SINGAPORE (Sept 9): Singapore has the most developed financial technology ecosystem in Southeast Asia, according to a report by Fitch Solutions.

Fintech segments such as e-payments, peer-to-peer crowdfunding and cryptocurrency are mature in Singapore, with established players providing services.

The city state also acts a springboard for many foreign companies to enter Asia markets.

In a report on Sept 6, Fitch highlighted the Monetary Authority of Singapore’s responsive and supportive regulations.

Not only does the regulator offers conventional to express fintech sandboxes for companies to trial services and test integration, coordinated master plans and digital initiatives have also been key to ensuring close cooperation among government and private entities, notes Fitch.

See: MAS proposes ‘regulatory sandbox’ for FinTech experiments

See: New industry sandbox established for financial institutions & fintech firms

See: MAS issues regulatory guidelines for fintech experiments

The Singapore government has reiterated that it will continue to adjust regulations to adapt to changing industry needs.

“We believe that the Singapore government will ensure that the regulatory environment remains conducive to the development of fintech systems and to maintain the vibrancy of its fintech sector, which attracted over $500 million in investments in 2018,” says Fitch.

Payments interoperability, a sticking issue in the past, has seen strides taken by the government to increase adoption. Citing work done on the Singapore Quick Response Code, Fitch is positive the move will help in adopting e-payments.

See: Singapore launches unified QR code for e-payments; new rules soon to address likely risks

However, the competition in this market is still fierce, with different e-payment players continuing to engage in promotions to attract customers.

“While there is no clear leader in the payments market, we believe that Singapore-based Grab is best positioned to gain greater market share, as its ownership of ride-hailing services allows it to offer its users rewards points for every transaction, which can be used to offset ride-hailing fares. Other established players include DBS PayLah, which has strong traction among account holders of DBS Bank, and Singtel Dash, which benefits from its telco parent’s regional presence,” says Fitch.

See: Grab will invest US$150 million in AI to build regional super app

The latest move by MAS to award five digital bank licences is a positive move, in Fitch’s view. This will allow digital banks to provide competition to traditional banks while delivering more innovative and efficient services.

See: Singapore to offer up to five digital bank licences

See: MAS sets high bar for digital bank applicants

“Traditional banks are unlikely to see any noticeable erosion in their business, as the MAS has suggested that it is unlikely to approve the business models that are ‘value-destructive’, and stated that the digital banks must instead be focused on meeting underserved financial needs using technology,” says Fitch.

P2P crowdfunding and lending in Singapore now features well-established platforms from Funding Societies to Moolahsense. They offer a wide range of services from business loans to invoice financing to start-up financing. The cryptocurrency market is also mature, with Singapore attracting a large number of Initial Coin Offerings as well as playing host to one of the world’s largest cryptocurrency exchanges.

See: Funding Societies raises $25 mil in Series B funding led by Softbank Ventures Korea

See: DBS signs cross-referral agreements with Funding Societies and MoolahSense

“Singapore’s attractiveness as a regional cryptocurrency hub is in part of the receptiveness of the regulators toward cryptocurrencies and their positive efforts in regulating the segment,” says Fitch.

MAS has issued a Guide to Digital Token Offerings, defining how ICOs will have to comply with the Securities and Futures Act, and the Payment Services Act was also passed in Parliament requiring digital token providers to meet anti-money laundering and counter financing of terrorism guidelines.

See: MAS releases guide to digital token offerings; announces new payments framework

See: MAS issues warning to digital token exchanges, ICO issuer

Singapore also has plenty of grants and subsidies for start-ups, which puts the city-state in good stead.

See: MAS launches $27 mil grant to promote AI & data analytics in financial institutions

See: MAS to place up to US$5 bil with private equity and infrastructure fund managers

“We are of the view that the government’s receptiveness and support for the fintech industry will continue to underpin Singapore’s leading position in the region,” says Fitch.