Fintech firms are not a threat to banks but "enablers" whose success will lie in partnering with traditional financial institutions, according to a senior regulator from the Monetary Authority of Singapore (MAS) yesterday.
Mr Sopnendu Mohanty, the MAS' chief fintech officer, told a briefing: "The initial euphoria that (fintech firms) will eat their lunch and eat their dinner has gone away. They are working very hard with the banks to co-create, co-participate - which is the right thing."
Fintech firms - non-bank businesses using technology in new ways to change the landscape of moneylending and financial services - could push out banks that are slow to innovate, observers have warned.
But collaboration is the way forward for the financial sector in Singapore, said Mr Mohanty, a former Citi banker.
"MAS' approach to fintech is to use the power of technology to help banks to succeed. We see fintech as an enabler. Where success lies is in partnering with banks, and enabling banks to succeed," he added.
Mr Mohanty noted that there are two kinds of fintech firms - the ones that provide financial services like crowdfunding or peer-to-peer lending, and those that offer technology to financial services firms.
Most fintech firms here fall in the second category, he said: "A lot of fintech companies want to participate with banks - the trend is clear now."
Banks here have heeded the MAS' call. All three local banks either run or back accelerator programmes where they work with fintech start- ups to spur innovation in the area.
Mr Mohanty promised that this year would be an exciting one for fintech in Singapore, kicking off today with a two-day conference on Application Programming Interfaces (API) organised by MAS for 100 invited industry players at the Ritz-Carlton.
"The only way (to help banks innovate faster) is through what I call the democratisation of banking services through API. That allows third-party developers to work with the banks to bring out that unique product," said Mr Mohanty, who leads a 20-person fintech and innovation group at MAS.
"As a regulator, we want to see the industry picking up that service-oriented architecture quickly."
The MAS is also working with the Association of Banks in Singapore to roll out a central addressing system towards the end of the year that will make it easier for people to transfer money using mobile technology, Mr Mohanty said.
Robo-wealth advisory is another kind of fintech that has got MAS' attention. Mr Mohanty said: "Robo-advisers are doing great stuff. They are building great algorithms. Financial advisers can tap into this technology to do a far better job.
"So from a regulatory standpoint, we see a hybrid model. But having said that, we don't say no to possibilities because as technology becomes more reliable, it could take the shape of completely self-service advisory. I don't think at this point, there are any regulatory barriers to any of these things."
Meanwhile, industry players are waiting keenly for the MAS to finalise the rules for crowdfunding platforms later this year.
This article was first published on March 29, 2016.
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