Each month, the British Chamber asks for member company comments on a specific topic, for publication in the Orient magazine. Comments below may be re-published only with the Chamber's consent and quotation. Contact firstname.lastname@example.org with any questions.
FinTech, which refers to the use of innovative technology to provide, enable and enhance financial services, has been identified as a key growth sector for the UK, Singapore, and the wider ASEAN region. Singapore is well positioned to be a regional leader in the sector with a drive from Government bodies such as the Monetary Authority of Singapore, EDB and Enterprise Singapore for the country to become a Smart Financial Centre, and the establishment of the FinTech Bridge in 2016 with Britain.
With many of our members involved in this space and participating in this month’s Singapore FinTech Festival, we asked our member network to share how they view the opportunities and risks, the potential impact of the market in China, and the development of new blockchain, shared ledger, and payment technologies.
Magda Chelly, Managing Director, Responsible Cyber
Blockchain and other technologies are not only transforming our daily lives but also our business models and disrupting traditional ways of doing business. That said, our economy is growing with the tendency to provide borderless services and products. This requires adapted payment processes built on digital trust. Singapore presents a great location to enable this transformation - being a financial hub, it’s acknowledging the importance of adoption and adaptation to new emerging technologies that will shape our lives. It represents a great platform to access to others markets and leverage of the existence solutions, for example in China. A presence in Singapore enables visionary companies to stay in the running.
Bryan Tan, Partner, Pinsent Masons MPillay
Singapore enjoys a natural advantage as a leading financial hub and with a well-respected legal system. It also sits in the middle of a vast and fast growing population of 700 million Southeast Asians with a growing middle class. But financial inclusion is a familiar theme throughout the region as the banking systems have not reached the maturity of the west. This sets the ground for tremendous innovation in financial services - home-grown FinTech companies as well as talent from continental and eastern Europe, the Middle East and north Asia are all jostling for a piece of this expanding pie. The conditions were perhaps last seen at the introduction of the Internet.
Therefore, Singapore has been the regional focal point for many blockchain and distributed ledger technology projects. Looking to keep in touch with international developments, with a light touch regulatory framework, the Singapore regulator MAS is playing a key role in catalysing this area and facilitating thought leadership with other regulators. Its Singapore FinTech festival is now the biggest of its kind in the world. Similarly, the Association of Banks in Singapore leads local industry in playing a critical role in facilitating access to datasets and protocols. Fast developing and dynamic, expect to see more and more opportunities being made available.
Stephen McNulty, President, Asia, Micro Focus
Global FinTech investment roared ahead at a record pace (US$57.9B) in the first half of 2018, a significant increase from the US$38.1B invested in all of 2017, according to the KPMG Pulse of FinTech report. FinTech remains a hyper-competitive, highly-regulated landscape with zero room for error. Sensibly, most start-ups delegate managing the complex IT back-end to an experienced partner in the banking sector.
In Singapore, with the highest number of FinTech companies in the ASEAN region, the pressure is on for banks to lead in their capabilities and speed to deliver services FinTech start-ups need. Smart banking technology requires modern functionality, such as APIs for mobile and web applications, as standard. Banks need their unique products to support mainframe application, process and infrastructure modernization along with the ability to switch to an agile development process in order to respond quickly in a dynamic and competitive market.
Rob Bryson, Managing Director, Robert Walters (Singapore)
In terms of recruitment, the rise of FinTech has introduced exciting opportunities within the tech sector in Singapore, as financial, insurance and banking institutions accelerate their digital transformations and invest in innovation centres to stay competitive. Overall, this presents myriad career opportunities for IT professionals with expertise in data analytics, front-end and back-end development, UI/UX design, platform-driven services and more.
Cloud specialists familiar with local regulations set by the Monetary Authority of Singapore (MAS) are also in high demand given the shortage of such talent. Outside of IT, the development and adoption of blockchain and related technologies has also increased demand for roles traditionally within financial services such as compliance, regulatory and finance policy, and accounting and tax. Given the shortage of talent with FinTech expertise, it will be key for employers to showcase their latest technologies, projects and opportunities to upskill – in addition to competitive salary packages and benefits – to attract the best people.
