The world has seen the potential Singapore holds to become the world-leader in fintech. The country has been working tirelessly, joining hands with every core sector to make sure it scripts the story of world-wide fintech success.
In five short years of planning to turn the city-state into a Smart Nation, the government of Singapore has not only managed to digitise services and utilities across the country, but also create a stable base of internet-literate population who are able to use their smartphones to access and make the best use of the services provided by the State’s administration. In fact, as per a Statista report, the internet using population in Singapore is set to touch the 97% mark by the year 2023.
The synergy between the finance and tech industry in Singapore is highly commendable, as well. This has also worked as a big positive in the geometric growth of Fintech in the country. While traditional banks worldwide are trying to come to terms with the rise of fintech, the finance industry in Singapore was quick to see the inherent benefits that lie at the core of this technology. Their acceptance and financial support have played a pivotal role in ensuring the boom of fintech in Singapore and the neighbouring ASEAN countries.
Let us take a look at some of the factors that have made Singapore such a fertile ground for fintech.
Tech literacy of the general population has played a huge role in the boom of fintech in Singapore. The market is made of demand and supply and it is mostly the dependence on demand that spells success for any initiative or venture. In Singapore, the large base of tech literate population who have access to smartphones and the internet and know how to use apps and tech platforms to get their work done on a daily basis, was a major plus for the fintech industry.
Fintech is not only meant for governments and large corporations. The way it makes financial planning and transaction easy for the common man is where lies its actual success. With easy digital pay platforms; smooth loan application, origination and disbursement processes; and easy verification for complex yet routine applications, Singapore soon started seeing the many benefits and immense possibilities the fintech sector has to offer. The overall acceptance and usage of the same by Singaporeans was just the stamp of surety that was required for the industry to gauge demand and grow further.
For a tech-intensive idea like fintech having a strong tech and internet-enabled foundation in the country is quintessential. Singapore has been working hard to turn the city-state into a Smart Nation since 2014 and is spearheading tech-growth in the ASEAN and the larger APAC region. Combining the tech prowess of Singapore, Japan, China, and South Korea, Asia has become a strong technology contender in the world map.
At the micro level, the fact that most of the utilities and services are digitised in Singapore, makes it easy for fintech to mushroom and expand. Just like a land should be fertile in order to be farmed on, Singapore too, provided the underlying digital framework that works like the nervous system of the country, connecting every nook, corner, citizen, household and numerous other entities. This kind of connectivity and digital database is what is required to make fintech a major success. Fintech uses technologies like Artificial Intelligence, Machine Learning, Big Data and Internet of Things (IoT) to create algorithms, platforms, dashboards, apps and equations that have digital database and connectivity at their very core.
Singapore is known for its strong national vision and excellent business conditions. These make it a great country to collaborate with on multiple initiatives be it financial, environmental, or socio-economic. Singapore’s long-standing tie-ups with neighbouring nations and the fact that it held the ASEAN chairmanship during 2018, has brought it at the centre-fold of attention in the APAC and South-Asian region. As such fintech collaborations in the form of knowledge transfer and building fintech platforms for countries such as India that are ready to embrace fintech, also makes Singapore a great place for budding fintech firms.
While traditional banks and financial institutions around the world are still unsure about the role fintech is going to play in their growth, the finance sector in Singapore was quick to gauge the benefits that the industry had to offer. As such, the finance sector in Singapore has been extremely forthcoming in helping the fintech industry in Singapore burgeon by providing them with the necessary resources and collaborating with them to turn their traditional processes into digitised ones.
In today’s date, financial firms in Singapore, be it banks or other financial institutions, enjoy the very best of fintech services that include accurate analyses that cut down underwriting costs that in turn boost turnover rates, lesser time taken for loan origination, easy verification, thereby making it easier to churn out more funds to the right applicants based on a vast database of credit history records, social engineering, and other tech-forward methods of ascertaining credit-worthiness. By doing this, financial institutions have not only reduced their cost of underwriting and risk of failure of repayment but have also been able to expand their market to a great extent by including small businesses and individuals into their list of customers, as well. This win-win partnership between the fintech and the finance industry has also played a major role in making Singapore a great platform for fintech growth.
Singapore understands the fact that exponential growth can only be achieved through active collaboration. It had hosted the largest fintech festival ever in 2018 to celebrate just that and to increase awareness about this new technology and the immense possibilities it holds. The festival hosted in 2018 saw around 40,000 participants flocking to Singapore from over 100 countries. This year too, Singapore is going to host the 2019 Fintech Festival during the second week of November. This annual festival is scheduled to go on till the year 2020 and is organised by the Monetary Authority of Singapore (MAS) along with the Association of Banks in Singapore (ABS).
MAS has also created the innovative sandbox that lets fintech firms test their products in the market to avoid any issues and also test the scope of the product before the actual launch. This has led fintech firms to achieve higher success rates and thus better revenue generating capacity once launched.
Singapore’s future-forward thinking doesn’t just stop at fintech. The city-state has been working progressively by creating proper regulatory framework that should support such an expansive initiative like that of fintech. Since, fintech is largely based on the digital platform, there are a number of compliance issues that keep cropping up given the security threats that this space has been observing at an increased rate.
Regtech, which is a short form of regulatory technologies, has been developed to address the various regulatory challenges that large organizations face while using innovative and cutting-edge solutions, like the ones offered by fintech. Singapore has been proactive about creating regulatory technology hand-in-hand with fintech which has made adapting to regtech an easy process for the entire nation, especially for corporations that use fintech extensively. The security provided by regtech has helped fintech expand and spread its roots even further as it has helped address issue of security threats in the Fintech space.
Future-forward thinking and Singapore are synonymous in the APAC region and the country has been proving this right with every new innovation and tech-forward move it adopts. It is only a matter of time that Singapore will be developing and executing its next tech plan based on the foundation of fintech and regtech. The world awaits to find out what will be the new “Next in Singapore.”