30 Jan 2019
FinTech Forum Focuses on Financial Inclusion and Global Co-operation
- Photo: Fintech: It’s not just all a matter of high finance and new technology. Apparently. (Shutterstock.com)
- Photo: The busy 2018 Singapore FinTech Festival showfloor.
- Photo: M-Pesa: Kenya’s transformative payment technology.
- Photo: Mini-ATMs: Bringing financial enfranchisement to millions of unbanked Indians.
While celebrating several landmark Asian financial inclusion achievements, the third Singapore FinTech Festival also called for the adoption of international data security standards and greater interchange between developers and banks.
Billing itself as the largest such event in the world, the third edition of the Singapore FinTech Festival attracted some 45,000 attendees from 130 countries. While 60% of all participants originated from beyond Singapore's boundaries, it was, however, left to a local representative to kick off proceedings – Ravi Menon, Managing Director of the Monetary Authority of Singapore (MAS).
Providing something of an update on the city-state's own progress on the fintech front, he said: "While Singapore has largely completed its national e-payment infrastructure, the pain points that remain – for banks, businesses and individuals – are cross-border payments and the settlement of assets. Of necessity, cross-border payments involve multiple currencies and multiple assets and, as yet, there is no single trusted central body offering an acceptable settlement service. We do, however, believe that distributed ledger technology may provide something of a solution.
"Turning to data oversight, we have been actively working with the industry to develop guidelines governing the responsible use of data within the financial-services sector. This has led us to develop Fairness, Ethics, Accountability and Transparency [FEAT], a code of practice relating to the use of artificial intelligence and data analytics.
"On the international front, we believe there needs to be greater data connectivity and less data localisation. Crucially, we need to develop global data standards so that information can be seen to flow freely in an environment deemed to be both trustworthy and secure. In line with this, for the digital economies of the future, it's safe to say that inter-country data connectivity agreements will be just as important as free trade agreements."
Finishing with a rallying call to the assembled delegates, he said: "Fintech is not just about technology, nor is it just about finance. Ultimately, it is all about creating agile digital solutions that meet the needs of the world's 1.7 billion unbanked citizens."
Broadening the perspective a little, Suvir Varma, a Senior Partner in the Singapore office of Bain & Company, the global management consultancy, outlined the current investment trends within Southeast Asia. Clearly happy to be the bearer of good news, he said: "The influx of capital into the region has soared to record levels, with private equity alone rising by 75% in 2017, reaching a total of US$15 billion. Since 2012, the region has also given rise to 10 unicorns [privately-held start-up companies valued at $1 billion or more], which now have a combined market value $34 billion.
"Within five years, we expect the overall deal value to have exceeded $70 billion and to have produced at least 10 more unicorns. Of these, we expect two or three – possibly more – to be in the fintech sector. In terms of geographical markets, we see Indonesia and Vietnam as having the brightest prospects over the near term."
As President of Microsoft's Asia operation, it was no surprise that Ralph Haupter was equally evangelical when it came to the region's prospects. Outlining the opportunities to be had and the challenges that need to be met, he said: "It's important to remember that Asia is home to 60% of the world's millennial population, representing a collective disposable income of $6 trillion. As a region, it also has its own distinct digital identity – mobile first, widespread e-wallet usage, a high penetration of both apps and artificial intelligence, and a marked inclination to share online."
One of the star turns at the event was Narendra Modi, the Prime Minister of India. Making no bones about his intent to sell the benefits of his country to the fintech sector, he said: "India is the best destination. Just as the sheer scale of India brought down the unit price of LEDs, that same scale will allow fintech products to achieve critical mass in a low-risk, cost-effective manner prior to going global."
Outlining how that scale is already being leveraged, he said: "Financial inclusion is now a reality for 1.2 billion previously disenfranchised people. With a billion biometric identities now established, more than a billion bank accounts opened and more than a billion cell phones in use, India has, by far, the world's biggest public infrastructure.
"In addition, $50 billion of state benefits are now directly accessible. No longer must an impoverished citizen in a remote village travel a long distance or pay off middlemen to get their due allowance. By the same token, fake and duplicate accounts are no longer bleeding government finances, a development that has already saved us more than $12 billion.
"Millions who lived in perpetual uncertainty now have their social insurance paid directly into their bank accounts, with old-age pensioners enjoying the same privilege. Thanks to the 400,000 micro-ATMs now in place, even the remotest village has reliable banking facilities."
As well as promoting the benefits of his home country, Modi was also attending the event to co-host the launch (alongside Singapore Deputy Prime Minister Tharman Shanmugaratnam) of a new online platform designed to bring together financial institutions and fintech developers – the Application Programming Interface Exchange (APIX). This high-profile initiative had the backing of the recently established ASEAN Financial Innovation Network (AFIN), a body whose founding members include the International Financial Corporation (a division of the World Bank), the MAS and the ASEAN Bankers Association (ABA).
The launch was particularly welcomed by another senior delegate attending the event – Dr Patrick Njoroge, the Governor of the Central Bank of Kenya. Speaking in the wake of the platform's formal debut, he said: "I have no doubt that this initiative could be of huge benefit to my own country, with many Kenyan fintech developers clearly prime candidates for incorporation into its network.
"Much of our own experience stems from the undoubted success of M-Pesa, the micro-financing mobile app that launched in Kenya 12 years ago. It is no overstatement to say that it has transformed the country, changing the way business is done and allowing wealth to be transferred from those who earn it to those who need it, with workers able to transfer money to their rurally located parents by just pressing a button.
"Some 10 years ago, only 26% of Kenyans had access to financial services. Today, thanks to M-Pesa, that figure is now 75%. With 94% of Kenyans now having access to some form of smartphone, it should perhaps be no surprise that 85% of all financial transactions are conducted via a mobile device.
"Such devices and such apps have allowed even the poorest and most illiterate to participate in the economy. The result has been nothing less than a wholescale social transformation."
The 2018 Singapore FinTech Festival took place from 12-16 November at the Singapore Expo.
Ronald Hee, Special Correspondent, Singapore