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Disruption is the new norm
FINTECH was, until recently, seen by incumbents as the little brother who wanted to snatch their favourite game. However, most now agree that fintech in Singapore is much less of a fight between incumbents and new fintech entrants, but more of a "fourth industrial revolution" that calls for broad collaboration. Incumbents have joined the digital revolution, and many are now working with startups and adopting the disruptive technologies which challenge their own traditional ways of doing business. "Digitisation" is the new buzzword at incumbent banks and other financial institutions. "Disruption" is now everywhere and ubiquitous. It is no longer about competition. Instead, it is about the coming together of the ecosystem to redefine our future. And our regulator, the Monetary Authority of Singapore (MAS), has been playing a pivotal role in this coming together, creating a fertile and collaborative environment to drive success.
The Red Dot is little no more
The MAS's inaugural Singapore FinTech Festival in 2016 was an immense success, which put this little red dot of a country firmly on the global fintech map.
In 2017, the MAS continued to showcase to the world Singapore's achievements as a fintech hub. While we may not yet have the same stature as Silicon Valley, we are no longer an afterthought to the global fintech community. The regulator has further unveiled initiatives to bolster our efforts to be the regional leader of fintech. These initiatives include putting together an ecosystem of diverse players; an open architecture economy; a web of international links; a strong talent pool with deep research capabilities; a conducive regulatory environment; and a safe and secure cyber environment.
"Bitcoin is a fraud"
JP Morgan CEO Jamie Dimon's statement is probably the most talked-about quote regarding cryptocurrencies in 2017. Many records were broken in 2017: Not only did bitcoin and other cryptocurrencies achieve record high prices, they also generated huge levels of public awareness and interest. But valuations are highly volatile and a substantial reversal has already been seen in 2018. To date, many regulators have taken a wait-and-see approach to cryptocurrencies. But some, worried about potential market abuse and the development of a systemic bubble, have started to take actions and make clear that they will crack down as and when they deem necessary, given their prudential and market conduct responsibilities.
Furthermore, the Initial Coin Offering (ICO) frenzy also caught regulators' attention in 2017. While ICOs may moderate in 2018, we are expecting the industry to further develop and institutionalise best practices in key areas – from know-your-customer (KYC) and anti-money laundering (AML) processes to governance and transparency standards.
"Make me a proposal"
The brief Twitter exchange between Prime Minister Lee Hsien Loong and Tan Min-Liang, chief executive of Razer, got Singaporeans chattering about payments systems. PM Lee emphasised the need for a unified payments system for Singapore at the 2017 Singapore National Day Rally. The importance of modernising our payments infrastructure was acknowledged nationwide and we have already seen some progress. The Association of Banks in Singapore (ABS) and the banking industry launched PayNow, a funds-transfer system that allows users to send money to one another using just a mobile or NRIC number. Earlier in the year, MyInfo, a government-backed digital vault of Singaporeans' personal data, was also launched as we took the first steps to embracing digital identities.
There is, of course, much more to be done. We expect a standardised, open platform that is convenient and can be used by all merchants and customers, regardless of who they bank with. The cost of transactions has scope to come down too, which would, in turn, promote greater adoption of this new technology. However, relevant regulations need to be aligned and unified.
In November 2017, the MAS released a proposed Payment Services Bill with a consultation paper to streamline the regulation of payment services under a single legislation, expanding the scope of regulated payment activities to include virtual currency services and other similar innovations, and calibrating regulation according to the risks posed by these activities. We expect much more in this space to happen and it can only get more exciting with the entrance of new challengers like GrabPay and Alipay.
Data is the new currency
Vivian Balakrishnan, Minister for Foreign Affairs and Minister-in-charge of the Smart Nation programme, foresees a massive transformation will take place within the "fourth industrial revolution", and Singapore is working to position itself as a digital port, at the centre of the exchange of bits, data and information. The MAS also announced the formation of a new Data Analytics Group (DAG). DAG will lead MAS' efforts to harness the power of data analytics to unlock insights, enhance the supervision of financial institutions, make regulatory compliance more efficient for financial institutions and improve work efficiency across organisations.
The mantra is that intelligent companies are driven by data. At such companies, data is analysed and acted upon in real-time by a high-value workforce, enabling better and more efficient decision making at all levels. With the proliferation of analytics tools and the iterative deepening of machine intelligence, the space can only grow and develop. PwC's impact centres in data and analytics, and cyber security, are already supporting enterprises seeking to harness these enabling techniques in their digital transformational journey.
Scaling new heights
We confidently expect Singapore to deepen its digital capabilities in 2018. Blockchain, or more generally distributed ledger technology, will continue to mature, promising more efficient and connected networks in the global financial services market. We should see this manifest in cheaper, faster cross-border payments and settlements and safer, more efficient trade connectivity. We are also likely to see more banks adopting open banking, dramatically broadening tailored choices that will benefit consumers. Perhaps even more significant than past industrial revolutions, whilst challenges will always remain, this digital revolution is likely to have a vast and far-reaching impact and promises substantial improvements in the lives of consumers. W