We’ve come a long way since 2016 and the first Singapore Fintech Festival (SFF). Because of the pandemic, SFF2021 — much like SFF2020 — will be hybrid. SFF2021 will also organise deep-dive sessions that will brainstorm how Web 3.0 technologies can be harnessed for more efficient financial intermediation, advance key objectives like green finance and financial inclusion, and examine implications for financial regulation and supervision.

A new company, Elevandi, is being formed to drive SFF. The company’s mission is to foster an open dialogue between the public and private sectors to harness FinTech for growth and development in the new digital economy. Elevandi will have an international Board of Directors to oversee its mission and work comprising members from the public sector, financial services sector and experienced global industry leaders. Sopnendu Mohanty, chief FinTech officer, Monetary Authority of Singapore (MAS), will be one of the directors.

Web 3.0

Web 3.0 is likely to use distributed ledger technologies, where decentralised technologies such as blockchain will allow a more open environment where data on the internet is decentralised. Web 3.0 could allow decentralised apps to displace centralised networks such as Facebook (Meta) and Google (Alphabet).

The conferences during SFF2021 will take a closer look at three drivers of financial services:

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 • embedded finance (which refers to non-bank financial service providers) and decentralised finance (better known as DeFi), which are financial services delivered through distributed ledgers or blockchain;

• integration of environmental, social, and governance (ESG) into financial services platforms; and

• adoption of digital infrastructures such as digital identity, trusted data exchange, interoperable payment systems, and consent systems.

In our cover story, “Forging ahead to connect markets”, we explore the early iterations of Web 3.0, and its impact on the wholesale payment landscape and capital markets using distributed ledger technology and blockchain.

As a decentralised form of technology, Web 3.0 allows no particular person or group to have full control of an ecosystem. Rather, all users collectively can retain control. While there is no single governing entity in blockchain, blockchain is a database that holds records while algorithmically ensuring security and transparency, hence its impact on various forms of financing and payments has the potential to be transformational.

In our story on tokenisation which is affected by distributed technologies, we highlighted that United Overseas Bank (UOB) is embracing distributed ledger technology (DLT) and blockchain. It has piloted a digital bond on Marketnode, a digital issuance platform which connects issuers, arrangers banks, investors, legal counsel, settlement and custodian banks for fixed income securities. UOB is also partnering with Marketnode to launch new products.

Elsewhere, UOB has partnered with ADDX to list a portion of Sembcorp Industries’ sustainability-linked bond. ADDX is a joint-venture digital exchange by Singapore Exchange (SGX), Temasek and other partners. Both ADDX and Marketnode count SGX and Temasek as investors.

UOB TMRW edges closer to BaaP

With an updated interface, artificial intelligence, and the use of API, UOB TMRW — UOB’s digital bank — has taken a step towards banking-as-a-platform (BaaP).

In a recent interview, Kevin Lam, head of TMRW and group digital banking at UOB, says: “Previously, digital banks were behind a firewall or a login. But now, the bank needs to find a way to be embedded in their partners’ ecosystems, where they can show insights and information.” He notes that banks should meet their users where they are most needed, adding: “When the customer wants to do something, they are brought right to the bank.”

UOB TMRW seeks to double the retail customers the bank serves digitally to more than seven million customers across Asean by 2026. Of the seven million target, Lam says, the bank’s aim is to serve three to five million digital-only customers.

FinTech to support ESG

We have two stories on ESG, describing how FinTech has been an enabler for banks’ ESG efforts as digitalisation facilitates the tracking of issuers’ sustainability-linked bonds and notes. Sumitomo Mitsui Banking Corp (SMBC) Group established “SMBC Group x Globe 2030” last year, a 10-year plan that extends to 2030. In October this year, SMBC joined the United Nations-convened Net-Zero Banking Alliance.

“The Asia Pacific (APAC) region is increasingly shifting its focus on renewable projects and we see the potential in FinTech to help pave the way for a more sustainable future. This trend has significantly boosted the adoption of the ‘renewable project finance’ model, especially for SMEs. We aim to support these customers better with our digital end-to-end platform for renewable energy project finance,” says Keiji Matsunaga, head of Asia Innovation Centre for SMBC.

