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Taking forward the learnings from a recent cyber attack impacting organisations all across the world, the Monetary Authority of Singapore (MAS) has rolled out a set of central banking rules to mitigate the technology risks in the financial sector.

The Monetary Authority of Singapore (MAS) now requires all financial institutions to assess the suppliers of their technology vendors. The updated guidelines apply to all banks, payment services firms such as GrabPay and Singtel Dash, as well as brokerage and insurance firms.

In a typical assessment, suppliers may be asked to prove that their software source code is rigorously tested and they do not use unsafe programming practices. Suppliers may also be asked to reveal their security measures and how often they monitor cyber risks.

Mr Vincent Loy, assistant managing director of technology at MAS, shared that using an external vendor which may, in turn, procure third-party tools brings significant risks to banking systems. “Unknown third-party suppliers are what MAS is most worried about… Financial institutions that do not allocate sufficient financial resources may be more open to unknown third-party suppliers,” he said.

The hacking of Texas-based SolarWinds, a leading provider of IT management software, had subjected hundreds of thousands of firms and government entities around the world to risks. SolarWinds’ IT management tools are common components in the products of many large vendors including Microsoft, FireEye and Cisco Systems.

Mr Tan Yeow Seng, the MAS chief cybersecurity officer, said financial institutions are increasingly reliant on third-party service providers as they adopt new technologies. “The revised guidelines set out MAS’ higher expectations in the areas of technology risk governance and security controls in financial institutions,” he added.

Straits Times reported that an assessment of third-party suppliers was previously not required under the MAS Technology Risk Management (TRM) guidelines, although due diligence on technology vendors was a must. The screening of component suppliers is now clearly spelt out in the revised TRM guidelines, which cover a wide range of topics to help firms fob off and recover from cyber-attacks and system failures.

Risks through the use of open application programming interface (API), a code that lets different applications talk to one another, are also addressed in the newly updated TRM rules. Banks have used APIs to automatically share foreign exchange rates, for example. This has allowed many external developers to build currency conversion apps using the data. Under the revised TRM rules, financial services firms must vet entities that access their APIs by looking at the nature of their business, cybersecurity posture, industry reputation and track record. They must also secure the development of the APIs and encrypt sensitive data transmitted to prevent leaks or hackers injecting malicious codes in the APIs.

In another key change to the TRM guidelines, the board of directors and senior management in financial institutions must vet and approve key technology and cyber-security appointments. “Organisations that do not have a good cyber-security posture usually do not have a board and senior management oversight for IT functions and key appointments,” said Mr Loy, citing findings of the central bank’s own audits.

Last revised in 2013, the TRM guidelines have been updated at a time of increased data sharing that underpins the sector’s digital transformation. The revision took in feedback from a public consultation in 2019 and other expert engagements. The guidelines elaborate on the mandatory requirements set out in the MAS TRM notice, first issued in 2013 and which carries a fine of up to $100,000 for non-compliance under the Banking Act. In the case of a continuing offence, a further fine of up to $10,000 daily may be levied.

Economies across the globe are streamlining their blueprints in a bid to foster economic recovery despite the challenges brought by the new normal. To do this, they are amplifying their digital initiatives faster than anticipated. Likewise, they are embracing a change in the cultural mindset to enhance their processes. 

Key economic sectors are getting support from the government in terms of technological advances. This is evident in the manufacturing and retail industries. Exports are likewise getting a boost from tech as governments strive to make their products more globally competitive and in the long term, be a growth pillar for the economy. 

In the Philippines, key areas of the economy are given priority following the onset of the global health crisis. From physical transactions, several government agencies are implementing online schemes to not just fast-track their correspondence with the public sector but to adhere to safety restrictions as well.  

Assistance to various sectors of the Philippine economy has been launched and made more convenient through digital tools. This is seen in the innovative measures used by the government not just in providing ease in public transactions but in key areas like social assistance. In an earlier report by OpenGov Asia, the Department of Social Welfare and Development (DSWD) said that it will be releasing livelihood settlement grants of LSGs to various households in strife-torn Marawi City through a mobile app. 

