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The race is on to stay relevant in financial services
AS new technologies disrupt traditional ways of delivering financial services to consumers, Singapore is working to ensure that it is among the top financial technology, or fintech, hubs in the world.
In just a few short years, the fintech space here has grown into a vibrant ecosystem with established banks and insurers working hand-in-hand with tech start-ups on developing cutting edge solutions in areas such as payments and lending. Reflecting the pace of the sector's growth, all but a dozen of the roughly 210 fintech firms operating in Singapore have opened in the past two years - the fastest growth rate in Asia.
Local fintech player V-Key, for instance, has developed a security solution that, among other uses, allows customers to obtain a one-time password (OTP) directly from their mobile banking app. With this "soft token", customers will no longer need to carry a hardware token just to generate an OTP when they want to conduct their banking online.
"Currently, we are working towards developing a single digital identity that can be used on multiple platforms to authenticate and authorise a transaction. This will only make the user experience easier and smoother, and take us further in our drive to be a people-first technology solution," says Benjamin Mah, V-Key's CEO and co-founder.
Such activity has not gone unnoticed. In September, Singapore tied with London for pole position as a fintech hub in a Deloitte report. Both cities scored a 10 - the best score among all 21 hubs surveyed. And in July, a KPMG report said Singapore has been more aggressive in pursuing fintech opportunities.
The sector's efforts have been supported by the industry's regulator, Monetary Authority of Singapore (MAS) which, together with the Association of Banks in Singapore (ABS), is the organiser of this week's inaugural Singapore Fintech Festival.
Bringing together representatives of financial institutions, start-ups, investors and government agencies from around the world, the week-long event will feature a series of fintech events, including hackathons, forums on technology risk and regulation and a tour of the innovation labs of various banks here.
"The Fintech Festival is part of our efforts to forge a fintech ecosystem with different players, like the financial institutions and the fintech start-ups. We also want to help start-ups here connect with investors abroad, or to connect start-ups from abroad with financial institutions based here. You can imagine the multiple networks that can be formed when you bring together 8000 people," says MAS managing director Ravi Menon.
One of the festival's sponsors, Citi, believes that the event is an important platform to growing the fintech space in Singapore.
"The event provides a platform for financial institutions, developers, government agencies and service providers from around the world to share, learn and collaborate to create a fintech ecosystem that engenders the development of digital solutions," says Amol Gupte, head of Asean and Citi country officer for Singapore, Citi.
"We believe that fintech will play an increasingly important role in driving the transformation of the financial services industry. The gathering of leading industry players is a big step forward in the development of Singapore as a global fintech hub."
While fintech holds the promise of better products and services for consumers, it will also result in the industry being disrupted and new risks arising. Among the challenges is the need for new skillsets that are relevant to a fast-changing landscape.
"There are new jobs and new skills being created as with all disruption and innovation. This means that regulators will have to keep a close watch on what is happening. We can afford to see small experiments fail, but we can't allow something of a large systemic nature," explains Mr Menon.
He adds: "Something else we need to keep a close eye on is in the inherent risk in many of these things. A smart financial sector must also be a safe one. Mishaps will happen from time to time but they should not be of a nature that will undermine confidence."
Mr Menon sees the shortage of talent as the biggest challenge to the growth of fintech in Singapore, and makes clear that the stakes are high in the race to be a leader in this emerging area.
"If we are not in the top league of fintech hubs we will become less relevant as an international financial centre. Our conviction is that technology is a key determinant of success in the financial sector, so we cannot be complacent," he says.
However, V-Key's Mr Mah is hopeful that events like the Fintech Festival will go some ways to addressing the challenges ahead.
He says: "The Singapore Fintech Festival brings in major fintechs, global financial institutions, and visionary central banks and regulators. By convening in Singapore, it increases global awareness of Singapore as a trusted, progressive, smart financial centre. This heightened interest will translate to increased funding, but also help to attract top talent from around the world, and most importantly, real business challenges that global financial institutions and fintechs alike are trying to solve."