See: Forging ahead to connect markets

Some of SMBC’s key aspirations under this plan include executing JPY30 trillion ($354 billion) worth of green and sustainable financing deals between 2020 and 2029 that contribute to sustainability; to publicly release at least one report a year that focuses on the results of social impact measurements targeting social contribution activities; and to become net zero in its group-wide operations by 2030.

At MAS, Dr Darian McBain, its new chief sustainability officer, helms a new sustainability group, which is tasked to steer sustainability efforts across the central bank in its role as the industry regulator. The group coordinates MAS’s green finance and sustainability agenda. This includes strengthening the financial sector’s resilience against environmental risks, developing a vibrant green finance ecosystem to support Asia’s transition to a low-carbon future, identifying strategic green finance collaborations with regional and international counterparts and reducing MAS’s own carbon and environmental footprint.

The ability to collect data can have longer-term impacts on how we consider “big challenges” like climate change or biodiversity, McBain says. Technology has an important role to play in how different financial institutions, companies and governments can share information that is usable and timely, she adds.

Tiger Brokers is a relatively new kid on the block, and one of a handful of online brokers given licences to operate in Singapore. Tiger Brokers reported 1.65 million customer accounts worldwide as of June 30, twice the number in the same period last year.

How has it fuelled such explosive growth? In June, Tiger Brokers (Singapore) entered into a partnership with Alibaba Cloud, the digital intelligence and technology arm of Alibaba Group. With Alibaba Cloud providing end-to-end technology support to Tiger Brokers (Singapore)’s Tiger Trade platform, users enjoy fast and uninterrupted trading, says the brokerage.

More recently, Tiger Brokers (Singapore) partnered with Onfido — a global identity verification and authentication company — to provide Tiger Brokers’ customers with a smoother onboarding process. Through Onfido, Tiger Brokers’ users can verify their identity by taking a photo of their passport or Singapore national registration identity cards (NRICs) and a short video of themselves.

To give a perspective on Insurance Technology or InsureTech, Prudential discusses how technology has helped the global insurer provide a better customer journey for its customers. It plans to launch Business@Pulse, a one-stop digital platform that will allow SMEs and their employees to have broader and simplified access to insurance and employee benefits. Users will be able to view their group insurance policy details and submit and receive their insurance claims on the app. They will also be able to use a Clinic Locater to find the GP nearest to them. Aside from these, the platform will also host content resources on health and financial wellness through articles covering areas like nutrition, exercise and diet, savings and investment.

Business@Pulse will also empower SMEs to better care for their employees by providing them with easy access to insurance and employee benefits, and health and financial wellness resources.

Fertile ground for unicorns

Our final story in this year’s supplement is on unicorns which are start-ups who get to a US$1 billion ($1.35 billion) valuation, and so called because they used to be rare. According to Credit Suisse, unicorns are less rare nowadays. The Swiss bank notes that there are now 35 unicorns galloping across the various Asean countries. The unicorns are largely based either in Singapore or Indonesia, with those from the FinTech sector leading the pack at 26% of the total in this rarefied club. E-commerce and logistics unicorns trail behind at 20% and 11% respectively.

So, what are the prevailing market conditions that make Asean a fertile ground for FinTech unicorns to grow? Asean’s unbanked and underbanked are fertile ground for FinTechs, in a manner similar to China’s billion where Alibaba and Tencent had their genesis.

Singapore, Malaysia and Thailand, according to Credit Suisse, are looking at mobile payment as a means to increase non-cash usage in the economy. Meanwhile, Indonesia and the Philippines view it as a means to also increase financial inclusion, considering their low penetration of traditional banking services. Regardless of the underlying goals, industry players can look forward to handling a ballooning volume of transactions. Euromonitor estimates that the size of Southeast Asia’s e-wallet market, at around US$39 billion in 2020, will grow at a CAGR of 7% to hit US$138 billion by 2025. So there we have it — Asean is the land of opportunity for FinTechs.

We wish everyone an informative, interesting, fruitful and safe SFF2021

From

The Edge Singapore team