Small and Medium Enterprises (SMEs) are one of the key areas of focus in Singapore’s FinTech agenda for a more inclusive society, says the Monetary Authority of Singapore’s (MAS) managing director Ravi Menon. In a speech at SFF x Switch 2020, he noted that plugging SMEs into common digital platforms is an effective way to enhance the digital inclusion of such businesses.
According to Menon, the inclusion of SMEs into such networks will allow them to enhance efficiency and expand their business opportunities. He highlights that digital platforms have helped Singapore SMEs enjoy seamless cross-border trade, enhanced access to global opportunities, as well as allowing for efficient multi-currency payments and settlements.
“In a small market like Singapore, to achieve scale, SMEs will have to sell their goods or services overseas,” remarks Menon, a former Permanent Secretary at the Ministry of Trade and Industry. He is painfully aware, however, that cross-border trade is often a “painfully complicated process”, involving multiple parties and countless documents with often duplicative data.
To ease this byzantine process, Singapore customs has developed the Network Trade Platform (NTP), a one-stop trade and logistics ecosystem to digitally connect players across a trade value chain across borders. With all documents and processes digitised end-to-end, Menon notes that this allows SMEs to share information quickly and securely and apply for trade financing with multiple banks through a single portal.
Moreover, MAS has been looking to make cross-border payments and settlements cheaper and faster for SMEs. Exploring the possibilities of blockchain technology to resolve this pain point through its Project Ubin project, MAS successfully tested a blockchain-based prototype for multi-currency settlement in July 2020. It has also integrated commercial applications such as trade and supply chain financing with blockchain payment functionalities.
Menon notes that industry players are now shifting away from experimentation towards commercialisation. DBS Bank, JP Morgan and Temasek, he notes, have egun leading the development of a digital multi-currency payment network, with pilot trials slated for 2021. The goal is to enhance commercial cross-border clearing and settlement globally.
“The goal of cheaper cross-border payments that settle round-the-clock and in real time is drawing closer. SMEs will greatly benefit when this becomes a reality,” declares the MAS MD.
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Partnering the developing world
Yet beyond cross-border trade, Menon notes that SMEs are also looking abroad to tap into bigger markets. The government, he suggests, wishes to help these businesses find new business opportunities, suppliers and customers overseas. They will also have to manage more complex procurement, logistics and supply chains across borders as they look further afield.
It is with this in mind that MAS has joined hands with the Infocomm Media Development Authority (IMDA) to develop Business Sans Borders (BSB). “BSB is designed to connect different platforms globally to help SMEs seamlessly access a much larger ecosystem of buyers and sellers,” says Menon. The system uses Artificial Intelligence (AI) to introduce SMEs to essential financing and business solutions from providers on the network.
“For example, a Singaporean SME seller of kueh lapis, a type of traditional cake, was able to use the pilot BSB platform to connect and trade seamlessly with SME buyers on platforms in India and the Philippines,” recounts Menon. The network, he adds, also intuitively matched the seller with a local FinTech firm to provide pre-shipment financing support for the trade.
BSB is operationalised through its commercial arm Proxtera, a private entity developed to commercialise the project. It will start its live beta at Singapore FinTech Festival (SFF) 2020.
BSB has also been used to help SMEs in developing countries access global opportunities too. MAS has signed a Memorandum of Understanding (MOUs) with the United Nations Development Programme (UNDP) to help developing countries access global value chains.
UNDP will connect its various innovation efforts to the BSB hub Sandbox and work with MAS to pilot the use of blockchain to improve product identification, validation and traceability in traditional supply chains such as agriculture and food products.
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“SMEs drive growth in the developing world, and strong, digitally-linked SMEs are crucial to the world’s recovery from the pandemic. We are thrilled to partner with MAS to help prototype and scale innovative financial solutions across the developing world,” said Bradley Busetto, Director of the UNDP Global Centre Singapore.
Moreover, MAS signed an MOU with the Bank of Ghana (BOG) on Day 2 of SFF 2020 (8 December) to improve connectivity between the SMEs of Singapore and Ghana. BSB will integrate trade and business services discovery and flows between Singapore and Ghana. MAS and BOG will also develop a complementary Financial Trust Corridor (FTC) to promote greater trust, trade and recognition between businesses and financial institutions.
“Indeed, we are glad to be a part of this partnership with MAS. The choice of Ghana is an absolute endorsement of how our technological capabilities are growing and will impact strongly on SMEs, in addition to building a robust, resilient and well-connected FinTech Hub,” says Dr Maxwell Opoku-Afari, First Deputy Governor at the Bank of Ghana,
The Ghanian business community is also on board with the MAS-BOG MOU. “Consolidated Bank Ghana stands with the Governments of Ghana and Singapore in their digitization agenda,” said managing director Daniel Addo, who called the initiative a “truly transformative” one. Meanwhile Jiten Arora, Standard Chartered Ventures’ Global Head for SOLV, saw the partnership as favourable to the bank’s plans to establish SOLV in Ghana.
