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SOPNENDU MOHANTY

Monetary Authority of Singapore

Singapore’s Smart Financial Centre Vision

echnology is transforming the way farious: and in modern times, the vibrancy of Hol- we live, work, play, and interact. At lywood and Silicon Valley. On the flip side, 1. To provide a conducive environ- the national level, Singapore has the ideas of Gregor Mendel, widely - T ment for acceleration set its sights on becoming a Smart Nation ed as the founder of genetics, remained in 2. To provide regulation that is condu- – one that embraces innovation and har- obscurity until many years after his death cive to innovation while fostering nesses technology to enhance productivity principally because he spent most of his safety and and improve the welfare of Singaporeans. life in relative isolation at a monastery in 3. To make Singapore more attractive A Smart Nation needs a Smart Financial remote Silesia. Time and place are clearly for FinTech investment Centre. Indeed, the financial sector offers important for innovation. 4. To build up skills and competencies fertile ground for innovation and the ap- MAS’ strategy is therefore not to in technology plication of technology. choose between financial In 2015, the Monetary Authority of and FinTech players but to provide the Singapore (MAS) laid out its vision of a optimal environment for both to inno- Smart Financial Centre, where innovation vate, compete, and collaborate. MAS’ is pervasive and technology is used widely aim is to create a FinTech ecosystem where to increase efficiency, better manage risks, To Provide a Conductive innovation thrives. This is an ecosystem create new opportunities, and improve comprising financial institutions, innova- people’s lives. Much of this will take place Environment for tion labs, institutes of research and higher against the backdrop of several big trends/ learning, the community, and con- enablers that are likely to transform fi- Innovation Acceleration nectivity to regional markets. nance in some shape or form: When the term ‘FinTech’ first crept into popular discourse, many observers • Digital and mobile payments framed this as a contest between nimble • Authentication and biometrics FinTech is fundamentally about ideas and ‘Davids’ against lumbering ‘Goliaths’. The • Blockchains and distributed ledgers enterprise flowing between cities, and a reality is more nuanced, mainly because • Cloud computing network of connections between players the incumbents have not been sitting still. • Big data everywhere. It requires bringing a whole Several financial institutions have set up • Learning machines range of stakeholders together across mul- in-house FinTech units to replicate the • Application Programming Interfaces tiple fields: technology, , venture startup culture, and are collaborating with (APIs) capital (VC), and startups. In , it needs FinTech . In fact, there is a nat- • Advanced sensors a strong ecosystem. Etymologically speak- ural synergy – FinTech solutions present • Cybersecurity ing, the term ecosystem is derived from the financial institutions with opportunities Since then, MAS has been working Greek root of ‘Oikos’, which means home. to enhance their product offerings, while closely with the financial industry, FinTech Just as no man is an island, ideas, too, de- collaboration with financial institutions companies, institutes of higher learning, pend on serendipitous interactions within enables FinTech players to broaden their and other stakeholders towards the vision an environment (or home) to evolve and reach. of a Smart Financial Centre. MAS’ role in flourish. Observe the intellectual and cul- Initiatives introduced by MAS to grow supporting this FinTech journey is multi- tural fecundity of Europe, the Singapore FinTech ecosystem include

