SINGAPORE: The Monetary Authority of Singapore (MAS) will kick off a public consultation on Wednesday (Nov 14) to seek views on the proposed set-up of a “sandbox express” that will give financial institutions and non-financial players quicker access into its so-called sandboxes.
This, alongside the move to set aside S$35 million to help smaller financial players tap on regulatory technology (RegTech), was announced by Education Minister Ong Ye Kung at the Singapore Fintech Festival.
AdvertisementThe MAS has been among the early adopters of “regulatory sandboxes” where firms with novel financial technology (fintech) ideas can test them in a loosely regulated, contained environment with real customers before releasing them publicly.
Describing this as a learning experience thus far for both the financial regulator and companies involved, Mr Ong said the MAS will expand on this approach by creating the “sandbox express”.
These will be so-called sandboxes that are easier to get into within 21 days, elaborated Mr Ong, who is also a MAS board member.
With pre-defined boundaries, he added that they will be designated for activities where the risks are low or already well-understood by the market and regulator.
AdvertisementAdvertisement“We can relax the system (to) allow tests and experiments to happen more quickly."
Going on to explain why Singapore does not adopt a laissez-faire approach, Mr Ong said there can be various concerns in an urban environment and regulations can help to “harmonise” them.
Expanding on that, he cited e-payment as an example.
In a fully laissez-faire regime, e-payments can grow so rapidly that it takes over the entire financial system and bypasses traditional financial services. Despite its convenience, it can give rise to potential concerns, said Mr Ong.
For one, there is the issue of interoperability as different e-wallets or mobile wallets tend to be closed-loop systems, which do not “talk” to each other.
Over time, this actually stifles competition.
Hence, Singapore “decided very consciously to take a little bit more time” when it comes to e-payments, said Mr Ong.
Now, the country’s system is “unique”, with the difference lying in its back-end infrastructure called the Fast and Secure Transfers (FAST) transaction system.
Introduced in 2014, FAST is the underlying network powering PayNow – the service that has paved the way for instant fund transfers through mobile phone numbers or NRIC numbers.
MAS is also mulling the opening up of FAST to non-bank players, and has rolled out a national QR code called the SGQR in September.
“One e-payment system with one (back-end system) and one QR code, but with many players in between,” said Mr Ong.
“We took some time to get this architecture right because payment is fundamental. We all use payments and we use it in every sector of the economy. We have to get it right.”
He added: “By ensuring that we have an open architecture and interoperability, we encourage competition and over time, promote innovation. Therefore, laissez faire does not equal innovation in our context.”
MAS has been encouraging financial institutions to leverage RegTech as a way to overcome regulatory pain points, such as submitting data requested by the Singapore central bank.
In relation to a previous announcement on making all data machine readable and eliminating duplication of data requests, Mr Ong said the MAS will set aside S$35 million to help smaller banks and insurers to tap on technology.
For this, more details will be announced in coming months.
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