Emerging FinTech technologies have had a dramatic impact on the insurance industry. At Aetna International, technology helps us get our members the right care, at the right time. It allows us to deliver health services with greater efficiency and personalisation – reaching our members when they need support the most. Tools like ‘vHealth by Aetna’, our virtual health service that gives our members access to primary care doctors via video consultations, is one such example. For the convenience and improvements they yield, these digital enhancements also raise concerns over data privacy. As insurers, it sits squarely with us to safeguard our members’ most personal details while making this data accessible to authorised personnel who can positively impact our members’ lives. That our members are willing to give us insight into their lives is a privilege – it’s our duty to invest in advanced cybersecurity systems and a strong data governance framework.
Derek Goh, Insight Director, Kadence International (Singapore)
Our extensive research work with banks & financial institutions, as well as many SMEs in Singapore, has revealed that FinTech is indeed no longer the ‘renegade’, and in many cases, forcing banks to rethink their relationship with SMEs specifically, and how else they can truly support their growth, over and above simply fulfilling transactional needs. While many SMEs have initially adopted FinTech into their businesses for cost savings or operational ease, it will not be long before they incorporate more such innovations into their businesses for strategic aims. As such, FinTechs will do well to start re-thinking their proposition, going beyond solving tactical pain points for SMEs, and begin examining how they can play a greater, more value-added role, in the SMEs ecosystem.
Kirstin Gillon, Technical Manager IT Faculty, ICAEW
FinTech provides two key opportunities – making financial services more efficient and convenient through innovation and competition; and extending financial services into markets that are not well served by current approaches. As our new report with ISCA on FinTech highlights, Singapore and the UK have many of the same strengths that encourage this innovation – mature financial services markets, magnets for foreign talent, lots of available capital, progressive regulators and supportive governments. To be successful, though, FinTech businesses need to solve real problems for their customers, not just distract them with new tech. They need to build profitable business models that justify the investment. They also need to work with regulators to build appropriate ethics and governance around technologies such as AI and blockchain so that consumers are protected from new types of harm. Otherwise, FinTech will struggle to build trust and ultimately deliver the promised benefits.
Ismail Ertürk, Senior Lecturer in Banking / Director for Social Responsibility and Engagement, Alliance Manchester Business School, The University of Manchester
FinTech’s proponents, mostly entrepreneurs and investors, believe that it is going to disrupt the traditional bank intermediation, creating economic efficiency through elimination of intermediary costs and bringing about social good by making finance more democratic and inclusive. Globally we are likely to see traditional banks becoming more efficient in back office and delivery channels through acquired FinTech innovations under regulatory oversight and encouragement -like PSD2 in the EU. We are also likely to see a more diverse, competitive and inclusive ecology in financial services where niche FinTech companies fill the gaps or create markets that are beyond in imagination and cost for banking conglomerates. Yes, FinTech will revolutionise financial services for good but banks will not disappear yet for quite a while because they have the size and resources (in 2016 global bank revenues was USD 4.6 trillion) to buy the disruptive small FinTech companies and will change at their own pace.
Jim James, Founder & Chairman, EASTWEST PR
The simple phrase in China is “blockchain not Bitcoin.” There is an acceptance of the value of blockchain to create secure ledgers and facilitate trade, but also an aversion to any technological challenge to the ability of the Central Government to control the currency. The People’s Bank of China (PBoC) is supporting the development of a blockchain-based trade finance platform that will streamline interbank payments and help SMBs get access to a wider range of financing tools, however in practice shifting money across accounts in China will continue be extremely sticky. The Supreme People’s Court has declared that BlockChain is an approved method for storing and authenticating digital evidence, but at the same time, in the past 12 months 90 different cryptocurrency exchanges and about 85 ICOs have closed in China. China is desperate to be at the leading edge of new technologies, including artificial intelligence, batteries, and blockchain which it sees as a source of IP and future competitive advantage. However, the over-riding priorities are political and economic stability. Fundamental therefore is control of the value and movement of the RMB. As with the Internet, where there is a talk of a bifurcation between USA and China led online spaces, perhaps bitcoin will in time have its own Yuan equivalent.
Ian Kloss, Head of Region (SE Asia) & CEO Singapore, Old Mutual International
The possibilities brought about by FinTech have a long way to run in most markets. So far we see the leading place ‘robo advice’ has been a success is in the US, which has seen hybrids of robo and face-to-face financial advice emerge as investors require the 24/7 access that technology offers and the intimacy and personalisation of advice in person.