Singapore’s Smart Financial Centre Vision | 19 SINGAPORE

• Introducing the SGD 225 million the development of open APIs among services value chain. This runs the Financial Sector Technology Inno- financial institutions to enable ef- gamut from payments services to au- vation (FSTI) scheme to support ficient data sharing. In November tomated fraud monitoring. innovation. The scheme supports 2016, the API Playbook co-created by the setting up of innovation labs, ABS and MAS was launched at the institutional/industry-wide projects, FinTech Festival to guide industry and proofs of concepts. For exam- stakeholders in their implementation To Provide Regulation ple, more than 20 global and of APIs. The Playbook features a list companies have set up of over 400 APIs that the financial Conductive to Innovation innovation labs in Singapore; some services industry can consider pub- of these have tapped on FSTI fund- lishing. To support efficient data while Fostering Safety ing. These labs are important touch sharing and interoperability, the points between the financial institu- Playbook recommends standards and Security tions and FinTech players. Financial for data exchange, information secu- institutions work with FinTech play- rity and high-level key technical re- ers in the labs to pilot new and inno- quirements for each of the APIs. The MAS believes that regulation must not vative solutions for their customers Playbook also sets expectations on front-run innovation – introducing regu- and abroad. API governance structure and risk lation prematurely may stifle innovation management practices that should and derail the adoption of useful technol- • Creating platforms for idea-gener- underpin an API-based financial eco- ogy. However, regulators must run along- ation, knowledge-sharing, and net- system. side innovation and stay abreast of new working. In November 2016, MAS, in developments and risks. partnership with The Association of Singapore’s FinTech landscape is fast MAS applies a materiality and pro- Banks in Singapore (ABS), organised evolving, with a proliferation of technolog- portionality test, which means that regu- the inaugural Singapore FinTech Fes- ical and solutions. lation will only kick in when the risk posed tival, which brought together 13,000 by new technology becomes material or participants from over 60 countries. • A Deloitte Report published in April crosses a threshold. Further, the weight In 2017, we look forward to welcom- 2017 noted that Singapore was ‘a se- of the regulation has to be commensurate ing the global FinTech community to rious contender for the global num- with the risk posed. Here are a few con- Singapore once again, for the second ber one spot in FinTech’.*1 Deloitte crete initiatives that illustrate MAS’ ap- edition of the FinTech Festival which analysed 44 FinTech hubs around proach towards the regulation of FinTech: will be held from 13 - 17 November. the world through quantitative re- search and interviews with local Fin- • Streamlined regulation to keep • Enhancing connectivity with oth- Tech subject matter experts in each pace with payments innovations. er FinTech hubs. As of July 2017, hub. Singapore (along with , MAS will streamline the licensing MAS has signed FinTech cooperation New York, Silicon Valley, and Hong of payments services under a single, agreements with 12 counterparties, Kong) was amongst the top five hubs activity-based modular framework. including entities in London, Austra- in terms of its Index Performance This could mean holding just one lia, , , , , Score. licence to conduct different kinds and . These agreements of payment activities, meeting only create frameworks for information • An Ernst & Young (E&Y) Report pub- regulations pertinent to the specific sharing on FinTech trends and reg- lished in February 2016 ranked Sin- payments activities they undertake, ulatory issues, and potential joint gapore as the fourth leading global and adhering to common standards innovation projects. They also help FinTech ecosystem in the world, for consumer protection and cyber to create greater understanding be- behind the UK, California, and New security. Streamlined regulation, in- tween FinTech players in different York. E&Y benchmarked the ecosys- clusive governance, interoperable markets, with the ultimate goal of tems according to talent, capital, pol- infrastructure, and pervasive digiti- benefiting consumers and - icy, and demand.*2 sation will contribute to Singapore’s es. vision of an e-payments society. • David Shrier, the New Ventures Of- • Facilitating industry experiments ficer at Massachusetts Institute of • Specific guidelines to promote se- in new technologies. MAS, the Sin- Technology, picked Singapore as its cure cloud computing. MAS set out gapore Exchange and eight banks number one contender to displace specific guidelines on the use of cloud embarked on a proof-of-concept London as the FinTech capital of the services by financial institutions. Fi- project to use blockchain technology world. He cited Singapore’s signifi- nancial institutions are free to adopt for inter- payments. This proj- cant government effort to support private clouds, public clouds, or a ect has allowed us to better under- FinTech innovators, its proximity combination of these to create hybrid stand blockchain technology and the to ASEAN, and dynamic incumbent clouds, so as they conduct the potential that it has for the financial banks as factors for his pick. necessary due diligence and apply sector. sound governance and risk manage- • Singapore is home to more than ment practices to address potential • Working with the industry to advo- 300 FinTech startups that address vulnerabilities. cate open APIs. MAS is encouraging different segments of the financial

