Regulation and FinTech are an odd couple, as policymakers have to work a fine line between too strict and too loose guidelines. The Monetary Authority of Singapore proposes a regulatory sandbox for startups and pilot programs in the Fintech industry. Regulation can be a positive thing for financial technology, assuming the guidelines leave breathing room for innovation.
The concept of financial technology has attracted a lot of attention throughout the years. Even financial institutions have taken notice of how they need to start innovating and collaborating. However, without a proper regulatory framework, that is a lot easier said than done.
A Regulatory Sandbox for FinTech Innovation
The Monetary Authority of Singapore has taken notice of this growing need for Fintech regulation and issued a proposal for a sandboxed environment. If this paper is approved by the government, startups and Fintech firms can experiment with new technologies without having to worry about regulatory guidelines and safeguards.
MAS Deputy Managing Director Jacqueline Loh told the media:
“MAS aims to provide a responsive and forward-looking regulatory approach that will enable promising fintech innovations to develop and flourish. The sandbox will help reduce regulatory friction and provide a safer environment for fintech experiments. We believe this will give innovations a better chance to take root.”
Singapore’s banking sector – just like every other country’s financial infrastructure – has a dire need for innovation. Consumer demand is changing, and the established financial players are losing ground to Fintech startups and challenger banks. Innovation and collaboration are the only way forward, and the Monetary Authority of Singapore is acknowledging that fact.
This is not the first Fintech initiative in Singapore either, as SG-Innovate was established in April of 2016. Similar to what the regulatory sandbox wants to achieve, SG-Innovate is destined to bolster Singapore’s ambition to become the Fintech hub in Asia. These efforts are aided by Standard Chartered and HSBC setting up innovation labs in the country as well.
Innovation is the driving factor of Fintech, and regulation can be a severe obstacle for startups and entrepreneurs. But by the look of things, the Monetary Authority of Singapore is keeping an open mind toward innovation, and doesn’t want to bog down new developments. A regulatory sandbox environment might just be what Singapore needs to become the biggest Fintech hub in all of Asia.
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