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MAS to make it easier for fintech start-ups to test out solutions: Ong Ye Kung

SINGAPORE — Singapore's central bank is looking to make it easier for financial technology (fintech) start-ups to test their products and solutions over a fixed period of time in a regulatory "sandbox", where regulations are temporarily suspended or relaxed.

Education Minister and Monetary Authority of Singapore board member Ong Ye Kung speaks during the Singapore Fintech Festival on Nov 14, 2018.

Education Minister and Monetary Authority of Singapore board member Ong Ye Kung speaks during the Singapore Fintech Festival on Nov 14, 2018.

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SINGAPORE — Singapore's central bank is looking to make it easier for financial technology (fintech) start-ups to test their products and solutions over a fixed period of time in a regulatory "sandbox", where regulations are temporarily suspended or relaxed.

The Monetary Authority of Singapore (MAS) will also be pumping S$35 million to help smaller banks and insurers make use of regulatory technology, or regtech.

Education Minister and MAS board member Ong Ye Kung announced these measures on Wednesday (Nov 14) as part of a wider move by the central bank to help financial institutions overcome regulatory pains.

Speaking at this year’s Singapore Fintech Festival, Mr Ong said one regulatory complaint from fintech start-ups is that they find it is “too hard” to get into the existing regulatory sandbox.

So the MAS will launch a public consultation exercise on Wednesday on the creation of a new sub-scheme called the Sandbox Express.

This express version of the regulatory sandbox aims to get new fintech firms to start experimenting their solutions within 21 days, but it will only be for activities where the risks are low or well understood by the market as well as regulators, Mr Ong said.

For a start, these sandboxes will be specifically pre-defined for insurance broking, recognised market operators and remittance businesses, the MAS said in a separate media release.

MAS chief fintech officer Sopnendu Mohanty said the Sandbox Express will also facilitate quicker experimentation and faster introduction of innovative financial services to the market.

Interested applicants must be able to provide a clear disclosure and obtain acknowledgements from users of their products and solutions before these users come on as customers.

The MAS will assess applications based on two criteria: Technological innovativeness of the financial service, and the fitness and propriety of the applicant’s stakeholders.

Applicants that receive MAS' approval will be required to submit periodic progress reports as well as ensure adherence to the pre-defined sandbox expectations.

The public consultation will run until Dec 13 this year.

However, even as Singapore tries to make the regulatory environment easier for financial institutions and fintech start-ups through these measures, Mr Ong cautioned that the city-state is not a “laissez faire” regime where entrepreneurs can just “run wild” with their ideas, and that regulations are necessary to “harmonise” the various concerns in an urban environment.

Citing the example of e-payments, Mr Ong said Singapore did not follow the path of a “certain laissez faire regime” where e-payments can grow so fast to the point that it “takes over” the entire financial system.

“Although it’s convenient, it gives rise to prudential concerns," he added. "And they are closed-looped systems which means different wallets don’t talk to each other; they are not interoperable and over time, that stifles competition."

Mr Ong also said there is a need to bring in foreign expertise in the field of fintech because Singapore, being a small country with a small population, “will not have enough expertise in many areas of specialisations”.

“Hence we believe we have to complement our local talent with foreign expertise — grow our own timber, but also welcome experts around the world,” he added.

“And if there is a capability we do not possess, we welcome international experts to come here, teach in our polytechnics, teach in our universities so that more of us can share that knowledge and those skills. That way, we can better grow businesses, open up more opportunities here, create jobs.”

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