AS banks and financial-technology firms (fintechs) cosy up, the Monetary Authority of Singapore (MAS) will let such fintechs thrive - but the end game is still to ensure that traditional lenders succeed, a senior MAS executive said on Monday.
The regulator is encouraging banks to embrace technology - which the bulk of fintech companies are offering - and will remain open to the minority of fintechs that are providing financial services directly, such as crowdfunding platforms.
Setting out MAS's open policy towards fintechs, chief fintech officer of MAS Sopnendu Mohanty said banks and technology firms are now exploring collaborations - going beyond the initial fears that tech firms were merely out to disrupt. "A lot of fintech companies want to participate with banks - the trend is clear now," he said at a media briefing.
For example, there are robo-advisers now in their early set-up stages in Singapore. Commenting broadly on the development of robo-advisory in the wealth-management industry, Mr Mohanty said this will come as a support for existing advisory services at this point.
"What we see now is a hybrid opportunity, where financial advisers can tap into this technology to do a far better job and be more efficient in their advisory," he said. "Somebody made a comment that robo-advisers are robos for the advisers."
His remarks come as the MAS and the Association of Banks in Singapore hold a two-day conference from Tuesday. The meeting will focus on the development of application programming interfaces (API); these are sets of requirements - routines and protocols - that determine how one application can communicate with another. For example, a Google Maps API lets app developers embed Google Maps in Web pages. The security of interactions between an API and the bank's system would depend mainly on the banks' existing security features.
Mr Mohanty noted that one Singapore-based robo-advisory service firm that approached MAS recently had several key processes such as client onboarding and housekeeping that were powered by APIs. "This was unthinkable months back," he said.
Given its advantages, the use of APIs could bring technology to the banking world more quickly than before - a view also supported by the banks, he said. OCBC is using APIs to give select startups on its fintech accelerator programme access to anonymised data; UOB's latest mobile app relied on API, while DBS has organised hackathons involving the use of APIs.
MAS is open to robo-advisers that are standalone self-service outfits.
"We have never said 'no' to possibilities. When technology becomes more reliable, it can take a shape of completely self-service advisory," said Mr Mohanty. "I've been very categorical on this. We don't see any regulatory barrier to this process. That's a space that will grow."
With the regulatory assessment of crowdfunding still in the works, Mr Mohanty could only say MAS has taken a comprehensive view of crowdfunding, putting options such as peer-to-peer lending and equity raising into different buckets for assessment. The final regulations for crowdfunding would help the industry grow safely in a "forward-looking" way. "It will not be something that takes it backward," he said.
A recent EY report said Singapore is becoming increasingly active in fintech policy, but cautioned that it would take time to reach the level of maturity seen in the UK. "We are extremely, extremely positive," said Mr Mohanty. "We will not disappoint you - it will be an exciting year."