Speeches
Published Date: 22 June 2022

Speech by Mr Heng Swee Keat, Deputy Prime Minister and Coordinating Minister for Economic Policies, at the opening of Point Zero Forum on 22 June 2022

A very good morning! 

1. Welcome to the inaugural Point Zero Forum. The FinTech community is facing several headwinds. 

a. First, access to capital has become harder, with rising interest rates and falling valuation. Investors are also putting greater emphasis on the path to profitability. 
b. Second, some segments of the community are viewed with increasing skepticism, especially after the recent crash of TerraUSD and Luna. 
c. Third, the world faces broader geo-political and macro-economic challenges posed by the ongoing war in Ukraine, and the spectre of another global recession. 

2. Despite these headwinds, the potential for FinTech remains tremendous. 

a. Growth has been strong, despite the pandemic. A record of over US$210 billion in Fintech investments were made last year. 
b. We have seen how FinTech has improved countless lives, including bringing digital finance to millions who were otherwise unbanked. 
c. FinTech is driving better outcomes – disrupting existing business models for the better, creating good jobs, and steering us towards a greener future. 

3. The current wave of technology has yet to run its course. AI, IOT and big data have become more prevalent, but there are still untapped opportunities. a. A new wave of technology is emerging in the form of Web 3.0. Blockchain, NFT, and DAO – these technologies are not as well understood or defined. But they could potentially be game changing. 

4. We are here today at “point zero” – to look at existing and emerging tech trends with a fresh perspective. We are here to bring new ideas to fruition, and scale ideas that work. Through our combined efforts, we can create a better, more prosperous, and greener future for everyone. a. While there are headwinds, there are also tailwinds. Our gathering today is propelled by three double helixes. Let me elaborate. 

Swiss-Singapore 

5. The first double helix is the Swiss-Singapore collaboration. 

a. Our two countries may be continents apart, but we share common interests and perspectives, as small countries with an international outlook. Both countries are also global financial centres. 
b. Global financial centres often view each other from the vantage point of competition, as they each seek to attract more assets under management (AUM) and talent. Competition is important, but it is not everything. 
c. This is especially so for new frontiers, where pioneering work thrives on the circulation of innovation and ideas. 
d. Cooperation is also needed to break new grounds – by reducing barriers for cross-border transactions, and with common frameworks for the responsible use of technology. 

6. As much as global financial centres compete, they must also cooperate. This is especially true for Singapore and Switzerland. 

a. Our two countries have always maintained close financial relations. Being located on different continents, we share many complementarities and have held financial dialogues and regulatory exchanges for years. 
b. Our cooperation on FinTech also goes back more than five years, when this field was quite nascent. So, when Swiss Finance Minister Ueli Maurer visited Singapore last year, the idea of holding a joint FinTech conference was mooted. 
c. Several months on, the Point Zero Forum was born, as we jointly seek to strengthen the circulation of innovation, broaden opportunities between Europe and Asia, and advance a new wave of emerging tech for good. 

7. The Swiss-Singapore double helix provides a more conducive and encouraging environment for ground-breaking innovation and start-ups. 

a. We hope to add more strands to the helix over time, by working with even more financial centres globally. 

Digital-Sustainability 

8. One common goal that Switzerland and Singapore share is protecting our planet. This brings me to the second double helix – digital and sustainability. 

a. The digital revolution is well known, not least to this audience. As Environmental, Social, Governance (ESG) gains prominence, so too the application of digital in sustainability. 
b. With satellite imaging, IoT and AI, we have been able to greatly improve the accuracy and granularity of ESG data. 
c. By layering on predictive modelling and analytics, we can make more informed decisions and take preventive action to protect the environment. 
d. As importantly, the use of digital technology and smart contracts have allowed us to ensure provenance and traceability of transactions. 

