Singapore leads Hong Kong in the race to be Asia’s fintech hub

SINGAPORE: Singapore is rushing to reinvent itself as Asia’s financial technology, or fintech, hub to fend off a regulatory threat to its wealth management industry and revive a sluggish economy.

State funding, light-touch regulation and a recent move to allow start-ups to test financial products in a controlled environment have put Singapore ahead of rival Hong Kong to be Asia’s fintech hotspot.

Much like Uber, Airbnb and others have harnessed technology and online social networking to disrupt taxi and hotel services, fintech firms are shaking up the traditional banking and financial services industry.

Singapore’s fintech drive comes as its role as an offshore private banking centre is under threat from a multi-billion-dollar money laundering scandal in neighbouring Malaysia, and as Indonesia chases undeclared money parked in the low-tax city state.

Also, Singapore’s traditional shipping and manufacturing growth drivers are faltering amid a global economic slowdown and a slump in commodity prices and demand.

Singapore is attracting interest, too, from among the 60,000 or so fintech firms based in London’s near-US$9bil market – a trend likely to accelerate with Britain’s referendum vote to leave the European Union.

“We already have registered interest from UK-based companies to move to Asia as it’s getting very crowded there,” said Markus Gnirck, partner and co-founder of tryb, a fintech consultancy.

“Brexit will probably accelerate a few of these conversations.” Britain’s soft approach to regulation and its influence on Europe would likely wane with Brexit and any new barriers that would create.

“In the long term (this) makes Europe much less attractive as a place for entrepreneurs,” Taveet Hintikus, CEO of peer-to-peer money transfer firm TransferWise, told the World Economic Forum in Tianjin this week.

He told a panel session that his company was looking at Asia for expansion, and Singapore appeared a more vibrant fintech centre than Hong Kong.

A KPMG report said Singapore has been more aggressive in pursuing fintech opportunities, and tryb noted that all but a dozen of the around 210 fintech firms operating in Singapore have opened in the past two years - the fastest growth rate in Asia.

However, Singapore’s immigration laws are an obstacle, start-ups and consultants say, as measures to curb the number of foreign workers and give priority to Singaporeans have left a shortage of talent.

And Singapore’s banking regulations have created a risk averse culture that is at odds with the trial-and-error approach of fintech start-ups.

But the city state’s efforts are bearing fruit.

SmartKarma, a start-up that operates a platform offering Asian institutional research and analysis on demand, chose Singapore over Hong Kong for its headquarters.

“There’s no other city in the world where you have such a progressive government when it comes to supporting innovation today - be it from grants, to having funding vehicles to operational support,” said co-founder and CEO Raghav Kapoor. – Reuters

Source: The Star

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