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THE Monetary Authority of Singapore (MAS) is looking to come up with a new policy for cloud computing, following feedback from the banking industry that there needs to be more clarity around the use of cloud services, said Sopnendu Mohanty, chief fintech officer at MAS, on Thursday.
This comes as banks see cloud technology as a means to keep up with the rising cost of infrastructure systems. Mr Mohanty also noted that the real disruption from startups may be coming at the "IBMs of the world" that build banks' infrastructure systems.
"Banks have a special talent in deploying legacy technology," he said at a panel discussion, adding that banks have to engage the 80 per cent of the fintechs that are working with the incumbent lenders to build more nimble technology. "The sacred cow is not the banks."
He also noted that the remaining 20 per cent of fintech firms have not created new financial products. Examples of such firms would include crowdfunding platforms. In creating platforms for lending, such fintechs are focused on changing the distribution model, which can be driven by technology, he said.
Lawrence Yong, CEO of peer-to-peer lending platform MoolahSense, similarly noted that platforms such as MoolahSense have emerged to serve areas that banks have found not economical to serve. As a result, small and medium enterprises can get adequate financing through crowdfunding, he said.
"Today, our role in the financial market is to deepen and broaden the market for the constituents," said Mr Yong. "We're not competing with the banks."
Still, there is uncertainty over the impact from fintechs on profitability for banks over the long term, said Jean-Charles Sambor, director, Institute of International Finance.
"Banks are not in a state of denial any more," he said. "But nobody is in the situation right now . . . to (know) what will be the net impact. Costs will come down, but there will be an impact on revenue."
More disruption is ahead in the form of blockchain - which would fundamentally change the banks' role in reconciling and recording transactions, said Anthony Eldridge, financial services and fintech leader, PwC Singapore.
"Insurance is very ripe for disruption" as well, he added.
Data analytics can fundamentally change what insurance means, going beyond insurance against death, but in spurring a more healthy lifestyle, or better driving standards, said Mr Eldridge. "The more data you've got, the more you can bifurcate the market."