As the fintech landscape continues to evolve, blockchain, AI, and data analytics solutions are becoming more ubiquitous, and the threat of cybercrime that will undermine these services continues to loom ominously.
Ravi Menon, Managing Director of Singapore’s central bank Monetary Authority of Singapore (MAS), kicked off this year’s Singapore Fintech Festival with the announcement of a slew of initiatives to tackle the aforementioned areas and more.
They include collaborations with foreign governments, educational institutions, as well as financial institutions.
For example, MAS is working with the Bank of Thailand to link their payment apps PayNow and PromptPay respectively. PayNow is an app that allows Singaporeans to transfer money to another bank account instantly using their mobile number.
The hope is that this partnership will allow them to transfer money to Thai bank accounts in a similar fashion in the future.
Here are MAS’s other new plans.
Data analytics and cyber threats
The MAS will launch a S$27 million (US$20 million) Artificial Intelligence & Data Analytics Grant. This is intended to support the adoption and integration of AI and data analytics in financial institutions.
It will also set up a new regional data analytics centre in partnership with Financial Services Information Sharing and Analysis Center (FS-ISAC). The centre currently supports 49 financial institutions across nine Asia Pacific countries.
The aim of the centre is to provide 24/7 local and global coverage with threat information sharing, actionable intelligence, as well as tools and resources to respond to incidents.
Members will also benefit from regional meetings, regionally-focused monthly threat calls, webinars on hot topics, cybersecurity training and summits.
Besides partnering with other governments to share cyber threats. MAS will work with Association of Banks in Singapore (ABS) to review the technology risk management guidelines.
Additionally, MAS and ABS to establish guidelines for “red-teaming”, to enhance cybersecurity testing. Red-teaming is a covert penetration test conducted on a financial institution’s live environment – its people, processes and technology – to assess their ability to respond to infiltration attempts.
In Singapore, MAS requires financial institutions to conduct these cyber defence tests by independent third-parties.
Distributed ledger technology
The MAS is doubling down on the development of distributed ledger technology (DLT), of which blockchain is a part of.
MAS will collaborate with the Massachusetts Institute of Technology (MIT) Media Lab to develop prototypes on interbank payments, securities settlement, insurance claims processing, trade, and trade finance.
They will be employing not only DLT, but also AI, cryptography, quantum computing and big data.
Closer to home, financial institutions have already been experimenting with DLT for decentralised interbank payments and “settlements with liquidity savings mechanisms” in a project called Project Ubin.
Phase 1 of the project saw banks conduct interbank payments without going through MAS, using a blockchain-based digital representation of the Singapore Dollar.
During phase 2 of the project, 11 financial institutions and five tech companies managed to develop three DLT platforms (Corda, Hyperledger Fabric and Quorum). These platforms will be made available to the public at no cost.
Moving forward, MAS will further leverage the collective knowledge of the open-source community through the Linux Foundation and the Hyperledger Project. The partnership will also be extended to the Bank of Canada.
DLT will also be used to develop cross-border digital transactions and transfers. MAS and the Hong Kong Monetary Authority will jointly develop the Global Trade Connectivity Network (GTCN). It will enable the seamless transfer of digital documents and data across the Singapore-Hong Kong trade corridor.
The platform is expected to go live in 2019.
Many Singapore banks, such as DBS and OCBC, are already sharing their APIs (application programming interfaces), which allows other services to integrate their banking applications into their platform.
Currently, DBS has over 170 APIs that are available to tap on. By integrating its API, Singapore-based home marketplace PropertyGuru lets consumers find out if they are eligible for a property loan and apply for the loan online.
Collectively, there are now 270 APIs offered by financial institutions in Singapore.
The MAS has been actively inking fintech partnerships with various governments across the world. By the end of the week, it would have signed 16 fintech cooperation agreements with other countries.
MAS also has a referral mechanism that supports Singapore fintech startups in overseas markets, and facilitate overseas startups to set up in Singapore.
New KYC guidelines
The current bank customer onboarding process is still labourious and inefficient. MAS wants to streamline it and make more robust so it becomes difficult to evade taxes or launder money.
MAS and GovTech have done a pilot with several banks to enable customers to open a bank account online using MyInfo, which is a government platform that stores and verifies Singaporeans’ personal data.
According to the MAS, MyInfo shortened the bank application account process by 80 per cent.
MAS is working closely with local and foreign banks to streamline end-to-end KYC. This means centralising processes such as:
- leveraging on MyInfo for customer identification and verification;
- collecting and validating KYC documents;
- screening against sanctions and blacklists.
Besides disrupting financial institutions using tech, MAS is also leveraging it to improve its own internal processes.
To this end, it has developed something called “supervisory technology” (suptech).
An example of MAS’s suptech is its data analytics and pattern recognition system. It uses it to detect trading accounts that may be engaged in circular trading or manipulation of share prices.
MAS is now working on a data analytics system to scour through the 3,000 “suspicious transaction reports”, or STRs, that financial institutions file each month on money laundering or terrorist financing risks.
Finally, MAS wants to reduce incidents of duplicate data requests by financial regulators, and end the manual collection of data from financial institutions.
To do this, it aims to roll out machine readable templates.
New fintech hub
80 Robinson Road, a 100,000 sq ft building which housed Lattice80’s fintech hub on its first two floors, will now be fully dedicated to accommodate fintech startups.
It will be rebranded as 80RR.