9. Digital and sustainability is another double helix driving the future of finance. 

a. The confluence of digital, sustainability and finance is Green Fintech. Green FinTech has recently gained traction, but is still relatively nascent. 
b. Two years ago, Switzerland started the Green FinTech Network. The Network published a taxonomy of Green FinTechs last year. 
c. At around the same time, Singapore started Project Greenprint, an industry effort to develop open and inter-operable platforms for driving the efficient and trusted flow of data for green finance. 
d. One platform is the Greenprint Marketplace – a regional API exchange connecting various stakeholders to facilitate partnership, innovation, and investment, which will be launched next year. 

10. We are making progress on sustainability, but these efforts are not good enough. 

a. We could still in theory keep global warming below 1.5°C. But to achieve this, we will need to act swiftly to halve net emissions by 2030. Much more urgent action is required. 

11. Singapore will be issuing sovereign green bonds to finance public infrastructure. We are also contributing to urgent action to further accelerate Green FinTech. 

a. We will be establishing an ESG Impact Hub to strengthen collaboration and fuel the fast-growing sustainability eco-system. 
b. This is a physical space in the heart of town in Singapore to co-locate Green FinTech start-ups, VCs, financial institutions, non-profit organisations, and family offices. 
c. Through this Hub, we hope to also anchor key industry-driven sustainability initiatives, which includes Google’s “Project Point Zero”, their climate finance accelerator and KPMG’s ESG Business Foundry. 
d. In so doing, we hope to engender a more vibrant Greenprint Marketplace when it is launched next year. I welcome all of you to be part of this effort. 

12. Even as we promote green finance, greenwashing is on the rise. Greenwashing is becoming the bane of global financial systems. If not tackled well, an erosion of confidence in ESG products can affect financial stability. 

a. The magnitude of greenwashing is concerning. Recently, Morningstar removed ESG tags from roughly 1 in 5 funds. This is over 1,200 funds managing over US$1 trillion in AUM. 
b. Regulators are putting in place legal frameworks for greenwashing to better underpin enforcement action. But this is also an area where Green FinTech can be put to greater use. 

13. One example in Singapore is NovA! 

a. NovA! is an industry-wide AI platform in Singapore for financial risk insights generation, which I announced at the Singapore FinTech Festival last year. 
b. The first use case of NovA! is to provide banks with ESG risk assessment when originating, underwriting, and servicing sustainability-linked loans relating to real estate. 
c. NovA! can identify areas for sustainability improvement during loan origination and the setting of sufficiently ambitious targets during underwriting. 
d. During servicing, NovA! compares third-party verified data with borrowers’ self-declarations to detect signs of greenwashing. 
e. As with all AI applications, the models will have to be refined over time. But by developing more robust greenwashing detection, we can raise the quality of green financing over time and build confidence in ESG products. 

14. In this second double helix, the twin forces of digital and green will propel finance in a fundamental way in years to come. By harnessing these twin forces, we can find effective ways to reap the upsides of green financing, while mitigating risks of greenwashing. 

Industry-Regulator 

15. On dealing with upsides and downsides, let me now cover the third double helix – the relationship between industry and regulator. 

a. Regulators and most of the FinTech community share a common goal – which is to use finance and tech to create value and improve lives. 
b. They need not be operating at cross purposes or take an adversarial approach. Doing so, works to no one’s benefit. 
c. This relationship should in fact be a partnership, where industry and regulator work as a double helix to encourage and promote innovation, while managing the downside risks. This creates the right conditions for sound and enduring growth. 

16. Each new tech wave is often greeted with a mix of optimism and skepticism. 

a. Internet banking took off in the late 1990s. This brought about greater convenience, but many at that time were not persuaded to transact outside of “brick and mortar” branches. The impact of Y2K was also a concern. 
b. Around the early 2010s, machine learning and AI started to take off. There were concerns about the “black box” nature of AI decision-making, and that AI could become sentient. 

