In the Part 1 we have introduced the background of FinTech in Singapore and the global significance of the growth and development of the industry. In this article you will be able to learn more about how to operate with the six key dimensions in order to create an advantageous FinTech environment, following the example of Singapore.

First, let’s look at human capital.
People are the most fundamental, yet complicated aspect of the ecosystem. The growth and development of the latter critically depend on the professionalism of those, who create it. Therefore, issues in this regard mainly appear due to the lack of talent and tech skills around the world. The scale of the problem becomes even larger when we are talking about small cities with limited pool of employees.
So, how can we deal with it? An optimal solution would be taking a multi-vector approach and influence the process on the early stages. For instance, institutes of higher learning in Singapore have made the existing curriculum more flexible in order to adapt it according to the advancements in the industry, so that emerging technologies are an essential part of the learning environment. It is also important to create re-skill programs that would give a second chance to those, who are willing to apply for jobs of the future. Besides, Singapore encourages professionals from all around the world to enrich its existing pool of employees and contribute to the global development of innovative technologies.

Second, we will take a closeup at identification.
No secret that the existing KYC mechanisms present problems of various kinds in terms of identity verification. Let’s look at how Singapore has been dealing with those. Primarily, the government of the state has created a tool called National Digital Identity (NDI), which involves two-factor authentication and a public-private key pair. Every citizen of the jurisdiction may use it when transacting online in order to securely declare his legal identity. One of the main components of NDI is MyInfo. The latter is a service that gives citizens an opportunity to authorize third-parties, granting them access to their personal data. Only when consent is given, third-parties may access government-verified data through MyInfo APIs in order to identify any potential or existing client and regulate their relationship with him.
Besides, such processes as bank account opening or credit card acquisition become much easier with MyInfo, as they can be completed online and in a rather short period of time. The extensive use of MyInfo by different agents in the industry has become the key towards solving the KYC problem in Singapore, yet this only concerns identification of individual and not corporate entities. In order to effectively manage the latter, there was a proposal to harmonize the KYC systems across the industry and integrate efficient tools with banks’ diverse IT infrastructure. Yet, this solution would be a quite costly one, even taking into consideration long-term profits from it, which immediately made it less attractive. Therefore, a mechanism that would solve the problem of corporate KYC in Singapore is still under construction.

Third, let’s move on to payment mechanisms.
The national e-payment ecosystem of Singapore is pretty much one of the most advanced and well-operating in the world. For example, there’s a special infrastructure that enables real-time funds transmission – FAST, as well as PayNow, which only requires personal ID number, mobile phone number and unique entity number, for instant funds transfers to private and business entities. In addition, there are UPOS that accept all well-known credit card brands, regardless of whether there’s a smart chip, NFC, or QR code. One of the most innovative and recent developments is the single standardized QR code SGQR, which can be applied in multiple payment schemes.
However, there are also major problems that concern payment mechanisms and they mostly relate to cross-border payments and settlement of assets. This is due to the fact that the former typically involve various currencies and the latter – various assets. The main instrument necessary to resolve the situation is a single trusted central party that would be responsible for handling the procedures. Professionals from Singapore tend to rely on distributed ledger technology when making prognoses about the future. Besides other benefits like decentralizing the netting of payments and increasing the privacy of transactions, it would also allow for settlement of tokenized assets. Therefore, faster, cheaper and more efficient cross-boarder payments may become reality in the near future with blockchain platforms.

The dimension number four is data protection.
Governing the accumulated data, its storage, processing, and transmission, are some of the key aspects of a FinTech ecosystem. Main concerns are all about privacy, confidentiality, security and ethics that are applied when handling sensitive data. It will be difficult to discover the full potential of the industry if such fundamental issues are poorly managed. Companies must ensure that what we get as the final output of AI-driven processes is ethical, transparent and socially acceptable. Information must flow freely, yet in a trusted and secure manner in order to ensure future progress, and data must be used responsibly by financial services providers. For this purpose, Singapore has been working on creating a regulatory framework that would provide the necessary guidelines for the participants of the industry.
On the transnational level, there must be more connectivity and less localization of data. The latter must cross boarders in a more efficient manner for the industry to grow and develop without limitations on the basic levels. The old-school notions of cybersecurity, data privacy and protectionism must be replaced by new progressive standards. This can only be done through cooperation of multiple actors, such as community, policymakers, and industry’s participants. Singapore is working on finding other innovative solutions besides the conventional end-to-end encryption and anonymization. One of them for instance, would allow banks to access data in other countries and receive an integrated analysis, without directly viewing the data. Common international data standards would be highly beneficial for creating the environment of trust and safety.

Daily application comes fifth.
Without applied research and analytics in the financial sector it would be difficult to see actual benefits of the technologies and improve them according to the needs of the modern society. Singapore constantly processes applications for grants from financial and research institutions, particularly in the spheres of econometrics and data science, back-testing methodologies and quantum computing for the financial sector and explainable AI. The applications of AI and distributed ledger technology in the financial sector also create a lot of interest from the side of researchers and analysts in the country, which fuels progress and development in the relevant spheres.

Last, but not least – common efforts.
The ultimate component of a healthy FinTech ecosystem is platforms fostering innovation. As you understand, growth cannot occur without a substantial level of communication. People and ideas must interact with each other in order to find solutions to major issues by means of organized cooperation.
One of the examples of such platforms is AFIN (ASEAN Financial Innovation Network), which was established to deal with the issue of unbanked individuals in the world. FinTechs have full capacity to serve those, living in regions that banks do not reach out to. AFIN stepped in to foster collaboration between banks and FinTechs in order to create solutions for remote markets. With similar platforms put in place, we will be able to dig deeper into the vast potential of FinTech and bring more innovative solutions to the world.

To conclude, you saw that FinTech is not solely about technology, neither it is all about finance, although these two components are central for FinTech application. It is rather about connecting people with similar ideas from all around the world and empowering them to turn those ideas into reality, in order to create a dynamic economy and improve the society we live in. Join FinTech today and become a part of this exciting journey!