Insights: Singapore - The Fintech Nation
Dec 02, 2020
By: Varun Mittal
EY Global EM Fintech Leader | Partner, EY
Author of the book: Singapore: The Fintech Nation
The slogan of "Dream big. Start small. Move fast" brought together regulators, startups, investors, corporates, and everyone else to achieve a common goal. One of Singapore's critical superpowers is a national character built on survival instinct and a distinctive obsession with being successful. Singaporeans, by nature, are Kiasu, and they wear it as a badge of honor.
The COVID-19 crisis triggered a significant stimulus into the economy, with fintech driving the execution of several of these. The key principles which established Singapore as a Fintech Nation have been an obsession with excellence referred to as RFFL (Right First, Fast Later), a unique model of economic and legal policies known as Singanomics, and lastly, an organized and controlled model of a new idea development termed Garden Innovation.
Singapore is a society that has a deep respect for law and authority, which are synonymous with regulated industry segments like financial services. Singapore acts as the bridge between the Asia Pacific and the rest of the world, enabling its financial services sector to flourish. The three pillars of Singapore as The FinTech Nation are the ecosystem, the regulators, and relentless individuals who have developed a playbook to establish synergy and achieved outsized outcomes in a short period. Financial services and the fractional banking system are vital components of social and public order. Factors such as a sound economic and political environment, favorable legal and tax policies, reputation for integrity, strict enforcement against crime and money laundering, and reliable financial innovation support have contributed to Singapore's status as The FinTech Nation.
Everything MAS does is work-in-progress. There is no finite point at which to declare this is our legacy, and everything is great from now on. This is a process of continuous improvement. It’s like innovation that you always do something better. Many exciting things are happening in the technology area. It’s not a question of legacy but an ongoing process of innovation. You need to have that mindset and culture across the financial industry. But because this industry is inherently riskier than other industries, we need to do this innovation prudently.”
- Ravi Menon, Managing Director of MAS 
Key principles of Singapore as Fintech Nation
RFFL (Right First, Fast Later)
Singapore DNA is to focus on being Right First and Fast Later. It reflects the roots of the country's 'Kiasu' nature. It doesn't matter who came first; instead, who did things the right way. Singapore's economic policies are a unique example globally of balancing social welfare with economic development. Singapore develops regulations and policies in a way community stakeholders can have a voice in the process.
A system of economics that orchestrates a balance between state-driven development staged liberalization and efficient private enterprise. An iron fist in a velvet glove provides global competitiveness and excellence by leveraging policy and other governance instruments of influence. Singapore's approach lets market forces define most outcomes, while a progressive government develops the broader structure and guidelines.
The "garden city" vision was introduced by then Prime Minister Lee Kuan Yew on 11 May 1967 to transform Singapore, and since then, the approach has been adopted across all walks of life. During the journey to becoming a Fintech Nation, Singapore picked vital focus areas of innovation like payments, blockchain, artificial intelligence, retirement solutions, and green finance. It then provided all possible resources to nurture them like a compassionate gardener.
Challenges on the horizon
There are challenges on the horizon like potential US-China Decoupling, limited depth on ASEAN stock exchanges for high growth companies, which will be the driver of the next generation of growth, the war for talent, and last acceptance of business being done remotely impacting high-cost locations like Singapore to stay competitive.
Competition between financial services and fintech hubs is not a zero-sum game. There is potential and space for multiple of them to thrive in collaboration. Singapore needs to continue to build upon its Kiasu character to not rest on its laurels. The next generation has more responsibility on their shoulders to carry forward their legacy and contribute to keeping the flag of startup nation flagging high.
FinTech to mushroom
Singapore has a small population. Transactions done per day, even during the COVID-19 period, have consistently stayed at a low number. The market has been cultivated well, with dedication from the government materialising in grants and labs, resulting in the ecosystem flourishing. There has been a culture of openness and sharing, as seen in the lab crawls as well. The main issue is the limitation in terms of volume and market size. For a FinTech to mushroom, the volume is necessary. Even for Grab, their volume came from Thailand and Indonesia. This is bound to be a consistent problem for FinTechs in Singapore.
The next question for Singaporeans should be to ask how they can help one another venture out to where the market is big enough. Grants can only see a company through for the first couple of years. The limitation of the market size will always be a problem at some stage of growth. There is a need to build a Southeast Asian story, as opposed to just a Singapore story.
How can Singapore lead a more coordinated effort in FinTech across the region? If Singapore can do this, it can expand much better. There is a need to focus on the convergence of industries as well. Singapore is in the best position to do this due to the harmony of our different sectors internally, and to its small size being advantageous to this.
Book Launch: 7 December 2020
Singapore: The Fintech Nation traces Singapore's journey from 2015 to 2020, starting with establishing regional hubs and internationalization of fintech innovation.
The book was developed with over 70 primary interviews bringing together the stories and journeys of founders and enablers of the fintech ecosystem, including access to capital, customers, talent, and policy initiatives that have made them and Singapore successful. It covers vital regulatory policy decisions and the background of how some of the foundation blocks of Fintech Nation were set up and evolved. It aims to inspire the next generation to build their ventures and bring technology to the masses, improving billions' lives. It contains a particular chapter from Chief Fintech Officer, Monetary Authority of Singapore, Sopnendu Mohanty, covering the subject from the regulator's eyes.
For more information, please click here.
 Ravi Menon, Managing Director at MAS, in an interview with Bloomberg Quint in November 2018
Varun Mittal is a Fintech Partner leading global emerging markets fintech practice at a global consulting and professional services firm. He advises financial services providers across banking & capital markets, insurance and wealth & asset management in the ASEAN region. He has worked with multiple regulators and national trade promotion agencies to develop fintech hub ecosystems across ASEAN, India, Middle East, European Union, and Latin America. Varun is a serial investor in over 20 startups across ASEAN, India and Africa with multiple successful exits. Previously, Varun was the first marketing and sales employee at helloPay (acquired by ANT Financial, Alibaba Group), led payments for Samsung in ASEAN and developed regional mobile payment solutions at Singtel Group. Varun has authored books and articles in domains of financial services (fintech, insuretech, blockchain, wealthtech, payments, regtech, entrepreneurship and innovation). He is the co-founder of Singapore Fintech Association & ASEAN Fintech Network, galvanizing startups in the ecosystem with educational institutions, investors and regulators across the world.