FinTech in Singapore: Everything You Need to Know to Join this Fast-Emerging Sector

FINTECH Singapore

Without a doubt in the global financial services and technology industries, Singapore is the best business leader in the Asian region.

This can be attributed to its GDP (Gross Domestic Product) per capita of USD55 thousand, its impressive FDI (Foreign Direct Investment) of USD 58 billion, and world-class infrastructure. The city-state also boasts of ultra-high-speed internet connectivity and beyond 100% mobile subscription penetration.

All of these factors prove that this sovereign state, which is currently ranked as the second most competitive economy in the world, has an outsized influence in the FinTech sector and is now emerging as the FinTech capital of the world.

The following are some detailed overview of how this fast-growing sector of the modern economy works.

What is FinTech?

FinTech is derived from two key words: financial and technology. FinTech, according to the World Economic Forum, is a broad category that refers to “the innovative use of technology in the design and delivery of financial services and products” including mobile and internet banking, fraud detection and authentication, artificial intelligence (AI), cryptocurrency, blockchain, etc.

The sector’s meteoric rise comes from its multi-faceted nature which makes it applicable across multiple business industries such as established financial institutions and multinational tech giants as well as local banks, start-up companies and SMEs.

As a result, FinTech organisations recruit talents from different fields of Finance, Information Technology, Engineering, and Computer Science with specialized skills set for the development of custom-made products for specific customer segments.

Why FinTech is a ‘big deal’?

fintech businessFinTech’s main activity involves the use and exchange of money – a necessary action for activities such as ordering food in a restaurant, buying new clothes, paying for tuition fee or rent, sending or receiving funds abroad, getting a loan, etc.

By adapting and profiting from the FinTech-enabled businesses, these activities can be made easier, faster, and more convenient as it can remove geographical constraints. They also provide customer-centred products and services, and offer new solutions that can capture diverse markets around the world.

FinTech is a big deal for Singapore because of the potential and massive economic rewards it would bring to all types of local industries. Additionally this has been proven through the KPMG Pulse of Fintech 2017 report which shows that Singapore has already received the highest FinTech funding for ASEAN at SGD 312 million.

With Singapore’s well-educated workforce, technologically-adept businesses, and FinTech-friendly regulatory framework, it wouldn’t be a surprise to see this robust regional financial hub rise to be a global leader in FinTech.

Types of FinTech Products and Services

Products and services that can be enhanced by and benefit much from FinTech are those from businesses that revolve around payment and fund transfer solutions. Listed below are some examples:

  • PayNow, which is a peer-to-peer fund transfer service with full integration with participating banks, enables customers to make a variety of digital financial transactions including bills payment, salary crediting, and getting funds for their e-wallet accounts even if it comes from a different bank account.
  • Stashaway, a local-based FinTech start-up, is a digital platform equipped with robo-advisers (AI) to provide financially-sound and custom-made investment advice to different customers.
  • AsiaCollect, a professional consumer debt collection company, uses FinTech to offer integrated Credit Management Services (CMS), among other debt collection-related digital solutions.
  • Silot, Silot, a FinTech software company, uses Singapore Quick Response Code (SGQR) to simple, swift, and safe cashless payment options to consumers
  • Spiking, Singapore’s first stock and crypto trading app, utilises the power of FinTech to allow traders to keep track of the current cryptocurrency markets.
  • FundedHere, the first home-grown equity and lending-based crowdfunding platform, leverages FinTech apps to provide much-needed funding for start-ups.
  • The finance industry has a net increase of 7,800 jobs for the past two years (2016-2017), thanks to a rising demand for FinTech-related tasks.

How the Government Regulates FinTech Businesses

Currently, there are no existing regulatory regimes governing for FinTech businesses. The Monetary Authority of Singapore (MAS), however, is the chief regulatory authority for how to carry out, implement, and act on specific FinTech services. Under MAS ruling, FinTech businesses must be in compliance with:

  • the Banking Act
  • the Business Trusts Act
  • the Finance Companies Act
  • the Insurance Act
  • the Securities and Futures Act
  • the Personal Data Protection Act 2012
  • the Cybersecurity Act 2018
  • the FinTech Fast Track (FTFT) initiative by the Intellectual Property Office of Singapore (IPOS)

How the Government Supports the FinTech Industry

The pivotal role that the MAS have in encouraging the growth and development of the FinTech ecosystem has led to existence of more than 30 FinTech research centres and innovation labs as well as at least 400 FinTech locally-based organisations.

Even the Singapore Institute of Accredited Tax Professionals (SIATP) supports the 10% tax incentive for FinTech start-ups, which will be proposed during the upcoming 2018 Budget.

As the government is determined to be at the forefront of the FinTech industry, this leads to the creation of several start-ups; providing them with cost-effective and regulatory-controlled support within a well-defined duration.

The following are some of the government initiatives:

  • 80RR, a one-stop FinTech innovation hub in collaboration with the Association of Banks in Singapore, encourages FinTech experimentation, ventures, and collaboration
  • PolicyPal, an MAS FinTech Sandbox, is an AI-powered digital platform that helps people with their insurance policies
  • Kristal Advisors, another MAS FinTech Sandbox, is an AI-enabled digital asset management platform that helps investors and advisors get access to sophisticated curated portfolios from financial experts and portfolio managers around the world
  • Looking Glass, an MAS FinTech innovation lab, that will give the government collaborative FinTech-related opportunities with start-ups, technology vendors, and financial institutions

Incorporating a Fintech Company in Singapore

FinTech entrepreneurs

Traditionally, the process of registering a new FinTech company can be quite a daunting process; nevertheless, ever since the MAS has made the necessary regulatory relaxation through its regulatory sandbox programs, it is now possible for aspiring FinTech entrepreneurs to jumpstart their businesses with relevant government support and safeguards against failure.

If you want to incorporate a FinTech company, Corporate Services Singapore can offer detailed information on the regulatory laws you need to comply with. We also provide professional assistance to accomplish the step-by-step incorporation procedure.

Posted in Company Incorporation.