SFF x Switch 2020

MAS sees opportunity for fintech to reshape post-Covid world

Monthly transaction values on PayNow have crossed the US$3 billion (S$4 billion) mark.
Monthly transaction values on PayNow have crossed the US$3 billion (S$4 billion) mark.ST PHOTO: ALPHONSUS CHERN

SINGAPORE - The economic crisis unleashed by Covid-19 presents an opportunity to create a more inclusive society and a more sustainable planet, Singapore's central bank chief has said.

Technology, and fintech in particular, has shown during this crisis that it has a role to play in the reshaping of the post-Covid-19 world, Mr Ravi Menon, managing director of the Monetary Authority of Singapore (MAS), said at the Singapore FinTech Festival on Tuesday (Dec 8).

The crisis has demonstrated the power of technology in finding solutions to difficult problems, from making vaccines and contact tracing to online learning and telemedicine, he noted.

The pandemic has also shown how vulnerable people are to the forces of nature.

Thus, the power of finance and technology can be brought together to help create a more inclusive and sustainable world.

"Technology has been at the forefront in the fight against Covid-19 and its effects. Likewise, technology can play a potent role in shaping the post-Covid world," he said.

Mr Menon highlighted Singapore's initiatives to make every citizen and every enterprise digitally enabled and financially included.

The initiatives include pervasive electronic payment systems, affordable cross-border remittances, timely health insurance claims and holistic financial planning.

On the payment systems front, he cited as examples Fast, which enables real-time transfers through the banking system, and PayNow, which allows people to send money to the bank accounts of individuals using just their mobile phone numbers or personal ID numbers and to businesses using their unique entity numbers.

He said four out of five people and three out of four active businesses in Singapore have adopted PayNow, with monthly transaction values on the system crossing the US$3 billion (S$4 billion) mark - a fourfold jump from July 2019.

"This secure, inter-operable e-payment infrastructure has supported a boom in e-commerce and a variety of online services", especially after Covid-19 struck, he said.

With Singapore's e-payment infrastructure to be extended to non-bank e-wallet payment providers next February, he said: "This completes the last mile in Singapore's journey to create an open and accessible e-payment ecosystem."

Besides individuals, the MAS chief said, small and medium-sized enterprises are the other focus area on Singapore's fintech agenda for a more inclusive society.

He highlighted how digital platforms can help SMEs. The Networked Trade Platform developed by Singapore Customs, for instance, digitally connects players across the trade value chain in Singapore and abroad.

Business sans Borders (BSB) is another platform that enhances local SMEs' access to global opportunities. Developed jointly by MAS and the Infocomm Media Development Authority, BSB is designed to connect different platforms globally to help SMEs access a much larger ecosystem of buyers and sellers.

He announced on Tuesday that BSB has been operationalised by a private entity, Proxtera, and is starting its live beta during the fintech festival.

The MAS separately issued a statement saying it has started discussions with the Bank of Ghana to adopt the BSB open hub of platforms between the two countries.

To make cross-border payments and settlements cheaper and faster for SMEs, Mr Menon said the central bank has been working for five years on Project Ubin, a blockchain-based system for multi-currency settlement.

Singapore's efforts to mitigate climate risk and build a more sustainable future include making its residential precincts more energy efficient and shifting towards cleaner energy. The Republic also aims to support Asia's transition towards greater sustainability by developing an Asian carbon credit market, funded by a green finance action plan and using green fintech.

He said the Sustainability Alliance for Action, set up under the Ministry of Trade and Industry's Emerging Stronger Taskforce, has proposed to develop a market ecosystem for voluntary carbon credits that can facilitate price discovery, improve liquidity, and verify the integrity of carbon credits.

Complementing the Sustainability Alliance, DBS Bank, Temasek, the National University of Singapore and Conservation International have come together to research nature-based solutions.

He said to strengthen the financial sector's resilience to environmental risks, MAS will issue finalised guidelines for financial institutions to manage their environmental risks. "The guidelines are among the first of its kind in the Asia-Pacific to apply to all financial institutions, across banking, insurance, and asset management."