Investors are highly mobile in these days and we believe FinTech can streamline the decision making process, getting the investors closer to their investments at their convenience. That is why we continue to invest in our online platform, Wealth Interactive. Ultimately we see FinTech as a great tool, enabling better customer outcomes, when used in conjunction with face-to-face advisory services. The increasing regulations and complexity of global taxation make financial planning strategies even more important and we believe that financial advisor relationships and quality financial planning are at the core of what investors value.
As emerging technologies such as blockchain, AI and AR come to the fore, we can expect to see an increasingly user-centric form of FinTech, with little or no need for a middleman. For those investing in such technologies, reputation is critical, and so all efforts must be tempered with equally measured levels of caution. Most notably the importance of effective cyber-security and anti-fraud processes to maximise customer and organisational security. The recent Danske Bank money laundering scandal, and its impact on share price, offers a stern warning for all of us. To deliver quality FinTech products that stand up to consumer and regulatory scrutiny, businesses need to work with experts who understand the technology and can test and analyse their products throughout the development phase.
Geoffroy Descamps, Managing Director, Digital Strategy, Accenture Strategy
The ASEAN payments market, notably Singapore, is a fierce battleground with a shift to digital payments. Regulatory changes coupled with technological innovations and new players e.g. GoPay and AliPay challenge incumbent banks. Thailand’s PromptPay national e-payment plan has seen rapid adoption, with ~40 Million users as of December 2017 whilst reducing income by up to 10 billion baht in 2018. Despite loss of revenue, banks must stay relevant in the payment game and shift mindsets from payments being a business to an enabler. Not only do payments allow banks to stay relevant for customers, it also allows them to increase deposits and cross-sell from a simple commodity to more profitable products such as loans. New entrants like Grab or GoJek already leverage all available payment data (transactional, behavioural) to provide new services (micro-loans, insurance) to under-served customers e.g. customers with no proof of income. Banks should rethink end-to-end customer experience and re-evaluate their customer value propositions, or risk losing the payments battle.
Jennifer Doherty, Head of Innovation, Asia, HSBC
For ASEAN to retain its competitive edge and achieve smart, sustainable urban development, the region must invest in its cross-border digital infrastructure. Payment interoperability is the next step in the digitisation of ASEAN’s economy and is one example where Singapore is driving greater connectivity. Significantly changing fixed costs, reliability and access, interoperability will accelerate the flow of people and trade. Yet there is a long way to go before the region is truly cashless. The Republic has the advantage here and given its chairmanship of ASEAN, is uniquely placed to drive the payments agenda. As a trusted broker and first-mover, Singapore can help establish shared common standards, be it in digital payments or cross-jurisdiction data protection. Singapore’s expertise in global trade and innovation, its intellectual property protection laws and the government’s desire to work with corporates to incubate ideas makes it an obvious leader in the region’s innovation.
Amy Landless, Chief Executive Officer, Expat Insurance
Ultimately FinTech today must be about how we can provide a better client experience and maximum value. These include online tools allowing quicker and transparent information and informed purchases, to shared processing and data management enabling lower costs and product pricing and to faster claim settlements. The emergence of expansive Chinese conglomerates with capabilities in data analytics, payments and AI mean it is vital that we maintain collaborative partnerships both within and outside the insurance industry. While blockchain can reduce costs and inefficiencies, the project costs/timeframe relative to benefits remain uncertain and there are regulatory, security and cultural issues that inhibit adoption. It is like selling to everyone a F1 car with the latest gadgets, but without the roads or a shared highway code of standards to support them (while many still drive vintage cars and just need a simple Toyota). It is better to focus on simpler tools, like 5G (widespread soon) bringing more powerful apps and processing speeds which will have immediate gains for the customer experience.
Lynne Geeves, Director, Benham & Reeves Residential Lettings
Professionals working in FinTech are an emerging presence on the London property rentals scene, driving up enquiries across our sixteen branches by 14% in September. We’ve concluded a record number of tenancies with professionals from the financial services sector, many of them working for start-ups as well as tech giants Google, Apple and Amazon. This new generation of renters are financially conscious, having grown up around a turbulent economy and so putting down roots in the conventional sense of homeownership is not a high consideration. Global mobility is essential for attracting top talent and renting offers the flexibility that these new FinTech high-flyers are looking for.
