A new report from credit ratings agency Moody’s Investor Services has given a sound backing to the three largest banks in Singapore, believing them to be well placed to withstand the threats from financial technology (fintech) startups.

The ‘Fintech – Singapore: Bank of the Future: Fintech threats are growing fast but large incumbents will hold their ground’, report has Moody’s VP and senior analyst Simon Chen praising the regulators of the tiny island nation as “highly supportive” of fintech innovation. Its policies and financial incentives have led to many expansions of tech firms, with Singapore as their base.

Chen added:

“While startups are facing increasing competition for funding, Singapore’s three largest banks have abundant financial resources to invest in technology, and have been channelling cost savings from efficiency gains through digitalization back into technology investments.”

It was in Singapore that the first regulatory sandbox for fintech opened in Asia, just three years ago. After a public consultation, last year they launched the “Sandbox Express” that allowed fintechs to experiment even more quickly.

Aside that, regulators have been trying very hard to improve the country’s digital infrastructure ensuring payment systems and real-time fund transfers benefited from interoperability.

The Singapore Quick Response Code (SQRC) launched in 2018 is now used by over 1 in 4 mobile payment services operators to consolidate different QR payment code platforms into a single one. Moody’s says this helps Singapore take its place as the “most advanced in implementing open banking globally”.

There are some protectionist measures however, that restrict fintech from expanding into deposit-taking and lending. The MAS (Monetary Authority of Singapore) is also monitoing fintech firms via the Payment Services Act. Fintechs aren’t allowed to use wallet funds to provide loans without a banking license either, even if they provide electronic wallets to store funds.


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