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

It is no secret that the fintech industry in Singapore has been flourishing 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 conducive environment for innovation and risk-taking.

The sector has also benefited from the strong presence of leading financial institutions and multinational corporations, 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 flurry of exciting announcements we have witnessed this year. As it may be hard 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 pushes the envelope with its CBDC developments 

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

The regulator had announced at the end of October that it had completed the first stage of a retail CBDC pilot – Project Orchid which examined the potential of a digital Singapore dollar (SGD), referred to as purpose-bound money or PBM.

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

Meanwhile, MAS showed that it was still optimistic over the use of wholesale CBDCs when it debuted the Ubin+ project at the Singapore Fintech Festival (SFF) 2022 for cross-border foreign exchange settlement.

Ubin+ will study “business models and governance structures for cross-border foreign exchange (FX) settlement, where atomic settlement, based on digital currencies, can improve efficiencies and reduce settlement risks 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 infrastructures.

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

Dubbed Project Mariana, the regulators will explore automated market makers (AMM) for cross-border exchanges of the hypothetical Swiss franc, Euro, and Singapore dollar wholesale CBDCs. 

Singapore digital banks have finally arrived

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

GXS Bank announced its official launch in September starting with selected employees and underbanked customers within the GXS, Grab and Singtel ecosystem. GXS Bank’s services will be rolled out progressively to consumers thereafter.

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

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

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

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

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

Singapore mulls regulating crypto trading and stablecoins

While the regulator has so far granted eleven full licenses and seven in-principle approvals to Digital Payment Token (DPT) service providers, MAS 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 could be misleading or false and pose potential consumer risks,

Providers can only market or advertise on corporate websites, mobile applications, or official social media accounts. These guidelines align with MAS’s approach of providing regulatory clarity while ensuring investors know the risks in trading crypto assets.

Additionally, MAS will also regulate the issuance of stablecoins pegged 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 assets in cash, cash equivalents, or short-dated sovereign debt securities that are at least equivalent to 100 percent of the par value of the outstanding SCS in circulation.

Incumbent banks failures

In light of recent DBS failures that led to MAS supervisory action and additional capital requirements, it is essential to know that even incumbent banks are not immune to system and cybersecurity failures.

Banking in Singapore is 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 its banking services, including its 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 apply 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 recent spate of phishing scams that affected 790 customers. The bank said it decided to reimburse affected customers in full “as a one-off gesture of goodwill given the circumstances of this scam.” 

Regional Payment Connectivity in ASEAN

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

Signed at the G20 Leaders’ Summit, the central banks involved in the payment connectivity include the 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 connectivity supports and facilitates cross-border trade, investment, financial deepening, remittance, tourism, and other economic activities, as well as a more inclusive financial ecosystem in the region.

Looking ahead 

The world has been turned upside down in the past year, and it’s hard to predict what the future will hold. After all the problems that have arisen, it is natural to wonder what will be in store for the tech and financial industries in 2023.

So, what would happen next in the following year for Singapore fintech? Only time will tell. But one thing is for sure: the lion city is a country that is constantly adapting and evolving. So, whatever happens in the coming year, Singapore will be ready for it.