MAS and IFSCA have signed a FinTech Co-operation Agreement (CA) to facilitate regulatory collaboration and partnership in FinTech.
Speech by Mr Heng Swee Keat, Deputy Prime Minister, Coordinating Minister for Economic Policies and Minister for Finance, for Singapore FinTech Festival x Singapore Week of Innovation & TeCHnology (SFF X SWITCH) 2020 on 7 December 2020
Welcome to the Singapore FinTech Festival and the Singapore Week of Innovation and TeCHnology 2020! We meet in extraordinary circumstances. COVID-19 has taken more than a million lives and disrupted the global economy. Across the world, technology and innovation played a crucial role in helping peoples and businesses respond to the crisis. Similarly, they will prove critical in curtailing the pandemic and boosting economic recovery.
COVID-19 has made us reassess what the global future holds. Supply chain disruptions have alerted us to a greater need for resilience and diversification. But fundamentally, we must continue to tap on global capabilities to serve the world. The pandemic has brought inequalities into sharper relief in many societies. Lower income households were hardest hit, in terms of fatalities and unemployment. We must take a more inclusive approach in our global recovery plans. Geopolitical tensions between major powers have intensified. The risk of technological and economic decoupling has increased.
Driving Global Recovery Through Innovation and Collaboration
This pandemic has created a unity of purpose in start-ups and businesses from Silicon Valley to Shenzhen. They want to find new solutions to cope with COVID-19 and new technologies that will shape a post-pandemic world. Chinese researchers made the COVID-19 genome freely available at the start of the crisis, speeding up the development of diagnostic tests. Apple and Google worked together to enable a broader Bluetooth-based contact tracing platform on mobile phones. The number of international collaboration and open access publications increased during the pandemic
COVID-19 has provided a single focal point for the world. We have demonstrated that we can set aside differences to pursue common goals. We must sustain this spirit of working together beyond this crisis. To build on this momentum of change, we must continue to invest in innovation. On the bright side, global venture capital investments have remained resilient during this period
Singapore can contribute to global recovery by continuing to invest in innovation and working in collaboration with Asia and the world. In Singapore, the tech sector continues to be a bright spot for businesses and workers. Companies like Google and IBM stepped up to create jobs and training opportunities. Paypal launched a programme to help SMEs digitalise. Microsoft helped SMEs gain access to regional markets like Indonesia and Thailand. As we gradually re-open our borders, Trip.com announced a partnership with the Singapore Tourism Board to market Singapore as a destination of choice for travelers. Our start-up eco-system continues to thrive. While relatively nascent, we have nurtured a number of unicorns, including Sea Group, which is Southeast Asia’s largest company by market value today.
We are committed to investing in innovation. Each year, the Singapore government invests about 1% of our GDP on research and development. We are finalising our plans for the next five years, and I will announce the details later this week.
We also continue to deepen our capabilities to keep our tech eco-system vibrant. FinTech is one key area we are growing so that Singapore can continue to develop as a global financial hub. Just last week, Singapore issued four digital bank licences. This will strengthen Singapore’s financial sector for the digital economy, and improve access for currently underserved businesses and individuals. Today, I am pleased to launch the Asian Institute of Digital Finance. This Institute is hosted by the National University of Singapore, and backed by the Monetary Authority of Singapore and our National Research Foundation. One of the Institute’s first projects is to build a data-sharing platform that can train models to improve credit assessments. The platform will use data distributed across multiple firms, while preserving data privacy. This allows lenders to make better credit decisions and offer better rates. This will improve the financing of small businesses to enable a stronger post-pandemic recovery. The Institute will also have a strong role in nurturing global FinTech talent for Asia, and will take in its first batch of post-graduate students next year.
Another area we are deepening our capabilities in is blockchain. Blockchain technology enables transactions, even in a zero-trust environment. In the last few years, the blockchain eco-system in Singapore has grown significantly. But there are also known limitations, such as the energy efficiency of processing blockchains and the ability to connect different blockchain systems. We are therefore launching the Singapore Blockchain Innovation Programme. This is Singapore’s first major blockchain research and translation programme. The programme will expand blockchain research to the needs of the industry, and will also look into scalability and interoperability of blockchain solutions.
