedding AI into communities
This year saw the inaugural SFF x SWITCH event, aimed at fintech and deep tech, which is intended to serve as a cross-industry platform for innovative technologies from sectors such as fintech, advanced manufacturing and engineering, biomedical and health sciences, urban solutions and sustainability and digital services.
Part of SWITCH, the Innovation Lab Crawl provided opportunities to meet visiting research facilities and in-house labs from 53 partners in these sectors. The cross-sector focus highlighted Singapore’s ambition to use artificial intelligence (AI) to transform the economy and improve the quality of life of its citizens. To that end, the Singapore government has committed more than S$500million to deploy AI technology at a national scale. Singapore’s National AI Strategy maps out the various initiatives based on AI technology, machine learning and computer vision that are in the pipeline over the next decade. Five national projects cover transport and logistics, smart cities and estates, healthcare, education, and safety and security. They aim to guide investment in AI research, generate ‘lead demand’ to anchor talent and capabilities, and steer decision makers in building Singapore’s supporting digital infrastructure.
In the area of smart cities and estates, plans to deploy sensors and AI algorithms to predict maintenance needs in public housing estates by 2025 were announced. For estate management, AI can help to anticipate problems so that housing estate maintenance can be better optimised, such as using AI to analyse data to help predict the next lift breakdown in a building. The deputy prime minister of Singapore also revealed that artificially intelligent technology for reporting local municipal issues via a chatbot to identify the correct agency, would be available by 2022.
A new National AI Office has been created under the Smart Nation and Digital Government Office to set priorities and help to build a pipeline of AI talent. Singapore also aims to train 25,000 professionals in basic AI coding and implementation by 2025.
In children’s education, an AI-enabled automated marking system for English will be piloted next year with selected primary and secondary schools, before a full rollout in 2022. Education will also be personalised through an AI-enabled adaptive learning system, which uses machine learning to tell how each student responds to learning materials and activities, and recommends a step-by-step pathway, customised for that person.
A plan to use AI to analyse clinical and genomic data, medical images and health behaviours to better assess the risk profile of patients, allowing for better prevention and care, was announced. For example, by 2022, the nation plans to deploy AI software system Selena+, which scans and analyses retinal photographs for signs of diabetic eye diseases. The deep-learning system is said to take a fraction of the time it currently takes humans, and is often more accurate.
Similar efficiency is already being realised by using automated technology at Changi Airport Terminal 4, where facial recognition scanning is reported to achieve manpower and efficiency savings of up to 20 per cent. By 2025, a totally automated immigration clearance for all travellers could be ready so that no one will need to present their passports on departing Singapore.
The AI project covering transport and logistics will look at ensuring intelligent freight planning with the building of a common and trusted data exchange platform, including the intelligent routing and scheduling of trucks to optimise delivery processes by 2022. AI applications will also facilitate freight planning at ports by 2025, which will then be expanded to include air and land cargo operations by 2030.
OWNING THE FUTURE… TOGETHER: COLLABORATION IN FS
The MAS will be working with industry partners on Veritas, a framework for promoting responsible AI and data analytics adoption by financial institutions, enabling them to evaluate solutions based on fairness, ethics, accountability and transparency.
Meanwhile, MAS and Banque de France (BDF) announced that they would be deepening collaboration on areas such as cybersecurity, with BDF opening its second overseas office in Singapore this year. A Memorandum of Understanding was also signed between MAS, BDF and Autorité de Contrôle Prudentiel et de Résolution to increase cooperation in cybersecurity through information and staff exchange.
In recognition of the growing demand for frictionless digital payments and the economic potential they could unlock, Singapore’s MAS intends to develop a real-time payments network with its ASEAN neighbours that would enable retail micro-payments using mobile numbers on smartphones, a potential boon for small businesses and migrant workers.
India has further deepened its ties and signed various MOUs with Singapore during the festival, launching a pilot demo of the first international application of India’s Bharat Interface for Money (BHIM), United Payments Interface (UPI) for QR-based payments, which aims to be live by next month, covering thousands of terminals in Singapore.
MAS’s e-know-your-customer (eKYC) project will also go ahead, creating a digital platform for supervisory tech solutions that central banks can use to try to solve regulatory problems by sourcing solutions from the fintech community.
NEWS ROUNDUP FROM THE SHOW
Mastercard launched the Fintech Express Program in Asia Pacific, allowing selected fintech companies access to various digital-first products, based on flexible agreements, to promote and support their global scaling.
Saxo Markets, a multi-asset trading and investment platform, and Quantifeed, a digital wealth management solutions provider, have partnered to launch a new wealthtech solution for financial advisors by 2020. The new platform, which will be built on Saxo’s open application programming interface (API), will include three core functions: portfolio and account management, actionable investment-related notices, and an interactive investment journey.
The United Overseas Bank launched an AI-based digital banking service, enabling customers to track their expenses and savings.
Digital insurer Singlife announced the launch of a mobile-first insurance savings plan, the Singlife Account. Every account comes with an optional Visa debit card that gives customers instant access to their account and allows them to make overseas transactions without incurring FX (foreign exchange) charges.
Leading payments issuer/ processor, Global Processing Services (GPS), announced the launch of its Asia Pacific (APAC) hub in Singapore. GPS chose Singapore as its new regional headquarters to best support its existing clients and leading regional banking providers through its Apex platform. At the epicentre of Europe’s fintech revolution, GPS is recognised as ‘the tech behind the fintech’, having launched fintech unicorns including Revolut, Monzo and Starling Bank on the Apex platform and now partnering with fintechs, such as Railsbank, in Singapore. The new hub will support existing client expansion and regional client needs as fintechs look for a platform partner to help them scale internationally.
The Association of Banks in Singapore (ABS) announced that PayNow QR will adopt the Singapore Quick Response Code (SGQR) specifications, enabling businesses to collect payments via PayNow through the national unified payment QR code, SGQR. The adoption of the SGQR specifications enhances the PayNow experience and makes it simpler for consumers and businesses to use the mobile epayment service. As SGQR combines multiple payment QR codes into a single SGQR label, businesses do not need to generate and display a separate PayNow QR code to collect payments via PayNow. Consumers can simply spot the PayNow logo on an SGQR label, scan the QR code with their preferred bank app and pay via PayNow.
Google Pay has tied up with DBS Bank and OCBC Bank to enhance Google Pay services in early 2020.
DBS Bank is working with Singapore’s three public healthcare clusters on the payment infrastructure to transition all public hospitals, speciality centres and polyclinics to SGQR in 2020.
Wirex announced that it is launching the Wirex Visa Travelcard, enabling customers to spend multiple crypto and fiat currencies across APAC. Compatible with more than 150 currencies, the card is enabled at 54 million outlets around the world where Visa is accepted. It also offers free international ATM withdrawals and up to 1.5 per cent back in Bitcoin on all in-store purchases.