20 | NOMURA JOURNAL OF ASIAN CAPITAL MARKETS | Autumn 2017 Vol.2/No.1 • A regulatory sandbox to test inno- though the VC industry in Singapore has technologies. Finance professionals will vative ideas. In 2016, MAS launched been growing at a healthy rate, there is need new skills and expertise from other a “regulatory sandbox” for financial room to further expand the size and scope disciplines that are traditionally not associ- institutions as well as new FinTech of VC funding available for startups. MAS ated with finance. players to test their innovations. The therefore intends to simplify the authori- In the financial sector, there is al- sandbox allows experiments to take sation process and regulatory regime for ready growing demand for skills in data place, even where it is not possible at VC. Potential areas under consideration analytics, digital/mobile user interfaces, the outset to anticipate every risk or include the following: and app development, in addition to core meet every regulatory requirement. finance skills. Take for example bank re- It provides an environment where • A primary focus on fitness and pro- lationship managers who provide wealth an experiment can fail safely and priety assessment of the VC manag- management advisory services. They are cheaply within controlled bound- ers. Unlike the case for fund manag- unlikely to be completely replaced by ro- aries, without widespread adverse ers, MAS may no longer require VC bo-advisers. But relationship managers consequences. MAS and the appli- funds to have directors and repre- will increasingly use data analytics tools cant will jointly define the boundar- sentatives with at least five years of to analyse client profiles and offer better, ies within which the experiment will relevant experience in fund manage- customised financial solutions. take place. MAS will then determine ment. A potential outcome is a short- MAS is working to build up the skills the specific legal and regulatory re- ened application process for new VC and competencies needed in the new world quirements which it is prepared to funds. of finance, starting with the curriculum in relax for the duration of the exper- our tertiary educational institutions, work iment within these boundaries. For • New and existing VC managers may placement programmes, and extending example, NTUC Income and Etiqa no longer be subject to the capital through to mid-career retraining and life- Insurance have partnered PolicyPal, requirements and business conduct long learning. a Singapore FinTech startup which rules that currently apply to fund offers an integrated insurance solu- managers in general. • MAS is working with the financial tion. It digitally aggregates insurance industry, training providers, and the policies, advises on insurance cover- • The base capital requirements and universities and polytechnics to pro- age gaps, and recommends and dis- risk-based capital requirements may vide learning pathways relevant for tributes insurance products to their be removed. a Smart Financial Centre. customers within the sandbox. • Independent valuation, internal au- • Some initiatives include the deep- dits and submission to MAS of au- tech curriculum in our tertiary insti- dited financial statements may no tutions, work placement programs, longer be required. mid-career retraining, and life-long To Make Singapore learning. In summary, the proposed simplified More Attractive for regulatory regime for VC recognises the Here are some specific examples of lower risks they pose, given their business recent initiatives: FinTech Investment model and sophisticated investor base. The intention is to allow new VC a faster time- • On 3 October 2016, MAS and the five to-market and to reduce their ongoing local polytechnics signed a Memo- compliance burden. The overarching goal randum of Understanding (MoU) The investment landscape in Singapore is is to attract more VC and spur them to play that would build upon an agreed characterised by a diverse range of players a greater role in supporting entrepreneur- framework in the next three years that perform early and later stage invest- ship and innovation. to prepare and equip their graduates ments. run the gamut from an- with the skill sets necessary to take gel investors, venture capitalists, corporate on new FinTech-related jobs emerg- venture arms, to government-linked inves- ing in the financial sector. The MoU tors. The latter include the likes of Temasek, covers curriculum reviews, facilitat- Government of Singapore Investment Cor- ing internship opportunities in Fin- poration, Economic Development Board To Build Up Skills and Tech-related roles and joint projects Investments, and Singtel. Prominent inter- with the FinTech community. More national investors, such as Sequoia Capital Competencies than 2,500 students who are enrolled and 500 Startups, are also active in and in the banking and IT-related cours- Singapore. Singapore has the most mature es in the polytechnics each year will VC ecosystem in ASEAN, followed by Indo- benefit from this initiative. nesia and .*3 According to a De- loitte Report, Singapore saw USD 86 million It is tempting to speculate about what jobs • In January 2017, MAS held its first in- in FinTech VC deals in 2016. technology will destroy and what kinds of augural Tech Talks session at Repub- MAS recognises that VC funds are new jobs it will create. The likelihood is lic Polytechnic. Tech Talks is organ- a vital cog in a healthy FinTech ecosys- that many jobs will remain, but most jobs ised by MAS in conjunction with the tem, due to capital and industry exper- will be transformed, requiring new skills local universities and polytechnics tise that they provide to startups. Al- and capabilities to make the most of new as part of its outreach efforts to get

