IFGS 2023: Collaboration key for Singapore’s burgeoning fintech sector
At the Innovate Finance Global Summit 2023, Sopnendu Mohanty, chief fintech officer at the Monetary Authority of Singapore (MAS), discussed how fintech investment in the country is booming, how Singapore prepared itself for digitalisation and how the country is “shamelessly” looking to copy the best of UK fintech.
MAS chief fintech officer Sopnendu Mohanty at IFGS 2023
In 2016, Mohanty says, Singapore began to ask itself what kind of fintech economy it wanted to cultivate. As a well-banked country with a relatively small market, many asked whether the country would care for fintech.
“The only chance we had in this space was to think differently about fintechs,” Mohanty says, deciding to focus on nurturing the country’s B2B market, helping fintechs build infrastructure that would support banks and corporates.
During the pandemic, this approach paid off, Mohanty says, because there was “huge demand” to start digitising at speed. “B2B fintechs suddenly found themselves in a very good position,” he remarks.
“Even in the crypto space, in Singapore it received a lot of capital allocation for the infrastructure players behind the scenes, the custody, the exchange support systems, the tech stack, and they’re still sustaining that growth, despite the crypto shift happening.”
As a result, investment in fintech is booming. “Looking at Q1 2023, we are up 20-30% against the previous quarter,” Mohanty says. “I think we should definitely be equal or better than last year,” he adds, with most of the growth occurring in the B2B space thanks to high interest rates and the well-positioned banking sector.
Still looking ahead, Mohanty believes the next wave of financial innovation in Singapore must account for “progressive” regulators and policymakers who are looking to put “disproportionate focus and capital behind digital public infrastructure”.
In other words, do not create a business around something that will be taken care of through policy and public funds in the coming months and years.
“If you’re a fintech, this is a time to take a pause and rethink your business model,” he says.
Although fintechs “arbitrage” natural inefficiencies in the system, the government will be pouring capital into building digital public goods, payment rails and data exchange platforms. “Fintechs who are trying to plug that existing gap will find that business model brought into question,” Mohanty says.
He believes the Asian market in particular is working towards implementing “world class digital public infrastructure”, with India, Singapore, Thailand and Malaysia all getting connected with domestic payment rails, which is a “huge, huge shift”.
In light of this, fintechs in these regions “should think hard about their next move”, Mohanty adds.
The world is your oyster
Mohanty claims Singapore has “a natural advantage” being part of the global financial ecosystem. “We have positioned ourselves as being interoperable and open to a coordinated global response when it comes to finance systems,” he says.
For example, MAS wants a “coordinated response” to digital currencies, whether that is retail or wholesale, or tokenised deposits.
“This is big, macro, strategic, forward-looking thinking when it comes to innovation and finance,” Mohanty says, “all part of the coordinated global thinking”. Singapore does not want to be an outlier in this regard, Mohanty adds. He also believes getting regulators across the globe to collaborate is best for every fintech company.
“We believe that the financial sector has no boundaries. This whole notion that there’s a competition between different cities and countries is absolutely a misplaced competition,” he says, adding UK fintech is “doing extremely well”.
“We try to learn from UK fintech day and night and copy shamelessly what you’re doing well,” he concludes.
