On 30 October 2017, the Monetary Authority of Singapore (MAS) released an industry transformation map (ITM) for financial services that outlined an agenda for continuous innovation and technology adoption. As a law firm that combines a deep-seated funds and investment management expertise with a leading-edge technology practice, we would like to highlight the following takeaways from the ITM:
1. Leading fund and wealth management hub. MAS is working with the financial industry to develop a centre of excellence for wealth management technology and innovation. A significant part of this initiative would be using big data and artificial intelligence to counter money laundering in the region and maintaining Singapore’ reputation as a clean financial centre. This can be done by identifying unusual patterns of transactions across a network of entities and across times. Digital advisory services, where programs assist clients in deciding on investment portfolios, are also becoming more popular. The introduction of these new technologies are however not discrete, and are instead part of a larger transformation of the financial services ecosystem.
2. Technological innovations. MAS acknowledges that technology has changed the financial services industry, and it is crucial for our financial sector and regulations to transform in tandem. A key focus under the ITM is to facilitate innovation in the sector by encouraging the adoption of technology by financial institutions. For example, MAS will collaborate with financial institutions to create common standards such as for electronic payments, and electronic know-your-client checks. These will accelerate the adoption of technology by financial institutions which will ultimately benefit customers.
The ITM reflects what is already happening in practice. We have noticed a greater convergence of fund and wealth management and technology, where fund and wealth management institutions are starting to invest in new technologies such as crypto-currency or blockchain technology. MAS, in turn, has also sought to boost the Singapore venture capital landscape with relaxed rules for fund managers (we recently wrote an article on this which can be accessed here). The ITM enforces this interaction and is a step in the right direction to encourage or enable more of such crossovers in future.
Taking a step back, the ITM is part of wider ambition to create a Smart Financial Centre in Singapore, where technology is used pervasively in the financial services industry. MAS is taking a holistic approach to this transformation, by setting up an international advisory panel for cybersecurity matters. This ambition brings with it certain risks, and the advisory panel will bring global perspectives on evolving technologies and cyber threats and their implications for financial services. Overall, with the transformation of the way financial services are delivered, customers can benefit and regulators can ensure a better management of risks. We are hopeful that Singapore will eventually see a fully technology-driven financial services industry which benefits consumers and strengthens the integrity of the financial ecosystem as a whole.