Jan-Arie Byloos, COO, BlueMeg
For BlueMeg, as a digital corporate services provider, the use of blockchain technology helps to simplify operations and it enhances security for our compliance and back-office procedures. Furthermore, it allows for automated processes using smart contracts and, through those same smart contracts, it mitigates the possibility of fraud and facilitates secure identity management and KYC. Our industry lends itself well for this new technology, however, you can’t rush the deployment of this technology and it all relies on solid real-world enterprise testing, something that is all too often overlooked.
Varun Mittal, FinTech Lead, EY
Singapore provides a wide range of business opportunities for UK FinTechs and investors. On the business-to-business front, Singapore hosts the regional, and in some cases, global headquarter for many banks and insurers, thus facilitating cooperation between FinTechs and financial services players here. On the business-to-customer front, the Singapore population is open to innovation and quick to adopt new technologies. More importantly, Singapore is a gateway for UK startups to access the 600-million-strong ASEAN market. The region has some of the fastest growing economies, with the largest population bases. The unique cultural and historical heritage present interesting use cases for UK FinTechs to explore; and as these economies continue to grow, there will be increasing demand for financial services. Further, big FinTechs in China have also been active in ASEAN, making it an exciting playground not only for competition, but also cooperation.
Michael Gourlay, CEO, MSIG Insurance (Singapore)
FinTech has been instrumental in driving positive changes and a dynamic scene here. In the past, blockchain was merely a concept. Its application is now increasingly explored by insurers through collaboration with tech companies - MSIG Singapore included. Its underlying capabilities to support smart contract and fast claim payment will allow insurers to provide better digital experiences for customers and at higher productivity. Blockchain will change the way insurers approach big data and enhance the precision of claims, underwriting and business decisions. As a global player, MSIG can potentially leverage on blockchain for cross border reinsurance premiums and claims. With emerging technologies, insurers will have to consider the regulatory environment they are in. A supportive regulatory regime will help accelerate the pace of innovation for insurers. MSIG Singapore’s innovation efforts have benefited greatly from the conducive environment and we will continue to invest where it can support our digital transformation.
Gregor McCallum, Principal, Financial Services Practice, Heidrick & Struggles
FinTechs are challenging traditional financial institutions to rethink everything from their structure to their leadership ethos. Traditional banks are doing their best to embrace FinTech technologies and creativity but it is difficult for them to advance from their legacy technology platforms – and even harder to switch out of a culture geared largely towards rewarding delivery rather than experimentation and learning from failure. It’s not simply a matter of finding leaders with the capacity to innovate. You can’t insert a disruptive thinker into an organization that’s unable to see beyond traditional thinking and expect everything to change. Nurturing the next gen innovative leader is less about taking charge and setting the direction and more about setting a scene where the norms include collaboration, inclusion, creativity, positively-framed failure and, ultimately, much greater success. In this light it’s encouraging to see the scale of the Singapore government’s commitment to supporting innovation and local talent.
Herbert Smith Freehills
Much has been made of the potential for FinTech start-ups to disrupt the financial services industry. We have seen them offer innovative, customer-focused solutions through superior technology in areas such as payment services, peer-to-peer lending, crowdfunding etc, and they are not bound by strict regulation that can stifle innovation in the same way that conventional banks are. In our view, however, the real opportunities lie in their co-existence and collaboration with traditional players in the industry. The Monetary Authority of Singapore also recognises this and is encouraging collaboration through initiatives such as the API Exchange (APIX) that will be launched at the FinTech Festival. APIX is said to be the world's first cross-border, open architecture platform which will enable financial institutions and FinTech firms to connect through a globally curated marketplace, collaborative sandbox experiments and adoption of application programming interfaces (APIs) to drive digital transformation and financial inclusion across Asia-Pacific.
Huw Wedlock, CEO, The Fry Group (Singapore)
Increasingly, technology gives us the ability to free our time to focus more closely on customers, and it also means we can boost the performance of elements of what we do as a core business – financial advice. This in turn creates a much richer customer experience and delighted clients! You can see this is action with our recent joint venture, Purple Asset Management, our digitally enabled investment solution. Singapore is a great setting for financial advisers to engage with FinTech companies. There is a well-regulated environment with its concentration of financial services and technology firms, and its dedication to building its technology sector is already creating a centre of excellence for FinTech development. There’s a strong sense that we’re on the verge of change for the better in our industry – and Singapore is at the epicentre of that process. The Fry Group is happy to be a part of it.
