Lawrence Wong, deputy prime minister and minister for finance, Republic of Singapore, took to the stage at Singapore Fintech Festival to make several announcements that will set the backdrop for the nation state’s fintech journey in years to come.
Welcoming attendees back to an in-person event, Wong referenced the huge turnout, stating that this has proven that “human interaction is indispensable even in our digital age.” He also highlighted that serendipitous encounters at the event may lead to the next breakthrough innovation and with technology, companies and countries can become more resilient.
Wong described Singapore as a “red dot in a dangerous world” that must ultimately count on itself to survive and thrive. By embracing “a healthy level of constructive paranoia” and working through what he referred to as “divine discontent,” Singapore as a nation maintains its motivation to push the limit and improve standards.
When hit by Covid-19, Wong explained that it was previous, pre-pandemic investments into digital infrastructure that helped keep Singapore afloat and continue to provide basic financial services to citizens.
Purpose-bound digital Singapore dollar to be trialled
This week, the MAS released a report detailing potential uses of a purpose-bound digital Singapore dollar (SGD) and the supporting infrastructure required, marking the successful completion of Phase 1 of Project Orchid. Enabling consumers to specify conditions such as when and where digital money can be used, this opens the potential for a plethora of use-cases. In an attempt to trial the use of purpose bound money in the form of digital Singapore Dollar backed vouchers, Singapore Fintech Festival attendees will be able to make purchases with this digital currency at participating merchants at the event itself.
Cross-border payments issues to be tackled
Although Singapore’s PayNow allows individuals to transfer money instantly to one another with just their mobile numbers or to businesses using their unique entity numbers 24/7, Wong revealed that in 2021, the world’s first linkage of real-time payments systems was established. This was between PayNow and Thailand’s PromptPay. They are also working on building corridors to Malaysia and India.
Supporting MSMEs and developing integrated trade and finance ecosystems
Wong revealed that the MAS will be working with partners such as in-country public entities for Ghana, with the UNCDF for the world’s least developed countries, and the IFC globally on financial literacy and building financial trust. Wong added: “Other than empowering small businesses, technology can help individuals take better care of themselves. Planning for your finances is a step towards having less stress in life, and building a more resilient financial future.”
SGFinDex to include insurance policy data
In his keynote address, Wong also announced that individuals will be able to view their insurance policies with insurers via SGFinDex, enabling Singaporeans to identify potential gaps in their protection more easily, and have a more comprehensive view of their financial positions. “Going forward, we hope to onboard more financial institutions and a wider range of financial information onto SGFinDex for an even more comprehensive overview and greater convenience in financial planning,” Wong said.
Cryptocurrency = risky; distributed ledger = transformative
Wong was unequivocal about Singapore’s stance on cryptocurrency: “MAS has made clear our stance on speculative trading of cryptocurrencies by retail investors - we believe this is highly risky, not suitable for the public, and we aim to reduce the risk of potential harm to consumers. But there should be no doubt that we are embracing fully the underlying technologies of distributed ledgers, and the potential that they have to transform financial markets. In short, we aim to become a centre for innovative and responsible digital asset activities.” This has been proven with the launch of Project Guardian. They have successfully conducted the first industry trials, featuring cross-currency transactions and trading of tokenised securities and will work to sharpen the digital asset strategy in Singapore.
MAS to partner with KPMG and the Singapore FinTech Association to identity ESG use cases
In addition to investing in new technologies that can help decarbonise the economy, like the use of low-carbon hydrogen, Singapore recognises that the current ESG fintech landscape is still nascent. MAS will partner with KPMG and the Singapore FinTech Association to identify key use-cases and growth strategies in this space.
MAS to provide FSTI in fresh funding of S$150 million for the next three years
After introducing the Financial Sector Technology and Innovation Scheme, or the FSTI, to support the creation of a vibrant ecosystem for innovation in the financial sector, the MAS has provided two rounds of funding. “Under the first tranche, we awarded over S$100 million of grant funding for close to 500 projects. In the second round, we provided over S$200 million in committed funding for more than 1,000 projects,” Wong said. The scheme has helped to anchor new digital asset ecosystem players, as well as catalysed industry efforts to adopt cutting edge technologies. The MAS will provide a third tranche of funding for the FSTI, with a fresh commitment of S$150 million for the next three years, maintaining focus in key areas for finance, like AI, analytics, RegTech and cyber security. Concurrently, there will be new focus areas, such as ESG fintech and Web 3.0.
Corporate cheque use to be eliminated by 2025
The share of cheques as a proportion of payments using cheques, GIRO, and FAST used to be 32% in 2016 and has fallen to 7% in 2021. Wong concluded that: “MAS will be issuing a public consultation today on several initiatives to eliminate all corporate cheques by 2025. This will help to bring down a substantial portion of the cheque transaction volume in Singapore. But amongst the remaining individual users of cheques, we recognise there are some, especially seniors, who are still not comfortable with shifting to e-banking and e-payments. We must not forget about them. To ensure that our e-payment journey is inclusive, we will provide a longer runway for individuals to switch to alternative payment methods.”