Beyond investing in innovation, Singapore is also strengthening collaboration. Through the Open Innovation Network, we brought together startups and corporates to address common industry challenges. Despite COVID, we have seen an increase in participation from companies based outside Singapore. The most recent series of innovation challenges focused on issues faced by industries as we recover from COVID-19. For example, with the increase in e-commerce transactions, one challenge is focused on developing durable and eco-friendly packaging that could reduce damage during transportation. Another challenge is on how package design can improve processing efficiency. I welcome all of you to take part in future waves of challenges.
Our commitment to innovation and to work together will be key to driving economic recovery and growth. As we do so, the question before all of us is this – How do we use innovation and tech in a way that will build better lives for all our peoples? How do we build a future that is inclusive and sustainable? Let me share how we can do so from Singapore’s perspective.
A More Inclusive Future Through Uplifting Smaller Firms and Their Workers
We must ensure that the opportunities from technology and innovation benefit the broad majority of people. Prior to COVID, support for globalization was already waning as the fruits of growth were unevenly distributed between and within countries. Tech and innovation have created tremendous opportunities for businesses who are able to master them, but has exposed the broad middle to sharper competition and disruption. The same disparity in fortunes has happened in the workforce, with a global shortage of tech talent, while workers whose skills have been disrupted were laid off.
To avoid widening inequality, we must recover from this crisis in a manner that is inclusive. We must speed up the time that it takes for the last company and worker to access and benefit from technology. Small and medium enterprises account for 90% of businesses worldwide and 50% of global employment.
In Singapore, we are levelling up the capabilities of our SMEs by helping them go digital. We are helping them be more productive by adopting enterprise IT solutions for invoicing and payments, and for accounting and payroll. We are also helping SMEs access business-to-consumer platforms, such as Shopee, Lazada, Taobao and Amazon, to help them scale and expand their consumer market reach beyond our shores. But we found that the digital marketplaces for business-to-business commerce across geographies were more limited.
So we started the Business sans Borders initiative, or BSB, to digitally connect SMEs around the world and further expand their markets. BSB is a ‘meta hub’ – a connector of different platforms from around the world that helps SMEs access a much larger eco-system of suppliers and buyers. The platform also connects businesses to logistics and financial services providers. Using AI, BSB enables SMEs to discover prices and sales opportunities in a much larger global marketplace. For example, a homegrown SME furniture maker on a Singapore B-to-B platform, Source-Sage, was able to connect to other digital marketplaces through BSB. The SME discovered more buyers in different countries and on different marketplaces. The latest buyer it acquired was on the India B-to-B platform, Global-Linker. BSB is going “live” this week and I strongly encourage marketplaces and service providers to connect and help their SMEs expand.
The challenge our companies face is not unique to Singapore, or to Asia. Small and medium enterprises form the backbone of the global economy. Some of them will inevitably be disrupted by technology. But many others simply need some help to use technology to raise productivity and boost their value propositions. As the digital revolution gains pace, helping our SMEs succeed will in turn create better opportunities for workers and communities.
A more sustainable future, with every country playing its part
As we create a more inclusive future, we must also do so in a sustainable manner. COVID-19 was a wake-up call for the world and a reminder that we must be better prepared for big problems like climate change. As economic recovery picks up pace, we see that emissions are also beginning to rebound. But we believe that growth and sustainability can go hand in hand, and technology and innovation can offer solutions to achieving both.
Many countries are pursuing a green recovery from the economic recession induced by COVID-19. For Singapore, climate change is an existential threat. As a low-lying city state, many parts of our country will be submerged by the end of the century if we did nothing.
Joining countries around the world, Singapore is fully committed to do our part for climate change through innovation. Within the decade, we will deploy at least 2 gigawatts of solar – almost 3% of our electricity needs by 2030. Given our small size and high population density, we need creative solutions such as applied photovoltaics on building facades, and floating solar panels on our reservoirs and offshore waters.
We will also accelerate the deployment of electric vehicles and explore smart charging technologies that can help with grid stability and enable higher solar deployment. By 2040, we aim to phase out all internal combustion engine vehicles in Singapore.
