Singapore leading the way in Asia’s regtech wave

Photo credit: krunja / 123RF Stock Photo.

Singapore has been constantly striving to stay ahead of the curve in technological innovations. Call it our kiasu instincts or simply an inability to stay idle in the face of ever-changing global landscapes, but our quest to become a Smart Nation has led to great investments and inventions in all the new-fangled industries that are causing a buzz in the market.

This was the case for fintech, and Singapore has since risen to become a regional hub for investments in the industry. The amalgamation of finance and technology was the perfect blend to entice Singaporean innovators who are keen on the next big thing.

We’ve been riding the global fintech wave for a while now; it is time to turn our attention to grooming the local regtech scene.

Regtech, or regulatory technology, aims to create nimble and scalable solutions to help companies comply with increasingly stringent and ever-evolving regulatory changes. The pressure to adhere to global regulatory demands governing everything from anti-money laundering to countering terrorist financing has given rise to the US$100 billion regtech market, and Singapore is poised to be at its forefront.

The case for regtech solutions

The scandalous case of Malaysian state fund 1MDB hit pretty close to home and illustrates how tracking a large volume of transactions across numerous banks can be an onerous task, which can lead to suspicious or unusual activity slipping through the cracks.

Technological advancements can create sustainable and scalable ways for financial institutions to conduct a variety of compliance functions. The automation of processes such as client onboarding and transaction monitoring can free up valuable compliance manpower that is needed to make key judgment calls that technology cannot offer as of yet.

This year, with what could be a new age of financial regulations, the need for smarter approaches to compliance is only becoming greater.

Smart nation with smart solutions

Singapore is well-positioned to lead the region toward regtech. The government’s recent report highlighted the importance of embracing technological changes in a digital age when new solutions can supplant existing ways of doing things.

Companies in Singapore are already coming up with creative regtech solutions. I work for one such startup, Datarama, which provides a risk management platform to make compliance-driven due diligence more efficient and affordable. Local startup Cynopsis solutions provides screening tools for KYC and transaction monitoring, while Singapore-incorporated Otonomos uses blockchain technology to change how companies are incorporated, administered, and even funded.

Furthermore, the country’s robust regulatory framework is a perfect testbed for monitoring complex structures that characterize the monetary regulatory regimes in the region. Transparency in regulatory law and changes, as well as structured approaches to attaining publicly available information (think ACRA and Bizfile) further aid this process.

The pilot program for the use of government database MyInfo for banking purposes, for instance, is a step in the right direction to making Singapore a smart financial center. Now, imagine if such a database can be used for client onboarding purposes. With regtech, that can be a reality.

Awareness of regtech is certainly burgeoning in Singapore. The inaugural FinTech Festival held in November last year shined the spotlight on this new industry through the ABS-MAS RegTech Forum, the first conference in Asia to focus on this nascent industry.

I believe the local regtech scene is still in its early days, but it is definitely something worth keeping an eye on.