COMPANIES in Singapore's financial-services sector have been challenged to think beyond individual gains and to shoot for industry-wide dividends.
This, said Minister for Trade and Industry (Industry) S Iswaran on Thursday, will be key to Singapore's ability to remain a leading regional financial hub.
Urging fintech (or financial technology) and financial-services firms to broaden and deepen their collaborations, he said: "We need our companies to focus not just on the value to their individual businesses, but also on the broader spin-offs to the system as a whole that can result from industry collaboration. In doing so, we will raise the value proposition for the entire sector."
He emphasised that such collaborations should go beyond knowledge sharing and extend to other industry-strengthening moves like setting common standards and enabling the seamless sharing of data.
Mr Iswaran, who co-chairs the 30-member Committee on the Future Economy (CFE), was speaking at a conference titled "FinTech and Financial Inclusion", co-organised by the Singapore Management University's Sim Kee Boon Institute for Financial Economics (SMU SKBI) and the International Monetary Fund (IMF).
In his 20-minute speech, Mr Iswaran spoke about the growing importance of open innovation, a process in which partners - even competitors - innovate by sharing risks and rewards.
Explaining why this model of innovation has begun to take hold, he said: "Innovation is inherently risky, and the nature of the challenge is complex. And yet the pay-offs can be significant if it's done right. So a collaborative approach, even among competitors in a pre-competitive stage, (makes) a huge difference."
He emphasised that open innovation is even more crucial in an industry as wide-ranging and multi-disciplinary as fintech, since it spans a variety of sectors ranging from technology and banking to insurance.
"The bringing together of fresh perspectives can catalyse cross-sector collaboration and strengthen the overall ecosystem," he said. He added that such a collaborative environment in which unorthodox partners seek out unorthodox solutions together will be a "key driver" in the fintech space.
Fintech, in turn, will be an essential differentiator for Singapore's economy and financial sector. In fact, the government wants Singapore to evolve into a leading global fintech hub, and has been taking steps to establish positions of leadership in this space.
This includes providing thought leadership on fintech regulation by ensuring a calibrated approach that balances the need for innovation with the need for a safe and stable financial system - and the development of fintech talent and capabilities.
To this end, the Monetary Authority of Singapore (MAS) recently unveiled a regulatory sandbox in which companies can safely testbed and experiment with innovative solutions.
Said Mr Iswaran: "While such a sandbox would not prevent product failures, it would contain the consequential impact on customers and allow us to learn, experiment and iterate our solutions. In doing so, the sandbox will reduce regulatory friction and give innovations a better chance to take root in Singapore, and clearly, to go beyond."
DBS chief executive Piyush Gupta, who spoke briefly at the opening of the conference, highlighted that the amount of money going into fintech was "massive". Last year, fintech venture capital funding hit an all-time high of US$19 billion; of that sum, US$4.5 billion was channelled into Asia (a quadrupling in year-on-year terms).
"That's one heck of a lot of money," said Mr Piyush, who also chairs the SKBI advisory board.
With Singapore's strong public-private sector ties, he believes the country is uniquely poised to be a "living lab" for fintech. This is especially important as societies negotiate issues of data security, data access, and data analytics over the next decade.
He said: "There is no better country than Singapore to actually pull these pieces together. The public-private partnership, I think, is going to be crucial in the next five to 10 years, as societies evolve new sets of norms for how they want to live, and what the new rules for the new world are going to be. Singapore is a great place (for that) because everything can come together very nicely."
The SKBI conference continues today; MAS is expected to share its plans for the next phase of development in Singapore's payment landscape.