FinTech is revolutionizing banking, insurance, investment and other financial services and activities throughout the region and aiming to reach out to the millions of unbanked citizens across ASEAN, explains MAS Chief FinTech Officer Sopnendu Mohanty
What is the role of FinTech in developing ASEAN and increasing financial inclusion of the ASEAN members?
FinTech can change every aspect of interaction within the financial sector - the way you create, sell, distribute and support insurance; the way you do consumer banking, asset management; the way you do pension plans, corporate banking or investment banking. It can also affect the way public infrastructure is built around financial services and changes the way regulators interact with the industry in terms of monitoring and supervising. That has been the big picture of our strategy for the last three years.
Aligning it to what ASEAN needs we have to consider the huge unbanked population and the need to provide them with banking services. So that is one way of doing it: by building products that create banking opportunities for the unbanked.
The other way is to do a complete and holistic transformation. We can change the banking sectors and infrastructure by uplifting and re-imagining them and giving them the access to the best technology globally wherever available. If they transform themselves the cost of delivering services becomes lower. They are agile enough to go and expand to these markets and bring more people to their system. As they do it, the unbanked population decreases, the liquidity creation gets bigger, and there will be more opportunities to borrow.
The next step is that in the next 20 to 30 years, this will be about creating jobs because population size will increase, and the job market will be a lot tougher. This will become a necessity. Where are the jobs going to come from? Jobs will come from small and medium enterprises, which will need access to these renewed banking services. So that is the second aspect of FinTech, to find ways to support SMEs to have access to capital, access to technology, and then they can do their job - conduct e-commerce and cross-border trade, and create access to the most efficient financial services. They will then be able to build that future economy which is primarily driven by SMEs.
Those are the two angles of FinTech which will change the way ASEAN is today and will be in the future.
Could you tell us more about the role the ASEAN Financial Innovation Network is playing in this regionalization process of FinTech and ASEAN?
There is something very unique about FinTech. Unlike other sectors, the best solutions for transformation are not going to come from developed economies but from emerging markets. The bigger the constraint, the more likely new ideas will come. We usually think that the mature economies will export technologies to less mature markets. But FinTech provides a reverse opportunity and unprecedented advantage. Once you find out what the bigger barriers are, you build a product and from there you expand. FinTech is a great equalizer.
Singapore has a very advanced legacy platform. There is no urgent need to change the way things are working. Yet, Singapore is willing to re-architect such working and efficient incumbent processes and systems. Hence we see remarkable opportunities in FinTech as it affects everybody, whether developed or undeveloped countries. Both sides can benefit, and technology will bring these countries closer as well. Collaboration is very important and AFIN (ASEAN Financial Innovation Network) is built on the premise of bringing the best brains and minds together. If the market comes together and if we build a collaborative platform then together we can start upgrading our financial infrastructure.
AFIN aims to facilitate broader adoption of FinTech innovation and development, and enhance economic integration within the ASEAN region and how it is a region full of opportunities for global FinTech play
There are two stakeholders in AFIN. One stakeholder, like the banks and insurance companies, will consume technology. There is another stakeholder – the FinTech firms, which will connect to banks and insurance companies via this platform and help them transform their own services at an affordable cost.
How important is it to position Singapore as a key hub for FinTech in the world?
A smart country must have a smart way of dealing with disruptions to a particular sector. Among the different populations in Asia, the affinity to technology is the same. They have the same behavior, needs and the same mobile device. What needs to be changed is the banking sector. It should uplift its infrastructure and services and be able to deliver mobile banking services at a very affordable cost. It is not about roads, buildings or airports. It is about people, whether in Singapore or in another country, having the same needs and having access to a mobile device. There is no physical dependency in providing these services. It is all digital, cloud-based, and delivered with empathy and in a very customer-centric way.
Can you walk us through the main milestones of your FinTech office here in Singapore and what has allowed it to be so competitive? How important is it for you to expand your network outside of Singapore to export that know-how?
We are building capabilities for every component of the financial sector which requires technical transformation. We also believe that this know-how can be shared with the markets outside of Singapore.
In Singapore, we have created an ecosystem that attracts a lot of start-ups. These start-ups need the right environment to allow them to build their software and experiment by working with the banks in Singapore to prove that their product is working. Singapore is a great place to experiment new ideas and to attract talent. It is a great place to get support from a very credible regulator like us who provides a regulatory framework within which they can operate successfully.
Start-ups then take their base product and they go to new market to sell it or work with other markets to deliver that same technology. That is how Singapore is building the ecosystem and creating the outflow of products and services, and the required expertise.