Steps to turn Singapore into a "smart" financial centre shifted up a gear yesterday with a series of new initiatives outlined by the Monetary Authority of Singapore (MAS).
The tech-related moves range from areas like blockchain to insurance.
MAS managing director Ravi Menon told the Fintech Conference at the Singapore Expo that the central bank, the Singapore Exchange and eight banks have started a project to use blockchain technology for interbank payments, including cross-border transactions in foreign currencies. Such cross-border interbank payments are currently a "big pain point", Mr Menon noted. To make these transactions today, for example, in trade finance, a bank would have to go through a correspondent bank in the foreign country as an intermediary. This takes time and adds to cost.
Under the pilot system, banks will deposit cash as collateral with the MAS in exchange for MAS-issued digital currency.
The banks can later redeem the digital currency for cash. This means that participating banks can pay each other directly with this digital currency instead of first sending payment instructions through the MAS.
"This is an improvement over current large-value payment systems that are centrally operated," Mr Menon said. "It strengthens resilience and lowers cost."
The banks need not rewrite their back-end systems to take advantage of this new system, he said.
Ms Susan Hwee, head of group technology and operations at United Overseas Bank, one of the banks involved in the project, said "by connecting the different parties in the transaction, this facilitates the smoother flow of payments, goods and services, and cuts down the time taken for the entire process".
Mr Menon also announced that the MAS published its "regulatory sandbox" guidelines yesterday. These guidelines aim to encourage experimentation of innovative technology to deliver financial products and services.
A Finance-as-a-service: API PlayBook, which has been developed by the MAS and the Association of Banks in Singapore, was released yesterday as well.
API, or application programming interface, is the set of codes for building software and applications.
MORE EFFICIENT AND EFFECTIVE
This is an improvement over current large-value payment systems that are centrally operated. It strengthens resilience and lowers cost.
MAS MANAGING DIRECTOR RAVI MENON, on using digital currency for bank payments.
Mr Praveen Raina, senior vice-president of group operations and technology at OCBC Bank, which launched an open API platform this year, said the bank wants "to create a 'data social network' which facilitates free flow of certain non-customer data that will benefit any third party and the community as a whole in a secure manner".
MAS will now allow insurers to offer online the full suite of life insurance products without advice.
Up until now, insurers were allowed to offer online and without advice only simple term-life and direct-purchase policies with broadly standardised features.
The MAS will issue guidance on the safeguards to be put in place for online distribution of life insurance products.
Life Insurance Association Singapore's executive director, Ms Pauline Lim, said that measures need to be put in place to ensure that individuals do not end up being over-insured in certain areas and under-insured in others.