Alvin Yap, our Managing Director shares with The Business Times why Singapore has the potential to be the Fintech hub in Asia. Read more about it here:
With the government’s big push to develop the fintech sector, Singapore has recently been making headlines as one of the leading fintech hubs in Asia and in the world.
The many initiatives launched by the Monetary of Singapore (MAS) this year – the regulatory sandbox, the Looking Glass innovation lab and the inaugural FinTech Festival – clearly signal Singapore’s ambitions to become a leader and global powerhouse in this space. While the race is by no means over yet, it would appear that we are on track to achieving the top spot. In a recent report on global fintech hubs by Deloitte, Singapore was recognised as “a leading international financial centre and a serious contender for the global number one spot in fintech.”
In many ways, Singapore is uniquely positioned for this destiny, one could say. Our international status, conducive business environment, position as the gateway to Asean and the Asia-Pacific region, access to China, rigorous corporate governance standards and well-governed legislation give our little red dot several competitive advantages over larger markets.
The World Bank ranked Singapore second, only after New Zealand, for ease of doing business in their recent report. Singapore is also Asia’s leading financial centre, according to the latest Global Financial Centres Index rankings released earlier this year. One of the factors that led to London’s eminent position in fintech was its standing as an international financial hub – Singapore is similarly well endowed with a developed financial infrastructure.
Recognising this advantage, the government is keen to ensure our nation stays ahead of the curve in the fintech industry. Just this year, MAS introduced a regulatory sandbox that enables both financial and non-financial institutions to experiment with fintech solutions without running afoul of regulations; an innovation lab for the fintech community to connect and collaborate; and a fintech office for businesses to seek advice on various fintech and technology-related government grants and schemes. In addition to promoting fintech in Singapore, these will enable the regulator to help nurture a wider fintech ecosystem, and attract businesses and entrepreneurs to set up shop in Singapore, bringing with them ideas and innovations.
Another key appeal Singapore has is its corporate governance practices. According to independent brokerage and investment house CLSA’s annual Corporate Governance Watch 2016 report, Singapore tops the chart in Asia for corporate governance. Markets are evaluated based on a variety of factors and Singapore surpasses its competitors in corporate governance rules and practices, enforcement, political and regulatory environment, accounting and auditing, and corporate governance culture.
Singapore is also leveraging on partnerships with other fintech powerhouses to strengthen its position. In May, MAS launched a FinTech Bridge with the UK’s Financial Conduct Authority to enable UK fintech firms and investors to access the Asian market and expand into Singapore, and at the same time to attract Singaporean fintech companies and investors to the UK. Both parties view this as a win-win agreement that would facilitate the referrals of fintech firms across the globe.
Closer to home, an agreement was signed between Singapore and the Korean Financial Services Commission last month, providing a framework for cooperation in fintech for innovative projects. If Singapore is able to continue to look outward and collaborate with its competitors, it will be able to build the fintech industry on a foundation of shared information, resources and innovation. But most importantly, these relationships will help Singapore extend its reach in this sector on a much wider playing field.
Another key front runner in the fintech race is China. It is almost a no-brainer to say that in order to succeed in our global ambitions, Singapore must work with China. Both nations have always enjoyed strong economic ties. A year ago, China and Singapore celebrated 25 years of diplomatic relations and established an “all-round cooperative partnership progressing with the time”, which promises bilateral trade and investment. As the two countries continue to explore new areas and opportunities to strengthen the collaboration, Singapore can – and should – tap this vast market of 1.38 billion people to boost its competitiveness in fintech.
These are exciting times. Of course, this path is not without its hurdles and challenges, but like a well-trained, well-prepared athlete running in a race, Singapore is off to a good start. What remains to be seen is the finish, but it wouldn’t be too far-fetched to say that Singapore has the prerequisites to lead the pack.