To promote ease in doing business for players in the agricultural sector, state-run Landbank of the Philippines (LBP) announced in a statement that it has installed its Digital Onboarding System or DOBS in its first Agri-Hub in the province of Ilocos Sur. 

The online banking system is intended to simplify account opening applications by reducing transaction turnaround time to 10 to 15 minutes. It is likewise anticipated to adhere to safety protocols implemented by the Inter-Agency Task Force during the new normal. It does this by minimising physical contact and promoting remote transactions. 

The bank was recognised for launching the DOBS, a web-based programme it launched two years ago to streamline account enrollment processes. This feat made the LBP one of the first lenders in the Philippines to offer a fully digital account application process for individuals, institutions and government agencies. The system was also set up with goals of promoting regulatory compliance in data quality through easy gathering, storage and retrieval of digital bank records. 

Launching a new Agri-Hub 

The Landbank, through Department of Agriculture Secretary William Dar, stated that the banking scheme, as well as the Sta. Maria Agri-Hub, “are expected to bring financial services closer to more bank clients in the rural area.” This is in conjunction with President Rodrigo Duterte’s directive that the LBP must cater to the needs of farmers, fisherfolks, agrarian reform beneficiaries and agriculture enterprises. 

During her speech at the inauguration of the Sta. Maria hub, LBP North Luzon Branches Group Head and First Vice President Ma. Belma Turla noted that the agri-hub is set to provide both financial and technical services to clients. These include account opening, withdrawal and cash encashment. Loan applications and handling of agrarian-related concerns may likewise be facilitated through the hub. 

The LBP’s Sta. Maria Agri-Hub is the fifth of its kind established in the country. The state-run lender said it has established these facilities in sites including Calabanga, Camarines Sur; Barotac Viejo, Iloilo and Sual in Pangasinan. Meanwhile, the Echague Agri-Hub in Isabela was earlier put up in a bid to cater to more than 2,500 farmers across 64 barangays in the municipality. 

The Sta. Maria hub is expected to speed up account-related transactions for farmers and fisherfolks not only within the Sta. Maria locality but to those from neighbouring towns and municipalities. 

Enterprises and government agencies alike are increasingly shifting their gaze to online payment portals as tools that can help them navigate through public transactions more conveniently. This is as the world recovers from the impacts of the COVID-19 pandemic which has left major economies accelerating faster in their digital transformation journey. 

In the Philippines, several government departments are experimenting with ways to integrate online payments into their operations. These include teaming up with other agencies and those in the private sector to ensure a speedy and more efficient turnaround in transactions. 

This vision is shared by the Maritime Industry Authority (MARINA) which in a statement announced that it has inked a Memorandum of Agreement (MoA) with state-owned LandBank of the Philippines (LBP) for the integration of web-based payments for MARINA services. 

The agency explained that under the agreement, the MARINA Payment Facility will be integrated with the Landbank LinkBiz portal. This portal is currently being used as a virtual payment channel that allows government and members of the private sector to have cashless payments for MARINA’s products and services. 

The LinkBiz portal was earlier launched to lessen direct and indirect costs that are attributed to cash and physical distribution of in-kind goods. The LBP likewise aims to foster accountability and effective tracking of funds on top of prioritising online payments instead of cash transactions to unclog traffic and in turn, save on operation costs. 

The portal is equipped to handle large-value funds and quick confirmation of payments through email. It can be accessed by the government and the public sector seven days a week, except during system maintenance. 

According to Capt. Jeffrey Solon, who is the Officer-in-Charge of the Office of the Deputy Administrator for Planning of MARINA, the department is optimistic that the new virtual payment facility will bring in more convenience and efficiency in government transactions. He also expressed gratitude on behalf of his organisation to Landbank for the collaboration. 

He added during the virtual signing ceremony: “With the eventual implementation of this memorandum of agreement, the MARINA looks forward to maximising the use of this e-payment facility as our modest contribution to the government’s efforts for ease of doing business, and also to adhere to the principles and practices of good governance.” 

