A stable financial system, numerous government initiatives and a vibrant tech ecosystem are among its key attractions
Singapore has long stood as a symbol for economic stability, innovation and wealth not only in the region of Southeast Asia, but also on the international stage.
In 2015, US-based research institute Business Environment Risk Intelligence (BERI) ranked Singapore as the number 1 city with the best investment potential for the 16th consecutive year.
Its reputation for having the best intellectual property protection in Asia, and for being the most transparent country in the world, according to the Global Competitiveness report 2015 – 2016 by the World Economic Forum, has ensured a healthy and a constant stream of businesses – big and small – setting up shops here.
Singapore’s record for tech innovation is equally stellar – it is ranked among the top 3 countries in terms of infocomm deployment, IT industry competitiveness and e-Government readiness.
Needless to say, the confluence of these factors have enticed burgeoning fintech companies – which bagged over US$19 billion in investments globally last year, more than doubling that of 2014 – to cast their sights on the republic.
But what specific programmes and who are the success stories that will entice them to make SIngapore their first port of call in the region, and how would Singapore propel fintech to the next stage of innovation?
Government initiatives and plans
The key driver of fintech is first and foremost – innovation. And innovation is no stickler for archaic rules; groundbreaking solutions are usually incubated in the minds of forward-thinking entrepreneurs.
The Singapore government has been proactively playing a hand in driving up interest in this very area. As part of its Smart Nation ambitions, Singapore aims to grow and boost the efforts of entrepreneurs eyeing to disrupt traditional industries through government-backed entities such as SPRING Singapore, Singapore Economic Development Board (EDB), and Infocomm Development Authority of Singapore (IDA).
For example, IDA has the Infocomm Investments Pte Ltd (IIPL) accelerator programme which provides early stage tech startups with mentorship and networking opportunities to investors and other entrepreneurs.
Last year, the Monetary Authority of Singapore (MAS) announced its plans to invest S$225 million (US$164.2 million) to drive up innovation in the local fintech industry and this year, the MAS went into the specifics of its plans to meet the future of fintech head-on through several initiatives.
In brief, it wants to become one of the first regulatory agencies to create a sandbox environment to test new technologies including Digital and Mobile Payments, Authentication and Biometrics, Blockchains and Distributed Ledgers, Cloud Computing, Big Data, Learning Machines, Cyber Security, Advanced Sensors, and Flexible Platform (API).
Government assistance extends beyond commercialisation and into the educational institutions too.
In 2013, the Singapore Management University (SMU), in conjunction with MAS and IDA, launched an academy called the Financial IT Academy @SMU (FITA) which is designed to help train and increase the pool of financial IT professionals.
Aside from a plethora of entrepreneur-enabling grants and programmes, regulations, laws and frameworks to prevent fradulent use of these new technologies is equally crucial.
Authorities have introduced strong regulatory frameworks to govern the use of the increasingly popular virtual currencies such as Bitcoin. The government also unveiled its National Cyber Security Masterplan 2018 to defend its infocomm sector against increasingly sophisticated cyber attacks.
These moves signal a clear sign that the SIngapore government is not only welcoming of fintech’s disruption, but also wants to be at the forefront of fintech and bring them into mainstream usage.
The upsurge in entrepreneurship has seen the establishment of many Singapore fintech startups in spanning across different verticals including crowdfunding, blockchain, and p2p.
One such example would be Fundnel, which launched its collaborative investment platform this year. Using this service, startups can eschew the traditional VC or bank loans route by relying on a equity, convertible bonds, debt and revenue sharing model. Through this platform, companies regionally have made 12 deals worth over US$8 million.
CoinPip uses fintech to solve pain points in the remittance market for large scale enterprises.
It helps these businesses keep costs low by leveraging on blockchain technology – a method by which bitcoins are transacted using a secure database. CoinPip claims that it can complete inter-bank transactions within 48 hours and at a third of the cost. To date, it has made over US$1 million in transactions.
Another Singapore-based fintech startup, Jewel Paymentech is tackling the area of security instead. It is sells a intelligence risk solution that alerts banks to potential sources of illegal online commerce, giving the banks a heads-up so they can act accordingly.
Foreign tech companies are also quick to tap on Singapore’s appetite for fintech. London and New York-based fintech startup accelerator Startupbootcamp established its first Asia branch in Singapore, giving local startups access to over 500 angel investors and VCs from across the globe. Earlier this year, it launched a demo day featuring 10 startups tackling insurance tech, data analytics and other financial solutions
Apart from that, there are numerous fintech-focussed workshops, hackathons and other programmes including FinTech Social, and Next Bank Meetup. as well as major conferences featuring fintech such as Echelon.
Naturally, Singapore’s growing affinity with fintech and e-commerce has brought to its shores leading e-payment services. These include Samsung Pay and Apple Pay which can be used to pay for groceries, meals, tickets, and many more services.
In short, the government and the people are pumping a lot of money and trust into fintech services for not only large scale enterprise transactions, but for everyday expenses.
Major financial institutions jumping into the fintech space
What about banks? Age-old institutions that are stalwarts of tried and tested products. Are they getting cut out from the fintech narrative?
Well not quite, on the contrary, banks and other leading financial institutions in Singapore are championing change and innovation.
Standard Chartered recently launched eXellerator, a fintech innovation lab located in Singapore with the aim of exploring “the use of emerging technologies and data science for sustainable business solutions”.
Global payments company Visa also recently launched its new innovation centre in Singapore. The centre will provide Visa partners access to Visa APIs and software developer kits (SDKs) to experiment and build large scale commercial fintech products.
These institutions push to develop and open up their APIs by these institutions would allow not banks to not only internally link traditional and future products across different platforms, but also for future third-party fintech services to seamlessly integrate their products into the system.
Banks are also taking a leaf out of the tech startup programmes. DBS, UOB have started organising hackathons and launching accelerator programmes, while OCBC set up a fintech unit called The Open Vault.
Other collaboration with startups including DBS’s deal with two p2p lending platforms Funding Societies and Moolah Sense. This enables SMEs who are are unable to acquire loans from DBS for reasons such as lack of audited accounts or personal income statements,
Fintech represents the democratisation of financial services – be it loans, money transfers, etecetera. Costs are much lower and the products are more transparent and easier to access. We have gone from carrying large wads of cash and coins, to using plastic cards, and now innovation has placed them into our phones.
Singapore, as an economic and tech powerhouse, is well poised to take the lead in this fintech revolution.
Disclosure: This article was produced by the e27 content marketing team and presented by Smart Nation Innovations 2016 where Tech Meets Innovation.
Learn how technology will redefine the world of financial business at InnovFest unBound 2016. More details on www.sni2016.com
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