Thomas Evrard, Senior Managing Director, Strategic Communications, FTI Consulting
New blockchain, shared ledger and payment technologies and the increasing sophistication of data are presenting unprecedented opportunities for the financial services industry to create new value. Growing maturity and viability of applications such as open banking APIs and cloud technology in the region are unlocking new micro-capabilities, and giving the industry a renewed competitive edge in today’s digital, customer-led economy. Singapore continues to serve as a centre of excellence and its leading Open Banking infrastructure will no doubt be an exciting catalyst for the year ahead. The real opportunity lies in more open collaboration between governments, FinTechs and banks to leverage the wealth of technology and data at our fingertips, increasing interoperability and ultimately building more robust solutions that can weather the demands of an increasingly fast-paced digital age. This will require players, almost counter-intuitively, to collaborate more openly and share data with a view to bringing further efficiencies to the consumer and ecosystem as a whole. As new forms of market volatility, risks and imbalances come into play, governments and industry players need to continually engage in robust dialogue to bring about the optimal balance between innovation and governance, address access to technology and drive the education, reskilling and awareness needed to ensure no one is left behind.
Max Ng & Natalie Loh, Gateway Law Corporation
Given the rapid emergence of new technologies in the fast-moving FinTech landscape, the rate of disruption in the financial services industry will only continue to increase. These emerging technologies are poised to make financial transactions more efficient, secure, accessible and cost-effective. However, further regulation and a progressive policy framework is also necessary to promote greater confidence amongst businesses and consumers, and to help drive the level of FinTech adoption. These new laws and regulations will seek to address the challenges arising from cyber security, money-laundering and compliance risks. We remain committed to assisting our clients in navigating through the new regulatory regime and responding to the rise of disruptive technologies in this sector.
Connie Leung, Senior Director, Financial Services Business Lead, Asia, Microsoft
For years, FSI organizations have focused on transforming their customer experience in the new digital era. In fact, a study we conducted with IDC found that 55% of FSI organizations will focus on transforming customer service and support as their key digital initiative in 2018. Organizations that have embarked on their digital transformation journeys expect a 70% improvement in customer acquisition rate by 2020. Technology is a key enabler for digital transformation. With new cloud adoption guidelines, cloud computing has played a key role in increasing operations efficiency and product innovations while reducing time to market among FSI organizations.
Embracing Artificial Intelligence (AI) is one way to address digital transformation priorities. For example, AI can improve customer experiences by offering real-time financial advice and personalized banking products. AI-powered insights can also be used to prevent frauds, as well as reduce risks in credit scoring and customer churn. Our industry is also evolving into a new ecosystem where Open API and blockchain are widely adopted to support data interchange to streamline services such as e-commerce and client onboarding. More importantly, FSI organizations need to build their digital solutions on a trusted platform, regardless of the technologies they adopt. Choosing a right partner will be critical in ensuring success in their respective digital transformation journeys.
Tristal Tay, Client Consultant, Euromonitor International
The Asia Pacific region is one of the best models of the “leapfrog effect” across different sectors and consumer aspect of life, ranging from how we shop, communicate, verify identities to finally making payments. This is an unlimited space for FinTech companies, due to the region ecosystem: billions of under-served markets, yet very tech savvy. In a short span, these markets suddenly seem to be more digital savvy than their developed counterparts. With many of the FinTech companies coming from a technology background they are able to offer traditionally costly services for either no coast or for free. In APAC it is happening because of innovation that has taken place in retail to online methods away from the in-store channels. For FinTech to succeed, it must make revolutionary impact to this segment, which means putting the consumers at the bottom of the pyramid as your priority and working your way from there. With a lot of FinTech companies in the fight for space in consumer smartphones, the next focus should be on consumer adoption rather than scaling for profitability.
Peter Scully, Managing Director, WorldFirst Singapore
FinTech companies are providing faster and cheaper alternatives, without compromising on service delivery. The payments industry has evolved. Individuals and small-to-medium enterprises can now enjoy value-added services that were once privy to large corporations and private banking clients. Banks have traditionally controlled the cross-border payments industry. Today they are being pressured to lower their fees and offer better services. FinTech players are not spared either. The nature of technology is dynamic. To remain competitive, we need to be agile and adaptable. Capital will support those who innovate at a much faster pace – those who are early adopters and sustainably cost effective.
As innovation plays a larger role in this highly regulated industry, governments need to find a balance of ‘hand-holding’ and ‘hands-off’ approach. Countries with regulatory regimes that adapt to technology will rise to the top.