We believe that putting sustainability at the core of what we do can create economic growth opportunities. For example, our commitment to phase out internal combustion engine vehicles was one reason Hyundai decided to locate its new electric vehicle manufacturing facility in Singapore, even though we do not have a traditional automotive manufacturing industry.
Just as importantly, Singapore can contribute to a green recovery in Asia. The Monetary Authority of Singapore launched the Green Finance Action Plan at this event last year. One key thrust of the Action Plan is to develop green financial products to fund the development and adoption of Green FinTech and other solutions in Asia. Singapore is also exploring how we can serve the region as a marketplace for high quality carbon credits, and to provide technology-enabled verification systems for carbon solutions.
More resilient global commons
Finally, let me emphasise that the foundation for a more inclusive and sustainable post-COVID future lies in the creation of a more resilient global commons.
Even as globalisation appears to be in retreat, new multilateral initiatives are emerging. The COVID-19 Vaccine Global Access Facility is one example, with more than 150 countries engaged in ensuring fair and equitable access to vaccines. In the Asia Pacific, the Regional Comprehensive Economic Partnership was signed last month by fifteen member states, including Singapore. This is the biggest trade bloc in history, accounting for 30% of global population and GDP.
As digital trade becomes a key source of economic growth, we are also seeing greater collaboration to harmonise standards, enable trusted data flows and empower greater participation in the digital economy. There is an ongoing effort by 86 WTO Members to update global trade rules to better facilitate digital trade. There is also a need to develop new approaches for emerging aspects of the cross-border digital economy, such as the application of digital identities in cross-border transactions and e-payments across jurisdictions. To this end, Singapore has thus far signed Digital Economy Agreements with Australia, Chile, and New Zealand. As the digital economy grows, we must look at how we can further deepen economic integration across our economies.
One key element of a resilient global commons is stronger governance on the use of technology. Fair and ethical rules that are generally accepted will allow more people to trust and use technology. In 2019, Singapore released the Model AI Governance Framework, which provides guidelines on how to address ethical and governance issues when deploying AI solutions. Companies have access to an implementation and self-assessment guide, as well as a collection of use cases. The best practices captured in these documents have been adopted by a range of companies, including Google, Microsoft and DBS. For financial institutions, I announced last year that Singapore is developing a framework, called “Veritas”, to ensure that their use of AI and data analytics is fair, ethical, accountable and transparent. The Veritas consortium – comprising financial institutions and global tech firms – has since developed a tool, the first of its kind globally, that allows financial institutions to validate the fairness of their AI-driven decisions in credit risk scoring and customer marketing. The consortium continues to grow and will develop more use cases in the coming year.
Strong governance applies not just to how technology is used, but also to how data is shared. Many of us transact with different platforms and businesses in our daily lives. One such area is in finance. People bank with different institutions, trade on different platforms and purchase products from different insurers. When we need to consolidate our finances, this is often onerous. In Singapore, we are launching the Singapore Financial Data Exchange today. This is the world’s first public digital infrastructure that allows a person to sign-in using his national digital identity and provide consent to obtain his financial information from different financial institutions and government agencies. Data from each source is encrypted and transmitted through the Exchange without being stored. Singaporeans can view their consolidated financial information through financial planning services offered by financial institutions or MyMoneySense, a free financial planning digital service offered by the Singapore government. The products and services offered can potentially be customised according to each individual’s financial situation. Such an approach to trusted data sharing – involving both innovation and conducive regulations – can potentially be applied in other areas and in other jurisdictions.
COVID-19 might have thrown the world a curveball. But it has been an opportunity for people to show resilience in the face of adversity, innovation in the midst of necessity, and the determination to build back better from the crisis.
Just as we innovated to cope with the pandemic, we must also use technology and innovation to emerge stronger from this crisis.
This event is a good example of our response to the pandemic. Despite the challenges, the organisers have put together the world’s first week-long round-the-clock hybrid digital and physical event, involving a global network of partners from over 40 cities. The valuable connections and business activities from this gathering will help drive pandemic recovery and provide insights on the new possibilities post-COVID. A big thank you to the organisers, to all contributing partners, and to all of you for joining us this week.
I wish you a fruitful conference. I warmly welcome you to visit us when the situation permits. Thank you.