17. What we have gradually come to accept today, was not as broadly embraced back then. But we did not let tech evolve by chance. a. Instead, the tech community and regulators actively shaped technology to bring out its best potential, while mitigating the risks. 

18. Take for instance the use of AI, which is now prevalent in the financial sector. 

a. To manage concerns, Singapore developed the Veritas Initiative, a consortium of 27 financial institutions and global tech firms. 
b. The Initiative ensures that the use of AI and data analytics is fair, ethical, accountable, and transparent. 
c. Since then, the consortium has published a series of white papers to guide industry on the responsible use of AI, with detailed assessment methodologies and toolkits. 

19. The same approach of encouraging the upsides while minimizing the downsides applies to Web 3.0, which creates many possibilities. 

a. Tokenisation enables fractionalisation of assets, allowing for greater liquidity and better price discovery. 
b. Distributed ledgers, without the need for intermediaries, reduce cost, and discourage rent-seeking behaviour. 
c. Allowing for simultaneous settlement significantly reduce settlement risks. 

20. Crypto assets have more recently been in the spotlight for the wrong reasons. This, however, does not reflect where the greatest value of blockchain and digital assets lies, much of which is away from the retail glare. 

a. Take crypto currencies for example. Their prices can be highly volatile and subject to speculative movements, making them unsuitable for retail investment. 
b. But the blockchain technology underlying cryptocurrencies has potential to improve wholesale cross-border transactions, where the settlement process is far from simple. Today’s cross-border settlement typically goes through a few intermediaries and is mostly bound by fixed operating hours of settlement banks and systems. 
c. There is thus much that we can explore using blockchain technology to improve efficiencies, accessibility and affordability of cross-border transactions. 

21. This is why Singapore, a few other like-minded countries, and the Bank of International Settlements Innovation Hub embarked on Project Dunbar. 

a. This project explores how a common platform for multiple central bank digital currencies could enable cheaper, faster, and safer cross-border payments. 
b. Project Dunbar validated various design approaches through prototyping. Its recently published recommendations will support the G20 roadmap for enhancing cross-border payments. 
d. One of the supporting tech platforms for Project Dunbar is Partior. Partior enables real-time blockchain-based interbank clearing and settlement, using commercial bank digital money or wholesale CBDCs. 

22. There are many other good use cases within the broader digital asset ecosystem. We should therefore take the same approach as earlier tech waves. 

a. We must continue to build trust through regulatory guardrails, while encouraging innovation and realising gains. 
b. In the past two years, Singapore granted licenses and in-principle approvals to 11 digital payment token service providers. These include stablecoin players, crypto exchanges, and traditional financial institutions. 
c. We continue to assess new applications. Today, the Monetary Authority of Singapore will be issuing in-principle approvals to three additional digital payment token service licence applicants. 

23. Singapore remains keen to work with blockchain and digital asset players. 

a. We are committed to partner innovative and responsible players to grow the Web 3.0 ecosystem and community in Singapore. 
b. We will facilitate live experiments through regulatory sandboxes, including testing the feasibility of DeFi and asset tokenisation. 
c. We hope to do pioneering work in these fields, in a way that will benefit lives and our regions. 
d. We welcome you to be part of this journey, as we strengthen the partnership between regulator and industry. 
e. The industry-regulator double helix can be a powerful positive force for change in Singapore, Switzerland, Europe, and the world. 

Conclusion 

24. Let me conclude. 

a. We are at an inflection point of a new wave of tech, even as we have yet to fully ride the existing wave. 
b. As we gather, there are many headwinds for the global FinTech community. But there are also tailwinds that will propel you forward. 
c. These include three double helixes of – Swiss-Singapore collaboration, Digital-Sustainability drivers, and Regulator-Industry partnership. 
d. As we stand at point zero, I hope this forum will generate new ideas in pioneering areas, seed concrete action that will change the world, and improve the circulation of innovation between Europe and Asia. 
e. With that, I am happy to open the Point Zero Forum!