First off, what a joy it is to live in a city that can attract so much attention and activity around a topic as specific as Fintech. We often assume everyone is exposed to this world, but there are few people who read beyond The Economist or see beyond CNN and Bloomberg. The week was not restricted to the massive Singapore Expo (I’m a little amazed, as were many, that a hanger-sized space in the middle of the Singapore monsoon season could get that cold!). So here are three quick takeaway discussions that took place among dozens:
The Monetary Authority of Singapore (MAS) – Ravi Menon’s Keynote
Ravi Menon and The MAS, I would say, came across as ‘the heroes’ of the Fintech Festival. Throughout the week, it was clear from startups, other regulators and banking gurus, The MAS’s game is on point. Showing themselves as a clear frontrunner in pushing regulations at a pace that is lightening fast for a regulator. They are clearly keen to lead the pack when it comes to disruptive regulators around the globe. The MAS has stretched its arms out to other countries regionally; in the case of Thailand with a like-for-like relationship between Singapore’s PayNow and Thailand’s PromptPay, to far flung Canada, which is indeed the other side of the world from an Asia-centric perspective.
The MAS is focused on adapting their regulatory frameworks so as to welcome Fintech development, while also providing the right suite of regulations. The Payment Services Bill soon to be released will license payment companies based upon their activities, as opposed to a one-size-fits-all framework that regulators have used in the past.
Cyber-Security is another issue that was discussed, and perhaps the most underplayed aspect of Fintech through the week that followed, was of clear concern for The MAS. Proudly, in typical Singapore style, The MAS is aiming to lead the way and get well ahead of issues before they hit. Masterplanning their future approach to combating Cyber-Security while still ensuring a continued reduction in operating friction. The MAS is now Red-teaming with covert financial institution reviews. “Mission-critical” is how Ravi Menon referred to it.
Perhaps the one unanswered question at the conference that lurked in the air like barbeque was when and how The MAS would embrace the world of crypto-currencies. That being said, nobody really answered it throughout the week, so The MAS being non-committal didn’t stand out as odd. To be fair to the approach of seasoned regulators like the MAS, their approach is not so much to step in the way of the freight train that is blockchain and crypto-currencies, but rather protecting investor interests when it comes to how information is divulged, and how assets are owned. Mr. Menon stressed as many in the space have also stated, if it looks like a security, acts like a security and smells like a security, it then needs to be regulated like one as well, providing all the necessary investor safeguards that the law provides.
India Fireside Chat – What are the challenges and opportunities presented by the Fintech boom in India?
Maybe it’s just me, and my very strong views on India’s development through the lens of the betterment of its society, but I felt what was said on this stage would not have been said by the panelists if they were physically in India. There would have been sharp rebukes from audience members who actually lived through and suffered directly from the harsh actions on currency flow by the government. A few examples, “India is the most digitally connected country in terms of payments and digital wallet penetration”.
This falsehood was sadly picked up and widely shared by many other panelists, speakers and delegates throughout the week. It felt that the pain people suffered for at least six months after demonetisation, was being spun into a positive statistic for a job well done by the Indian Government! The reason this is not true is simple – If you remove the two largest denominations from circulation with a three-hour window from when the ‘diktat’ is announced to when it is went into effect, your population of 1.3b (those that actually use cash and are mostly not in the organised banking world) have little choice but to use digital wallets. Even then, although tens of millions of new digital wallets were assigned, the necessary metrics showing exactly how many of those wallets were active 12 months down the line, and what the wallet balances were, was ominously missing. No mention of how after an initial boom in new wallets, there has been a month-on-month decline in wallet usage. The most common statistic which existed prior to demonetisation was that globally, digital wallets had an average balance of sub $3. How does India stack up against that? I heard a faintly mumbled 100 Rupee number (sub $2), is that really a statistic to be proud of?
Of all four panelists, I felt State Bank of India’s CTO Shiv Bhasin and Axis Bank’s Board Director Rohit Bhagat had the more valuable viewpoints on how India could and would progress moving forward in an ever-greater digital India. Mr. Bhagat in particular showed a savvy viewpoint of someone who clearly had his ear to the ground, and did not have political masters to pander to. But unfortunately, the overall feel of the session was too polite, ignoring the obvious criticism of the monetary moves of the government in the past year, and worse still, a lack of humility to correct the actions in a way that actually heals the pain caused.
Established Markets Fireside Chat – Is the Fintech boom giving mature markets a second wind?
Hopefully this will come across as honest as opposed to just rude, but this session showcased how disconnected regulators and members of the ‘old economy’ banks are, and what they thought of the future of money. Comparing their approach to those of emerging market players such as the MAS, China, Visa, MasterCard, or even smaller European countries – the panelists had a rather lofty view of how relevant Europe and traditional banks would remain dominant in the dynamic modern world of Fintech. It reminds me of a Forbes cover from just 10 years ago, referring to Nokia’s 1 billion phones sold and saying, “Can anyone catch the cell phone king?”. There was no sense that the panelists had a substantial grasp on blockchain technology or crypto-currencies as just one example. It felt as though an analyst gave them a weekly technology brief that was skimmed and then set aside to be forgotten. What will be the most interesting takeaway from this will only show itself at next year’s Fintech Festival, when the acceleration of new technology will have begun to really take shape and dramatically unsettle the apple cart of banks and regulators.
How can ASEAN use technology to foster greater integration?
A stand out discussion took place with respect to payments in ASIAN, with Indonesia’s Go-Jek founder Nadiem Makarim dropping truth bombs to the highly engaged audience. Specifically, Nadiem’s stressing of the importance of financial regulation in the payments space, regardless of what particular area your business operates in. Amazingly, a person can approach a Go-Jek driver with cash and have his digital wallet topped up. This is the game-changer of digital everywhere. Flexibility with unlimited potential to streamline your day-to-day activities. He was categorical, that being a licensed payments institution in Indonesia was key to the longevity and robustness of G-Jeks business, which has seen a rapid acceleration from just a point-to-point bike taxi company to one whose payment platform is dominant in Indonesia even when compared to local retail banking. Alex Kong too, of TNG Fintech Group on the panel, stated here and on further firesides about how important it was for his company to be regulated in the payment space. This doesn’t sit so well with the world of crytpo-currencies which are hell-bent on “beating the system”. It goes a long way to show how important it is to start your business with a plan that has scalability, as opposed to ‘just’ rolling up your sleeves and hoping to solve every problem only as it comes up to hit you in the face.
What is clear from this session, is that digital wallets are no longer the nuisance that they once were. They are a powerful engagement and connectivity tools, particularly in the emerging markets which do not have the overhang of relic banking systems and habits. One can only wonder what a truly cross border wallet available to everyone on the planet could achieve.