How Singapore and HK are accelerating the growth of their fintech ecosystems

By Yon Heong Tung for e27

As two countries with high stature in the global financial sector, Singapore and Hong Kong are equally renowned for pushing the envelope of financial technology (though not in equal measure).

New business models and products leveraging on emerging tech have come into focus. In Singapore, for example, the ecosystem has produced startups such as Fundnel, a collaborative investment platform; and CoinPip, a blockchain remittance platform.

Banks, corporations and the governments in both markets have been proactively supporting fintech startups — both early stage and mature — develop and fine tune their products, in order to validate their business models for market readiness.

Emerging markets looking to jumpstart their country’s fintech sector need to take a leaf out of these success stories and adapt and localise these lessons into their own markets. Here are what Singapore and Hong Kong are doing right.

Ample government support

Most startups are cash-strapped and are highly dependent on external funding to keep their lifeblood running. And governments are never in more need of fresh ideas to get out of a sluggish economy — and stave off stagnation — than they are now.

Hence, both countries have been generous in pouring investments as well as other resources into this sector.

Last year, the Monetary Authority of Singapore (MAS) pledged a funding of S$225 million (US$164.2 million) spread over five years to ratchet up innovation in the local fintech industry.

Beyond monetary assistance, it also providing an accommodating environment to test-trial new technologies. MAS has therefore become the first regulatory agency to create a sandbox environment to test various aspects of fintech including digital and mobile payments, authentication and biometrics, blockchains and distributed ledgers, and Big Data.

The Singapore government is also partnering with local universities to equip a new generation of financial IT professionals with the most relevant and up-to-date fintech skillsets.

This has manifested in the form of a collaboration with Singapore Management University (SMU) in 2013, which, together with the MAS and the Infocomm Development Authority (IDA) — now renamed as Info-communications Media Development Authority (IMDA) — launched an academy called the Financial IT Academy @SMU (FITA), for this purpose.

The government is also setting in place a comprehensive and stringent regulatory framework to facilitate the smooth integration of new financial products such as Bitcoin into the broader market. This includes, for example, giving the legal green light to equity crowdfunding.

For Hong Kong, the government is also beginning to stir up a fintech revolution, though not at the same level as Singapore’s.

In September, Hong Kong Monetary Authority (HKMA) launched a collaboration with the Applied Science and Technology Research Institute (ASTRI) to set up a Fintech Innovation Hub to equip fintech startups with the necessary resources to grow their products.

It will also establish a sandbox environment, Fintech Supervisory Sandbox, similar to MAS’, providing fintech startups with a test bed to trial their groundbreaking products before launching them in the real world.

Earlier this year, the government launched an initiative called InvestHK to bring foreign fintech startups, with a focus on blockchain, e-payment, cybersecurity, and regulatory framework verticals, to its shores. To facilitate this process and raise awareness, InvestHK will be holding fintech events, as well as competitions.

A conducive environment for corporations and startups

Both Hong Kong and Singapore are reputable for their safe and conducive business environments — especially tax and regulatory laws favourable to foreign companies.

Thus, these countries have had their work cut out for them, in terms of attracting multinational banks and financial corporations — as well as startups — to set up shop.

With relatively less red tape and legal quandaries to deal with, corporations can instead focus on delivering and pushing new innovative products.

In Hong Kong, Accenture has set up a fintech innovation lab. And, last year, SuperCharger fintech accelerator was launched, with the backing of large companies like Standard Chartered, Baidu, and Ernst & Young.

Among its alumni is a Hong Kong-based startup, Neat, which was interestingly enough, founded by British entrepreneurs. Its e-banking solution allows users to set up a bank account in 10 minutes, with secure fingerprint scans and facial recognition.

In Singapore, not only is there a plethora of fintech accelerators and activities such as the PayPal Incubator, fintech startup pitch days, and festivals. Many e-payment companies have sought the country as their first port of call in the region, which in part, is also driven by the Lion City’s huge appetite for e-commerce.

Braintree, a global e-payments for e-commerce provider, is a subsidiary of PayPal. Its service allows customers to pay seamlessly with their preferred payments method, and in their preferred currencies. It is available to merchants in over 46 markets, allowing them to accept over 130 currencies and every major alternative payment types such as Apple and Android Pay.

Additionally, it also provides the tools for startups to create secure, seamless and elegant one-touch payment experiences within their apps or on their websites.

A final word

Singapore and Hong Kong may be at different stages of fintech readiness, but both markets exhibit the right conditions for fintech to germinate. Unlike some emerging markets where high levels of corruption pose obstacles that prevent or discourage financial institutions from setting up, the two aforementioned markets have a low barrier to entry, making them ideal locations for fintech startups to innovate and roll out their products.

First appeared at e27