Singapore’s Smart Financial Centre Vision | 21 SINGAPORE

more students interested in finan- continuous learning that we need to power cial technology. Each month, leaders innovation. from the industry their success stories, challenges and opportunities in the financial industry as well as Notes how technology is transforming fi- nancial services. Conclusion *1 https://www2.deloitte.com/content/ dam/Deloitte/uk/Documents/Innovation • The Financial IT Academy (FITA) has /deloitte-uk-connecting-global-fintech developed a digital transformation -hub-federation-innotribe-innovate- programme for mid-career profes- finance.pdf sionals that includes topics such as *2 http://www.ey.com/Publication/vwLUA data analytics and agile develop- Much has been said about technology and ssets/EY-UK-FinTech-On-the-cutting-edge- ment. The Institute of Banking and FinTech. The larger picture is really about Executive-summary/%24FILE/EY-UK- Finance (IBF) will also be offering promoting a culture of innovation in our FinTech-On-the-cutting-edge-exec- new learning modules on data sci- financial industry. summary.pdf ence, human-centric design, agile Such innovation is not always about *3 Vertex, “Snapshot of the Regulatory Envi- thinking, and cyber security aware- bleeding-edge technology. It is about de- ronment for in Southeast ness. signing better work processes and creating Asia,” July 2016. new business models that will deliver high- • Through the Financial Training er growth, more enriching jobs, and better Scheme (FTS) and IBF Standards services for the consumer. Technology is Training Scheme (IBF-STS), MAS pro- likely a key enabler for all of this, and we SOPNENDU MOHANTY vides funding to support profession- must make a concerted effort to under- als in acquiring specific expertise stand it and use it effectively. and competencies in the financial Not everyone can be an entrepre- Chief FinTech Officer, Monetary Authority of sector. There are also schemes with- neur. But we all have to build the skills Singapore in the TechSkills Accelerator (TeSA), and expertise necessary to power the dig- an initiative driven by the Info-com- ital economy. The financial sector in par- Sopnendu Mohanty is responsible for creat- ing development strategies and regulatory munications Media Development ticular has to build new capabilities. The policies around technology innovation to Authority (IMDA), which provide people factor is a critical in Singapore’s “better manage risks, enhance efficiency support for employers to develop Smart Financial Centre aspirations, and and strengthen competitiveness in the finan- their existing employees in the rele- more broadly in the economy of tomor- cial sector”. Prior to joining MAS, Mohanty vant ICT skills. row. That is at the heart of what it takes for was with Citibank as their Global Head of Singapore to sustain and grow the FinTech the Consumer Lab Network and Programs, movement – the entrepreneurial desire which included driving innovation programs to find new ways and the deep skills and and managing innovation labs across multi- ple geographies globally.

Mohanty has spent 20 years in the APAC re- gion and held various roles in technology, finance, productivity, and business develop- ment. He was Citibank’s APAC regional head of Branch operations along with heading the Consumer Innovation Lab in Singapore. He spent a significant time in Japan, where he was Citibank’s Business Development head and also did leadership stints in various functions within operations and technology. Globally, he played a significant subject mat- ter expert role in driving Citibank’s global smart banking program, to transform bank’s physical network to digital first, smart & in- novative, client centric and highly delightful customer engagement center.

Mohanty has co-authored various patented work in area of retail distribution of financial sector. He is based in Singapore, loves trav- elling, reads history and pursues culinary innovation as a hobby. He was in the list of Fintech’s Most Powerful Dealmakers of 2016 by .

22 | NOMURA JOURNAL OF ASIAN CAPITAL MARKETS | Autumn 2017 Vol.2/No.1