What we heard at Singapore Fintech Festival 2018

Singapore Fintech Festival 2018 brought together leading experts from around the world to discuss the opportunities, challenges and future for fintech.

We were proud to once again be a "friend of fintech" sponsor of the event.

Fintech is widely regarded as one of the fastest-moving investment markets in the world, growing by one third in the past year.

The Singapore Fintech Festival returned for its third consecutive year, to deliver the world's largest platform for the global fintech community. With close to 45,000 participants from over 100 countries, this year’s festival was bigger and better than ever, with keynote speeches from Christine Lagarde (Managing Director, IMF), Narendra Modi (Prime Minister of India) and Justin Trudeau (Prime Minister of Canada).

The themes this year focused on artificial intelligence (AI), financial inclusion, insurtech, digital currencies and the ASEAN market.

Find out more about our solutions-driven Fintech advice or explore below the top things we heard, watch our videos covering blockchain and data, and read our fintech-focused news and updates from around the world 

"The Singapore FinTech Festival continues to grow, going from strength-to-strength, with this year cementing Singapore’s position as one of the key facilitators of the global fintech community. We’ve been delighted to support the festival since its inaugural event and this year noted a distinct evolution in both the pace and significance of developments. We are no longer considering the possibility of fintech or proofs of concepts, but tangible products, solutions and engagements. Key developments included the Prime Minister of India and the Deputy Prime Minister of Singapore’s joint launch of the API Exchange, an online global fintech marketplace and sandbox platform for financial institutions."

sophie mathur

 

Sophie Mathur, Partner and Global co-Head of Innovation

Top things we heard about fintech in Singapore

AI in Financial Services

  • Despite the concern that AI may have a negative effect on employment, the consensus from the festival was that the nature of jobs will change and jobs are more likely to increase as a result of AI
  • Some of the most impactful use cases of AI in the financial services sector are enhanced anti-money laundering monitoring and incorporating internal bank data with external big data to provide more valuable customer insight, which in turn enables the delivery of a more tailored and accurate customer experience
  • Market Authority of Singapore (MAS) released a set of principles to promote Fairness, Ethics, Accountability and Transparency (FEAT) in the use of AI and data analytics in finance. The document provides guidance to firms offering financial products and services on the responsible use of AI and data analytics.

Payments and digital currencies

  • Payment methods are evolving and we are moving towards a cashless economy
  • Christine Lagarde made the case for central bank-backed digital currencies
  • Central banks need to ensure that these currencies do not facilitate money laundering e.g. by requiring authentication of users' identities, with such identities only being disclosed to third parties if legally required
  • Risks to financial integrity and financial stability need to be considered with digital currencies
  • Regulators will need to adapt to the changes that come with a cashless economy

Big banks and Fintechs

  • All (if not most) major banks have a commitment to fintech. Cultural transformation is key.
  • There is increasing collaboration between big banks and fintech companies. Full integration however is often difficult.
  • could a referral model be considered instead?
  • The future is likely to see a mix of both fintech companies and big banks, though the distinction between the two may become more blurred.
  • Consumers and the consumer experience will drive the types of technology/AI that are deployed in future.
  • Banks may differentiate themselves by collaborating with start-ups, leveraging on customers' trust, utilising all types of data (instead of just proprietary data) and by improving on data analysis capabilities.

Capital raising for Fintechs

  • Private and public markets are complementary. Each have different types of investors and issuers and serve issuers at different stages in their life-cycle
  • Some speakers thought that we would see a convergence of types of securities (e.g. preferred stock, LP interests, common stock, tokens) in the future. The focus would be on the company instead of the type of security being offered
  • The greater listing and compliance requirements required for listed companies creates controls in businesses which build a good foundation for future growth
  • Some speakers questioned whether tech unicorns would want to list on public exchanges at all in future

Development of a regulatory framework

  • An ASEAN regulatory body, such as in the EU, is unlikely to form 
  • Globally, regulators are considering a global standard to restrict “regulatory arbitrage”, where financial institutions select jurisdictions to conduct activities in based on whether regulatory standards are favourable
  • One of the biggest challenges that regulators face is adapting existing regulations originating from the analog era and updating them to the digital era, while ensuring that these regulations produce secure financial products 
  • Central banks now have to wear two hats: a regulatory hat and a banking eco-system development hat 
  • Many platforms are now legally required to allow smaller financial institutions access to bigger financial institutions’ data resource platforms. This has greatly opened up the data ecosystem
  • Regulators, legislators and policy makers must work together to build an incentive scheme for innovation
  • Start-ups felt that regulatory sandboxes have been useful and may also enable regulators to fulfil goals such as greater competition and transparency

Data and cloud: challenges and risks

  • Organisations are facing pressures from changing regulatory requirements. Protecting data is needed in order to build trust with customers
  • Data biases, data sovereignty, data veracity and ensuring that data is used responsibly are some of the key issues relating to data
  • Migrating from legacy systems to cloud-based, distributed ledger solutions may be difficult as existing products and services need to be configured
  • Certain jurisdictions are enhancing data localisation laws (which dictate that data held by companies must be stored in the same jurisdiction as the company), but these may also restrict innovation. In his opening address, Ravi Menon, the Managing Director of MAS, called for more data connectivity, and less data localisation

Views on ASEAN

  • ASEAN's high mobile phone penetration and young and underbanked population create large fintech opportunities
  • ASEAN countries are very diverse and there is little integration however. This poses challenges for companies in terms of scalability
  • Data sovereignty is one of the biggest issues in parts of ASEAN
  • Different expansion strategies are required for the different ASEAN countries. Local nuances must be taken into consideration
  • Building a business from scratch when entering new countries should only be done if there is sufficient capital and knowhow
  • Slow adoption and trust of technology has been a major challenge for ASEAN fintech startups
  • There needs to be greater awareness and more education on the benefits of data sharing and use of fintech in ASEAN and Asia

Key initiatives in Singapore

  • API Exchange - a partnership between India and Singapore which involves an international fintech marketplace and sandbox for fintech firms and financial institutions to collaborate
  • Business sans border - a collaboration between MAS and the Infocomm Media Development Authority for SMEs to connect and explore synergies through a sandbox, services app store and AI engine
  • MATCH (Meet ASEAN's Talents and Champions) - a new platform that allows potential investors to connect with ASEAN's fintech companies
  • Collaboration between MAS, Bank of Canada and the Bank of England - to explore possible solutions for cross-border payments
  • MAS announced the Sandbox Express - a new regulatory sandbox with fast-track approvals for firms experimenting with innovative financial products or services

The blockchain journey: from beginning to....where?

1:21

Blockchain technology made its debut in the form of bitcoin, but its use cases have been touted to extend far beyond the world of cryptocurrency. Its proliferation has also caught the attention of regulators and lawmakers around the world. But, is blockchain technology here to stay? Linklaters partner, Jonathan Horan and counsel Peiying Chua give us a rundown on the latest trends, challenges and successes of this much-hyped technology.

Driving Fintech through Data

1:22

Efficient and effective use of data creates opportunities to engage with customers in new ways and build new product types and distribution channels. But with such rapid advances in Fintech, the regulatory scrutiny and ethical considerations can make implementing the required technology challenging. Linklaters Counsel, Adrian Fisher believes that awareness and collaboration are the key to building solutions that are both compliant and responsible.

Key Contacts

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