Stringent regulations and political uncertainty in the UK are among the reasons cited in a new report that suggests Singapore is on the cusp of taking London’s fintech crown.
The report by the Association of Chartered Certified Accountants (ACCA), which was released in September 2016, explores how fintech is transforming finance around the globe. It warns onlookers to “keep an eye on Asia” as red tape begins to hamper London’s once thriving prosperity, and the effects of a hard Brexit are weighed up.
Numerically, Singapore lags behind. In 2015, the Southeast Asia region as a whole raised approximately US$151 million in fintech venture capital funding, considerably behind the US, China, India and the UK (which raised US$7.3 billion, US$2.7 billion, US$1.5 billion and US$962 million, respectively), as per the report.
But Singapore’s geographic location, widely regarded as the gateway to the Pacific Rim and its reputation as a financially transparent nation are among the reasons why it has become a much coveted location to start and build a financial business.
The Fintech Bridge
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While Singapore has a lot going in its favour, the seizure of a title is not just about assuming the business will come. It’s about sharing knowledge and working with your competition to plug the gaps and work together – incredibly necessary, as the global fintech landscape is notoriously disjointed.
That’s why the Monetary Authority of Singapore (MAS) and the Financial Conduct Authority of the UK have joined forces to create what has become known as the Fintech Bridge. The cooperative agreement aims to share knowledge and co-develop approaches to capture and nurture fintech businesses globally.
This comes following a similar agreement between Singapore and the Australian Securities and Investments Commission, which is aimed at speeding up the process for each to enter the other’s market.
Towards a smarter Singapore
Alongside developments in international cooperation, Singapore’s Prime Minister, Mr. Lee Hsien Loong, has repeatedly pledged to make Singapore the world’s first 'smart nation'; and this is reflected in the efforts by MAS to develop Singapore into a smart financial centre.
The endgame of both of these objectives is to use technology to improve the economy and standard of living in the country, as well as create job opportunities and increase efficiencies in government processes – the results of which can be fed down to citizens.
Over $160 million has also been pledged to help non-fintech businesses collaborate with fintech businesses, including supporting them through their early stages and beyond.
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As finance professionals, such as those dealing with accounting and online payments, become ever more alert to fintech opportunities, it’s important for Singapore to capitalise on not only how best to attract their business in the first place, but how to appropriately develop the talent and retain it.
As ACCA Accountancy Futures Academy’s chief executive Ng Boon Yew puts it: “Understanding the intricacies of global best practices and adapting them for varying national contexts can set aspiring fintech hubs on a course for success, and highly skilled accountants will be vital to that process."
That includes Singapore tackling the ongoing worry of human resources. Migration restrictions have been recently revised, but many believe the government of Singapore must do more to attract the type of top talent required to drive the country’s fintech sector and cement its position as a regional and global leader.
The next fintech hub
All in all, London’s potential for banks to lose their passporting rights following a hard Brexit are driving entrepreneurs and their cash, elsewhere. But Singapore can’t afford to just bank on disgruntled businesses landing at its door. It must use its international connections to develop its knowledge and relationships, as well as address its drawbacks, such as immigration rules.
Political developments in London will be under close scrutiny in the fintech world in 2017, but Singapore’s efforts to capitalise on the head start it already has will be just as important as it continues on its journey to be crowned fintech hub.
(By Sarah Thorp)
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