With the extensive government support and innovative approach from the corporate sector, Singapore is emerging as a leading FinTech hub on the globe. Today, the country creates a magnetic appeal for top international investment firms and foreign industry players to come and set up their holdings.
Big financial institutions are looking at Singapore as a stepping stone to enter the Asian financial market where a huge part of the population is still unbanked. It has become a home for a variety of fin-tech startups in areas such as payments, crowd-funding, fund-management, the blockchain, data- analytics, crypto-currencies, etc. A recent analysis by KPMG suggests that while business environment and government incentives are very strong in Singapore, entrepreneurial and innovative mindset, technology readiness, regulatory support and funding vary from nascent to emerging stage.
Major government initiatives
To foster the FinTech sector to lead Singapore as an international FinTech hub, the Monetary Authority of Singapore (MAS), the regulator overseeing all financial institutions, has taken several initiatives to help create a vibrant eco-system. The MAS doesn’t regulate any FinTech startup until it becomes a significant threat to the financial system of the country. The purpose is to give ample scope for innovation to experiment and grow and not chain them in stiff regulations.
The MAS has also set up a fin-tech lab which will assist startups financially and technologically, If a startup, financial institution or technology vendor develops any new fin-tech software or tool, the MAS will experiment it along with market players to test its viability. In addition to this, an important scheme, Financial Sector Technology and Innovation (FSTI) started in June 2015, aims at bringing various stakeholders on one platform to find out a solution to financial challenges. The government has also signed a cooperation agreement with UK and Australia for transfer of startup technology among each other.
Focus on e-payment
According to KPMG report, cash component comprises 8.8 percent of Singapore’s GDP while in Australia and Sweeden, they are just 4.4% and 2.2% respectively. Further, while in Singapore in 2014, per person issuance of the cheque was 12.7, it was 7.1 in Australia and almost zero in Sweden. 0.5% of GDP of Singapore, which is equivalent to $2 billion, goes in dealing with cash and processing cheques. The government may be looking at lowering the figure with the help of improved environment for cashless transactions.
Reports say that the MAS have collaborated with various fin-tech players to create a cashless financial system in the country. The new payment system envisages payment from one entity to another using mobile phone and email address. Taking a step further even the social media account can also become a payment medium, there is no need for a person to hold a bank account for the purpose of making payments. The MAS is working out to bring in single regulation for conventional and digital payment service providers for consumers’ ease and without compromising their interest. For this purpose, the establishment of a Payment Council with the representatives of stakeholders from payment sector is also in the pipeline.
Creating a vibrant ecosystem
A rich ecosystem for a FinTech startup includes good infrastructure, skilled human capital, adequate financial support system and regulatory support and Singapore has got all that. Singapore, which is home to more than 200 banks, is a headquarter of all top global financial service companies such as AmEx, Citibank, UBS, DBS Bank, JP Morgan Chase and HSBC. So the fund is not a challenge as a budget to procure IT services of these banks goes above $500 billion.
As far as incubation support is concerned, all top financial giants have realized the importance of fin-tech for customers. They are making incubation centers and promoting fin-techs to position themselves as leaders in the global financial market. A couple of instances is EVOLVE – UBS Centre for Design Thinking and Innovation, Citi Innovation Lab, R&D innovation center by MasterCard, DBS-owned programs, and accelerators.
Besides global financial institutions, international consultants like KPMG; American online payment company Pay Pal; Russian investment firm LifeSREDA.VC; Australian-based Internet Ventures investment and development firm Fatfish Internet Group and American multinational technology company IBM among many others have either opened incubation center/accelerator or in the process of opening it.
The endless list of global companies with interest to enter into incubation support system shows the strong backbone that Singapore has developed to nurture startup talents. With these massive investments and infrastructure comes mentorship of global giants from all business verticals.
Skilled and entrepreneurial population
The young population of Singapore is quick to adapt to any new technological development because the county is a goldmine of top talents from science, technology, and engineering. Besides this, smartphone and the internet have become an inseparable part of their process of growing up. According to an estimate, Singapore tops in the world for mobile and internet usage. Finance has never been a challenge as Singapore’s per capita ranking was 7th in the world with $53,604 per capita income in 2015. People are financially sound enough to encourage their children to get into risk taking ventures.
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The educational institutions both school and college try to focus on skill-based education and inculcate entrepreneurial values. All these factors contribute to creating a culture of forward-thinking and experimentation. That’s the reason venture capitalists are keen to pump money into Singaporean FinTech startups. In recent years VCs such as BlueHill Asset Management, IMJ Investment Partners, Digital Media Partners, Monk’s Hill Ventures, Golden Gate Ventures, IncubAsia Ventures, Intel Capital, Fenox Venture Capital, Infocomm Investments Pte. Ltd, Jungle Ventures have shown their interest and invested in a lot of fin-tech startups.
The fast emerging ecosystem has produced some of the out-of-the-box fin-techs such as Bw8 Trading which connects non-professional investors to big traders through a social networking app, Dragon Wealth which brings financial advisors and clients together for a tailor-made investment information, Fastacash which gives freedom to users to transfer money and other values with digital content via social networking site, and Kashmi which allow exchange of money through smartphone. These are a few instances as Singapore has hundreds of such fin-tech startups which are changing the financial outlook and habits of consumers.
With the focus of the government to aggressively pursue policies to promote FinTechs in Singapore, the country is emerging as a stiff competitor to global leaders in the fin-tech sector. Steps like tax incentives and regulatory backing are pushing big financial institutions to create incubations and accelerators to support new ideas. All these measures have not only helped create an ideal ecosystem but posed a big challenge to New York and London which remain the largest fin-techs hubs in the world.
About the Author
Alex Kong is the CEO of TNG Wallet – 香港人的電子錢包
TNG Wallet is the No.1 e-Wallet in Hong Kong. Launched in Nov’15, TNG Wallet has 360,000+ active users & accepted by thousands of merchants & taxi drivers. It supports P2P, money transfer, bill payments, in-shop payment, website payment, app payment, virtual membership cards for merchants, e-Tickets, e-Coupons while providing instant cash withdrawal through TNG appointed agents 365 days a year. TNG Wallet will be available in other SouthEast Asian Countries soon.