Highlights from the Singapore Fintech Festival – Singapore’s role in the global financial technology community

• The first day of the Singapore Fintech Festival saw Monetary Authority of Singapore Managing Director Ravi Menon shed light on Singapore’s role in the global fintech community and the coming regulatory changes
• It also saw top executives from financial technologies in China give their insights on their firms’ strategies, particularly in global expansion
• A panel on fintechs in India looked at how the impact of fintechs has grown following demonetisation and what lies ahead

In his opening address at the Singapore Fintech Festival, Ravi Menon, managing director of the Monetary Authority of Singapore (MAS),highlighted the role Singapore plays in the global financial technology (fintech) community and regulatory changes underway that will impact fintechs as well as existing players.

MAS initiatives to support the ecosystem have included encouraging financial institutions to share application programming interfaces openly and working with the Bank of Thailand to establish cross-border usage of the PayNow and Prompt Pay real-time payment systems. It has also signed agreements including ones with 16 central banks in other countries, and an R&D collaboration in fintech with MIT.

Singapore must embrace fintech, maximise benefits, and minimise risks, Menon said. Furthermore, he expects that a shared know-your-customer utility will be launched by the end of 2018, shortening application timelines by 80%, and that a joint effort between MAS and the Hong Kong Monetary Authority to use blockchain for a global trade connectivity network will go live in early 2019. MAS is also partnering with the Bank of Canada to use distributed ledger technology to send payments seamlessly, with greater speed and efficiency at lower cost and risk.

“We want to make a pervasive culture of innovation,” Menon concluded. “Fintechs must solve real-world problems. Together we can recreate finance with creativity and innovation.”

Fintechs from China expand globally

Fintechs in China continue to grow rapidly and are now expanding faster overseas. A panel discussion by Tang Ning, chief executive officer, CreditEase; Douglas Feagin, president, international business, Ant Financial; and Soul Htite, founder, Dianrong.com, provided valuable insights into their firms’ strategies.

In building his business, Tang Ning said, “we never had this technology first point of view. We had this consumer need first point of view - unmet consumer and small business needs. Then we asked, is there new technology we can use, business model to fulfil that need. We asked what kind of technologies are there, and how can we use them to build new business models. This has been our innovation thought process.”
Feagin similarly said that Ant Financial starts with the customer. “We start with the customer, and how we can use technology to come up with a more innovative solution, and serve the computer in a better way.”
Echoing their sentiments, Htite said that “technology is not a toolbox. If you just take what you need, you will never get what you expect. Blockchain has the potential of changing the way we do everything in finance. It did not start because somebody said ‘how am I going to do this?’. It started from bitcoin. We said it can solve risk management.”

Drawing on more than two years of experience as a banker at Goldman Sachs, Feagin said that there is space in China for both banks and fintechs. “A lot of things banks do, fintechs will never be able to do. In lending, banks are scaled to be able to do larger scale lending. Big corporate lending, banks do. They do have a scale to reach customers, in distribution. Fintech companies are serving customers in a different way, or a different customer segment.”

“Banks are very good at getting low cost of capital,” Htite added. “Where they are weak is in operations. Technology companies are very good at operations. If you combine these two, we will be able to extend cheap loans to small and medium enterprises, consumers and even corporates.” As an example, he said Dianrong works with small-sized banks and helps them improve service for their customers.

As it looks to expand overseas, Ning said that “we rely on the entrepreneur partners. Our fintech fund invests to do well in each market. In the US, we’ve done close to 20 investments, in all fintech subsectors. We are going through the learning curve for Southeast Asia and we will work closely with entrepreneurs.”

For Anti Financial, Feagin said, “our focus has been to go to the core of the customers we serve best in China, low to middle-income consumers. That’s why we announced partners in Thailand, Indonesia, Malaysia, and the Philippines. We take a minority stake and leave the right solution for the people in the market, to build the right product.”

Fintechs in India increase financial inclusion

In a panel discussion on fintechs in India, leading players in the market looked at how the impact of fintechs has grown following demonetisation and what lies ahead.

While payments companies have been among the most prominent fintechs in India, Rohit Bhagat, board director at Axis Bank, believes there are three key opportunities ahead for fintechs. “Unsecured lending will see a huge boom, a second is lending to the MSME space, and there is a huge opportunity for targeted financial products such as small ticket insurance.”

Shiv Bhasin, chief technology officer at State Bank of India (SBI),stated that although fintechs posed challenges when the bank started transformation three and a half years back, “they helped us transform faster.”A key emerging opportunity for SBIis issuing personal loans from debit cards.“We tied up with Flipkart and Amazon. We are working with fintechs for SME lending. Fintechs are providing alternative predictive scoring. We have been able to give loans, where merchants are getting loans at a cheaper rate,” Bhasin added.