Recently ranked fourth financial centre of the world in a report produced by think tank Z/Yen, Singapore is thought of as a fintech leader in the Asia Pacific region because of increased innovation and it is apparent that a revolution is imminent in this space.
In November 2015, the Singaporean government proposed to transform the country into a “Smart Nation” which means that all citizens would have increased access to data and would be able to harness technology for more efficient use. As well as this, mobile payments and wallets have been paving the way for modern transactions, so a nation with all consumers having mobile coverage has meant that Singapore is at the top of the MasterCard Global Mobile Payments readiness index. “With an efficient regulatory system and mobile phone infrastructure, as well as financial services that get high marks, Singapore is the market most ready for mobile payments in the short term,” MasterCard explains.
Alongside this, Singapore has support from the Infocomm Development Authority (IDA) that is fully behind the country becoming the world’s first Smart Nation. In the IDA’s factsheet for the establishment for the Smart Nation Platform, the authority addresses how achievements such as the Nationwide Broadband Network and Wireless@SG will be developed. “IDA will further develop our capabilities in pervasive connectivity, and build new infrastructure and common technical architecture to enable citizens, businesses and government agencies to leverage technology to make lives better in a Smart Nation,” the report said.
Traditional banks also have to adapt to become “smart” but Singapore seems to have this under control as results from the Global Finance ranking of the world’s safest banks revealed that Singaporean banks, DBS Bank, Overseas-Chinese Banking Corporation and United Overseas Bank hold the top three positions. Global Finance publisher and editorial director Joseph D. Giarraputo highlights that this ranking is an invaluable tool because of the market changes some investors have been through recently. “Global Finance’s Safest Banks ranking 2015 highlights those banks that have built strong foundations – providing safety and security in this rapidly changing market landscape,” Giarraputo said.
Despite this, the traditional sector has to welcome cashless payment systems. A large number of Asian people remain unbanked regardless of banks such as those named to be the safest in the world offering a high quality service. It seems that Singapore is heading in a direction that is increasingly committed to fintech and supporting start-ups, even those involved in blockchain. Vladislav Solodkiy for Tech in Asia explains that the Monetary Authority of Singapore (MAS) has committed S$225 to help the fintech industry of the startup ecosystem grow.
MAS’s managing director, Ravi Menon explains how Singapore has already embraced fintech. “First, payments at stores and restaurants. This is almost a Uniquely Singapore phenomenon: many of our stores and restaurants have multiple Points-of-Sale (‘POS’) at their payment counters; this not only clutters valuable real estate but also makes life difficult for customers and merchants,” Menon said.
Banks also need to embrace fintech and Solodkiy provides examples such as the relationship between Moven and Accenture, and the US organisation Bancorp. He mentions that unless start-ups in Singapore attempt to merge with banks, a lot of unnecessary time and money will be spent. “Fintech startups could not only increase product line of Singaporean banks (and telcos), but also help them to expand capital of Singaporean banks for other countries without buying/establishing of new (and expensive) traditionally licensed banks,” Solodkiy said.
Singapore is renowned to be a start-up destination and an increased number of investors are beginning to pay attention to this region. However, Terence Lee for Tech in Asia states that dealing in Singapore does have drawbacks as “many Singapore-based entrepreneurs are not adaptable enough to thrive in these countries as they are culturally more in-tune with the West and other developed markets.”
Evan Barry for Tech in Asia makes a comparison between Silicon Valley and Singapore and the most prevalent is that although both can be referred to as a technology hub, Singaporean entrepreneurs do not launch their products at home, whereas those working in Silicon Valley do. “Singaporeans understand the limits of their market and look to find ones that better fit the product they’ve created,” Barry highlighted. Another difference that is highlighted is that “many Singaporean companies rely on small government grants to get them off the ground as opposed to Silicon Valley companies that rely on angel investors.”
In April, the Prime Minister of Singapore, Lee Hsien Loong, gave a speech at the Founders Forum Smart Nation Singapore Reception. Here he spoke about how Singapore is a smart nation and one of the bright spots of the world.
“We are embarking on our Smart Nation journey with the same determination and with the same confidence. To make the Smart Nation succeed, we need an entrepreneurial culture. You can import the latest technology, you can implement business-friendly schemes, but ultimately, you need a culture, that spunk, daring to dream, daring to fail, daring to take on big challenges. Many countries have tried to nurture this culture, only a few have succeeded. America is one of them, Israel is another, perhaps there will be one or two somewhere in Asia. But the places which have succeeded in doing this – even in America, it is not everywhere but a few places – it starts a virtuous cycle – talent attracts more talent, more ideas and start-ups are established, the excitement builds on itself and you get more breakthroughs,” Loong highlighted.