Reply to Parliamentary Question on plans to encourage the use of FinTech in financial institutions

QUESTION NO. 1137

NOTICE PAPER 644 OF 2017

FOR ORAL ANSWER

Date: For Parliament Sitting on 8 May 2017

Name and Constituency of Member of Parliament

Mr Melvin Yong Yik Chye, MP, Tanjong Pagar GRC

Question:

To ask the Prime Minister whether there are plans to encourage the use of financial technology (fintech) in our financial institutions given that 73% of traditional financial institutions in Singapore believe they are at risk of losing business to fintech.

Answer by Mr Ong Ye Kung, Minister for Education (Higher Education and Skills) and Second Minister for Defence, on behalf of Mr Tharman Shanmugaratnam, Deputy Prime Minister and Minister in charge of MAS:

1     Financial technology, or FinTech, is transforming the financial services industry in an unprecedented way. Disruption is happening and gathering pace. A growing number of FinTech players are offering a range of financial services, either to take over business from financial institutions or to work together with them.

2     But financial institutions in Singapore are not sitting still. They have been investing heavily in developing their own FinTech capabilities. At the same time, MAS has been strongly supporting the development of FinTech and is regarded internationally as one of the most progressive regulators in this aspect. In 2015, MAS laid out a vision for a Smart Financial Centre, where innovation is pervasive and technology is used widely.

3     MAS does not have to choose between financial institutions and new FinTech players. We take an even-handed approach, encouraging established and new players to compete, collaborate and innovate. There is a natural synergy here: FinTech solutions present financial institutions with opportunities to enhance their product offerings, while collaboration with financial institutions enables FinTech players to broaden their reach.

4     In this regard, MAS promotes FinTech in two broad ways.

5     First, update policies and provide regulation that is conducive to innovation. For example, last year, MAS issued new guidelines on the use of cloud computing services by financial institutions to give them confidence to adopt new FinTech solutions hosted on the cloud. MAS has also introduced a regulatory sandbox for financial institutions and FinTech players to experiment with new technologies while limiting the potential consequences of product failure.

6     Second, facilitate and encourage innovation and collaboration between financial institutions and FinTech players. Last year, Singapore staged the world’s largest FinTech Festival. FinTech companies around the world, and in Singapore, participated actively, because they wanted to collaborate with established financial institutions. Today, more than 20 global financial institutions have set up innovation labs or research centres here, specialising in areas such as data science, machine learning, user experience, and design thinking.

7     As our financial institutions harness new technologies to improve their services, it is important to ensure that our financial sector workforce is building competencies in tandem with these changes.

8     MAS is working closely with the institutes of higher learning to shape curriculum and engender greater alignment between what is being taught in the institutes and the skills needed by the financial industry.

9     The industry is cognisant of the need for skills upgrading too. The Financial IT Academy (FITA) has developed a digital transformation programme for mid-career professionals that includes topics such as data analytics and agile development. The Institute of Banking and Finance (IBF) will also be offering new learning modules on data science, human-centric design, agile thinking, and cyber security awareness.

10     Through the Financial Training Scheme (FTS) and IBF Standards Training Scheme (IBF-STS), MAS provides funding to support professionals in acquiring specific expertise and competencies in the financial sector. There are also schemes within the TechSkills Accelerator (TeSA), an initiative driven by IMDA, which provide support for employers to develop their existing employees in the relevant ICT skills.

11     What I have outlined today are just some of the examples of what is being done to embrace technology in the financial sector and enhance collaboration with FinTech players. Financial institutions in Singapore are making good progress in fostering a culture of innovation and a spirit of enterprise.

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Last Modified on 08/05/2017