Fintech firms will help banks succeed - not eat their lunch: MAS

Fintech firms and their new business models could push out banks that are slow to innovate, observers noted.
Fintech firms and their new business models could push out banks that are slow to innovate, observers noted. ST PHOTO: LIM YAOHUI

SINGAPORE - Fintech firms are not a threat to banks but "enablers" whose success will lie in partnering with banks, and enabling them to succeed, said a senior regulator from the Monetary Authority of Singapore (MAS).

"The initial euphoria that (fintech firms) will eat their lunch and eat their dinner has gone away," Mr Sopnendu Mohanty, MAS chief fintech officer, told reporters at a briefing on Monday (March 28).

"They are working very hard with the banks to co-create, co-participate - which is the right thing," he said.

Fintech firms - non-bank businesses which are using technology in new ways to change the landscape of moneylending and financial services - have grown in prominence over the last few years.

Their disruptive new business models could upend the old financial order, pushing out banks that are slow to innovate, observers have warned.

But collaboration is the way forward for the financial sector in Singapore, said Mr Mohanty, a former Citi banker.

"MAS' approach to fintech is to use the power of technology to help banks to succeed," he said.

"It's not a game of disruptors versus enablers. We see fintech as an enabler... The good news is fintech companies by design are creating far superior technology products, and where success lies is in partnering with banks, and enabling banks to succeed."

He noted that there are two kinds of fintech firms. The first group provides financial services like crowdfunding or peer-to-peer lending, while the second provides technology to financial services firms.

Most fintech firms here belong to the second category, said Mr Mohanty. "A lot of fintech companies want to participate with banks - the trend is clear now," he said.

Mr Mohanty also promised that this year would be an exciting one for fintech in Singapore, with the kickoff on Tuesday of a two-day conference on Application Programming Interfaces (API), organised by MAS for 100 invited industry players at the Ritz-Carlton.

"The only way (to help banks innovate faster) is through what I call the democratisation of banking services through API, that allows third party developers to work with the banks to bring out that unique product," said Mr Mohanty.

"As a regulator, we want to see that happening in Singapore, we want to see the industries picking up that service-oriented architecture quickly," he added.