Singapore’s Top 5 Fintech Stories of Last Year That Will Impact the Industry in 2023

It’s no secret that the fintech industry in Singapore has been booming in recent years. This can be attributed to the city-state’s supportive ecosystem, which includes a pro-business government, a highly educated workforce, and a favorable environment for innovation and risk-taking.

The sector has also benefited from the strong presence of leading financial institutions and multinationals, as well as the city’s status as a regional hub for banking and finance.

All of these factors have contributed to the growth of the fintech landscape in Singapore, as evidenced by the number of exciting announcements we’ve witnessed this year. As it can be difficult to keep up with the rapid growth of the local fintech ecosystem, Fintech News Singapore has curated the top five fintech stories from this year.

MAS is pushing the envelope with its CBDC developments

The Monetary Authority of Singapore (MAS) has been quite committed to exploring the potential of both retail and wholesale CBDCs in the island nation.

The regulator had announced in late October that it had completed the first phase of a retail CBDC pilot – Project Orchid which explored the potential of a digital Singapore dollar (SGD), referred to as dedicated money or PBM.

While MAS found that there is no compelling reason for a retail CBDC in Singapore, it will continue to explore good uses for digital currencies.

Meanwhile, MAS showed it remained optimistic about the use of wholesale CBDC when it debuted the Ubin+ project at the Singapore Fintech Festival (SFF) 2022 for cross-border currency settlements.

Ubin+ will study “business models and governance structures for cross-border foreign exchange (FX) settlement, where nuclear settlement, based on digital currencies, can improve efficiency and reduce settlement risk compared to existing payment and settlement rails.”

The project will develop technical standards and infrastructure to support currency transactions using distributed ledger technology (DLT) and non-DLT-based financial market infrastructure.

In addition, MAS is also working with the Bank for International Settlements (BIS) and France and Switzerland on a wholesale CBDC project.

Called Project Mariana, regulators will explore automated market makers (AMMs) for cross-border exchanges of hypothetical Swiss franc, euro and Singapore dollar wholesale CBDCs.

Digital banks in Singapore have finally arrived

MAS granted the full digital banking license to Grab-Singtel consortium’s GXS Bank as well as SEA Group’s MariBank in 2020.

GXS Bank announced its official launch in September with select employees and sub-bank customers within the GXS, Grab and Singtel ecosystem. GXS Bank’s services will then be gradually rolled out to consumers.

Standard Chartered’s Trust Bank which operates under the Significantly Rooted Foreign Bank (SFRB) categorisation, was launched at the same time as GXS Bank.

Within the first two months of its launch, Trust Bank had managed to bring over 300,000 customers with it.

Ant Group’s ANEXT Bank and Green Link Digital Bank backed by Greenland Financial Holdings also started operations this year with their digital wholesale banking licenses.

All five digital banks are now members of the Singapore Credit Bureau, which will enable them to monitor credit risk exposure more effectively.

The launch of digital banks is part of MAS’ work to promote financial inclusion and competition in the banking sector. The move will also give consumers more choice regarding the type of bank they want to use.

Singapore is considering regulating crypto trading and stablecoins

While the regulator has so far granted eleven full licenses and seven more approvals in principle Digital Payment Token (DPT) service providersMAS has consistently warned retail investors in Singapore about the inherent risks of crypto trading.

The regulator banned DPT service providers from placing advertisements and promotions in public areas with immediate effect, as some of these advertisements and claims may be misleading or false and pose potential consumer risks,

Suppliers may only promote or advertise on company websites, mobile applications or official social media accounts. These guidelines are consistent with MAS’s approach of providing regulatory clarity while ensuring that investors are aware of the risks involved in trading cryptoassets.

In addition, MAS will also regulate the issuance of stablecoins linked to a single currency – called single-currency pegged stablecoins or SCS – where the value in circulation exceeds S$5 million.

SCS issuers must hold reserve funds in cash, cash equivalents or short-dated government debt securities equivalent to at least 100 percent of the face value of outstanding SCS in circulation.

incumbent banks fail

In light of recent DBS failures that led to MAS regulatory action and additional capital requirements, it is important to know that even established banks are not immune to system and cyber security failures.

Banking services in Singapore are generally efficient and convenient, with good products and services available. However, two significant failures in the past year stand out – DBS suffering two-day disruptions and OCBC’s phishing scam.

DBS Group suffered disruptions for about two days in its most extensive outage in years, dealing a blow to the bank’s reliability. The outage on Tuesday and Wednesday disrupted banking services, including the payment app.

The bank’s systems have since been restored, and all services are now up and running.

MAS stated that it now requires DBS to use a multiplier of 1.5 times its risk-weighted assets for operational risk – this would mean an additional amount of approximately S$930 million in regulatory capital.

Meanwhile, OCBC Bank lost a total of S$13.7 million was lost in the latest wave of phishing scams that affected 790 customers. The bank said it decided to refund affected customers in full “as a one-off gesture of goodwill given the circumstances of this fraud.”

Regional payment connectivity in ASEAN

Meanwhile, five ASEAN central banks, including Singapore, announced they had flagged one Memorandum of Understanding (MOU) to collaborate on regional payment connectivity to support faster, cheaper, more transparent and more inclusive cross-border payments.

Signatories at the G20 Leaders Summit include the central banks involved in the payment link Bank Indonesia (BI), Bank Negara Malaysia (BNM), Bangko Sentral ng Pilipinas (BSP), Monetary Authority of Singapore (MAS) and Bank of Thailand (BOT).

The implementation of cross-border payment links supports and facilitates cross-border trade, investment, financial deepening, remittances, tourism and other economic activities, as well as a more inclusive financial ecosystem in the region.

Looking forward

The world has been turned upside down in the past year, and it is difficult to predict what the future will bring. After all the problems that have arisen, it is natural to wonder what will be in store for the technology and financial industry in 2023.

So, what would happen next year for Singapore fintech? Only time will tell. But one thing is certain: The Lion City is a country that is constantly adapting and developing. So whatever happens in the coming year, Singapore will be ready for it.