There are over 200 banks with headquarters in Singapore whose total assets are estimated to be worth over S$2 trillion. The presence of these banks in Singapore has turned the city into a financial centre. As a result, Singapore has been ranked third in the Financial Centres Index and top in the Asia Pacific region. The presence of banks in Singapore is a key factor that has propelled the city to being a fintech hub. Similarly, other factors have equally contributed to the growth of Singapore fintech hub, key of which include:
- A business friendly political and economic environment
- Appropriate regulatory framework
- Good tax policies
- Availability of experts
- Support by the government
The Central Bank of Singapore, the Monetary Authority of Singapore and the financial regulator have set aside S$225 million for the development of fintech products in 2017. The creation of appropriate government departments to focus on fintech innovation is a key indicator of the government’s goodwill. For instance, in March 2016, the Monetary Authority of Singapore created the position of a Chief Fintech Officer to lead in the development of strategies and products that promote competitiveness in the financial sector.
Presence of international financial institutions
Leading international financial services companies have opened up financial technology labs in Singapore with a view to integrating emerging financial technology innovations into their businesses. Some of these companies are MasterCard, Citigroup and Wells Fargo.
Initiatives of local financial institutions
The initiatives of local banks contribute greatly to the development of Singapore as a fintech hub. These banks have well laid out strategic plans for nurturing their individual fintech acceleration and digitization initiatives. Between 2015 and 2016, these banks invested a total of S$200 million in digitization of financial services. This brought the total fintech investment to S$600 million over the same period.
Partnership between local and international financial institutions
Partnerships between local financial institutions and their international counterparts significantly contributes to the development of the fintech sector in Singapore. UOB partnered with OurCrowd in launching a local equity crowdfunding platform with the aim of promoting regional fintech growth. The platform has offered well over US$500 million of credit to startups in India, China and ASEAN countries.
Similarly, OCBC has partnered with Nest, a US company, to set up a fintech accelerator dedicated to fintech solutions across a range of fintech sub-sectors such as wealth management, operations and customer service.
Moreover, IBM has set up a centre for blockchain innovation in partnership with KYCK. The partnership focuses on developing innovative products in blockchain, fintech and cyber security.
Fintech agreements between the government of Singapore and other governments
The government has made several cooperation agreements with governments of other countries in order to boost the Singapore fintech sector. Particularly, there are agreements with the UK, one of the world leaders in fintech innovation, Abu Dhabi, South Korea and Japan. Exchange of technology between Singapore and these countries is good for fintech innovation in Singapore.