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MAS Proposes New Rulings, Launches Fintech Innovation Lab to Boost Financial Innovation

Singapore’s central bank and financial regulator, the Monetary Authority of Singapore (MAS), has made several announcements this week, launching a set of new initiatives intended to bolster financial innovation and support its ambition as becoming a fintech leader.

“An electronic payments society”

Singapore has embarked on a journey to become a Smart Nation and is looking to “embrace innovation and harness technology so as to increase the productivity of our businesses and enhance the welfare of our citizens.”

Ravi Menon, Managing Director, Monetary Authority of Singapore

During a keynote at the Sim Kee Boon Institute Conference on Fintech Financial Inclusion earlier this month, Ravi Menon, managing director of MAS, told the audience:

“The financial services sectors is well placed to play a leading role in the Smart Nation project. MAS has been partnering with the financial industry to create a Smart Financial Centre, where innovation is pervasive and fintech is used widely.”

A key component of the fintech agenda is payments, which impacts every sector of the economy and which has been widely influenced by two major trends: digital and mobile.

Last week, MAS and KPMG released the Singapore Payments Roadmap, a paper that identifies the several steps that Singapore needs to take in order to improve the payments landscape. This includes streamline and strengthen the regulatory framework, establish a new governance model for payments and enhance the adoption of electronic payments.

New regulatory framework

Following the points addressed in the Singapore Payments Roadmap, MAS published a consultation paper on Thursday on proposed changes to the payments regulatory framework as well as the establishment of a National Payments Council.

The consultation paper proposes to merge legislative rules under the Payment Systems (Oversight) Act (PS(O)A) and the Money-changing and Remittance Businesses Act (MCRBA), which govern stored value and remittances respectively.

This means creating a single framework that will provide for the licensing, regulation and supervision of all payments services, including stored value facility holders, remittance companies, and virtual currency intermediaries.

The National Payments Council on the other hand would focus on coordinating key initiatives such as promoting interoperability and adopting common standards.

“Payments is one of the key components of fintech and serves as a foundation for our vision of a Smart Financial Centre,” MAS’ deputy managing director Jacqueline Loh, said in a statement.

“This public consultation is an important step for MAS and the payments industry to co-create the future of Singapore’s payments landscape; one where payments are swift, simple, and secure, supported by streamlined regulation and inclusive governance.”

The public consultation will be running until October 21, 2016 and represents the first in a series of consultations on the proposed regulatory framework and governance model for Singapore’s new payments landscape.

In addition to the proposed regulatory changes in Singapore’s payments landscape, MAS said it “will review some of the regulatory requirements places on venture capitalists,” Menon said on Wednesday, as quoted by the Straits Times. The purpose is to encourage investors to set up in the city-stage and boost funding for its homegrown fintech startups.

Menon was speaking to the media on the sidelines of the launch of MAS’ fintech innovation lab.

Fintech Innovation Lab

The purpose-built facility, called Looking Glass @ MAS, is located within the MAS building and intends to “serve as a platform for the fintech community to connect, collaborate, and co-create with one another,” Sopnendu Mohanty, MAS’ chief fintech officer, said in a statement.

Looking Glass @ MAS will allow the central bank to experiment fintech solutions with financial institutions, startups and technology vendors, as well as facilitate consultations for startups by industry experts on areas such as legal, regulation, and business-related matters.

The facility will also serve as a venue for training sessions and networking activities for the fintech community.