Singaporean fintech has a vision of Asian Silicon Valley
Singapore sees more investment pouring into fintech companies this year as the city-state seeks to become a regional hub for raising capital in areas ranging from payments to robo-advice, according to a senior official at the central bank.
These investments have grown from around $ 20 million in 2014 to a record $ 1.1 billion last year, and more are expected this year, said Sopnendu Mohanty, CFO of the Monetary Authority of Singapore, in an interview.
“We don’t have Silicon Valley, but we’re doing our best,” he said. The environment that the country is building allows these fintech players to “find opportunities to see if their first ideas translate into real long-term value”.
Mohanty, who spent 17 years at Citigroup Inc before taking the central bank role in 2015, holds the fintech role at a time when the industry is changing rapidly. The aspirations of MAS are central to Singapore’s goal of strengthening its position as a global financial center where legacy banks and competing technology companies compete with each other to provide services to consumers and businesses, albeit it is also a custodian of standards when companies operate.
Mohanty has been involved in efforts such as Partior, the joint venture between JPMorgan Chase & Co, Temasek Holdings and DBS Group Holdings Ltd, which is a new blockchain-based platform for payments, trading, and foreign exchange settlement. He also wants to expand a cross-border payment infrastructure, which started with Thailand, allowing residents of both countries to transfer money almost immediately via their cellphones through government-backed systems.
With the link with Thailand now established, India is a priority, Mohanty said. Other Southeast Asian countries like Malaysia and Indonesia could follow, as well as more distant countries like Africa.
“We hope that India will enter this platform next year,” he said. “If we can connect our system to that of India – we have done a huge test of our system – we hope other countries will follow this platform as well.”
Meanwhile, the MAS is still processing applications from companies seeking licenses to operate crypto payment and exchange services in the city, Mohanty said. These companies have been operating under a grace period since the regulator put the new payment services law into effect in January 2020. More than 300 have applied, and the MAS is examining how best to expedite the process as well as the balance between encouraging entrepreneurship and regulation, according to a Singapore minister in January this year.
Leading companies seeking MAS licenses include entities from Alibaba Group Holdings Ltd and Ant Group, Binance Holdings Ltd, as well as Alphabet Inc.
“Licensing someone is a bonus, not something to be taken lightly.” Mohanty said, without giving a timeline for the issuance of the first permit. “We make sure that anyone who obtains a MAS license is credible.”
Here are other comments from Mohanty during the interview:
Central Bank Digital Currencies: Central bank digital currencies have become a topic of interest as China progresses with its digital yuan, which is in testing.
They generally fall into one of the following two categories, either a retail CBDC owned directly by citizens and businesses, or a wholesale CBDC reserved for financial institutions and primarily intended for interbank payments and financial settlements.
Singapore was ranked third in a PwC index released in April that measures the progress of interbank / wholesale CBDCs. Retailing, like the one China is planning, is another story, according to Mohanty.
“In the context of Singapore, it is not obvious that a retail central bank digital currency is useful because today you can already send money to yourself at zero cost and with a few clicks. What can you do better than this? ”
Bitcoin and Cryptocurrencies: Singapore and its private sector have taken steps to strengthen their presence in cryptocurrencies, from Singapore Exchange Ltd to become the Asian price hub for bitcoin and ether to DBS Private Bank by launching the first trusted banking solution in Asia for crypto. At the same time, however, the government has repeatedly warned its citizens about the risks involved in trading crypto like bitcoin.
“I haven’t touched bitcoin so far. It’s a speculative asset, ”Mohanty said. “It makes good sense that no one should indulge in assets they don’t understand. It’s so volatile and it’s so complex. MAS does a lot of work through speeches and parliamentary messages to tell people to be careful. And if people continue to buy such risky assets, it is their choice. However, he added that in terms of trading, “we know the world is moving towards digital currencies – so, CBDCs and stablecoins and all that other stuff.”
“The first thing that becomes institutionalized is exchanges. The common platform, like Partior, they become the backbone. And once that backbone is created, transactions flow through that backbone and eventually become more common. There is value to this change in the way you think about payments and currencies. “