This statement was echoed by officials from the LBP, adding that they are anticipating that the cashless payment service will enable them to also fast-track their financial dues from MARINA. Marilou Villafranca, the Senior Vice-President of the North National Capital Region Branches Group of the LBP, noted: “Following our MOA signing today, this e-payment facility will be made available to your clients, allowing them to settle their monetary obligations to MARINA in a faster, more secured and convenient manner.” 

The MoA signing was well-attended by officials of both MARINA and the LBP, including the Senior Vice-President and the OIC of MARINA’s Office of the Deputy Administrator and the MARINA Administrator Vice Admiral. Officers of LBP’s North NCR Branch Groups Cluster also attended the online event.  

The agreement is alongside government efforts to improve the current business climate in the Philippines and government transparency. Republic Act 11032, which promotes the ease of doing business and efficient delivery of government services, was enacted in 2018. It enhanced and amended the Anti-Red Tape Act of 2007 by reducing processing time and eliminating red tape activities in government. 

To achieve these goals, many agencies in government are gearing towards digitalisation to fast-track transactions and lessen turnaround time. As earlier reported by OpenGov Asia, a local government in the Philippines has adopted a zero-contact policy. The programme required all departments within the local government to adopt electronic means in the submission of government applications, requests and payments. 

The Reserve Bank of India (RBI) recently announced that the Payments Infrastructure Development Fund (PIDF) has been operationalised to create three million new touchpoints every year for digital payments in Tier-3 to Tier-6 centres.

According to a news report, in June last year, the RBI unveiled PIDF, which intended to subsidise the deployment of payment acceptance infrastructure in Tier-3 to Tier-6 centres, focussing on the north-eastern states.

In a statement, the central bank said an Advisory Council (AC), under the chairmanship of RBI Deputy Governor, BP Kanungo, has been constituted for managing the PIDF. It will be operational for three years, starting from this month, with a possible extension of two more years.

The fund aims to increase the payments acceptance infrastructure by adding three million touchpoints every year – one million physical and two million digital payment acceptance devices. The fund will cover multiple payment acceptance devices/infrastructure that supports underlying card payments, including physical PoS, mPoS (mobile PoS), GPRS (general packet radio service), PSTN (public switched telephone network), and QR code-based payments.

RBI explained that as the cost structure of acceptance devices vary, subsidy amounts will accordingly differ by the type of payment acceptance device deployed. The government will offer a subsidy of 30% to 50% of the cost for physical PoS, and a 50% to 75% subsidy for digital PoS.

However, payment methods that are not inter-operable would not be considered under the PIDF. The objective of PIDF is to increase the number of acceptance devices multi-fold in the country. The scheme will benefit the acquiring banks, non-banks, and merchants by lowering the overall acceptance infrastructure cost, the RBI said.

The initial corpus of the PIDF has to be substantial to initiate pan-India terminalisation and to cover the pay-outs in the first year. Contributions to the PIDF will be mandatory for banks and card networks.

RBI noted that card-issuing banks will also contribute to the corpus-based on the card issuance volume (covering both debit cards and credit cards) at the rate of IN 1 and IN 3 per debit and credit card issued by them, respectively. It aims to collect contributions by the end of January.

The report noted that besides the initial corpus, the PIDF will also receive an annual contribution from card networks and card-issuing banks. The PIDF is on a reimbursement basis and accordingly, the claim has to be submitted only after making payments to the vendor. The maximum cost of the physical acceptance device eligible for subsidy is IN 10,000 (including one-time operating cost up to a maximum of IN 500). The maximum cost of the digital acceptance device eligible for subsidy is IN 300 (including a onetime operating cost up to a maximum of IN 200).

The implementation of targets shall be monitored by the RBI with assistance from card networks, the Indian Banks’ Association (IBA), and the Payments Council of India (PCI). Acquirers must submit quarterly reports on the achievement of targets to the RBI. Acquirers meeting or exceeding their targets well in time and/or ensuring greater utilisation of acceptance devices in terms of transactions will be incentivised. Those who do not achieve their targets shall be disincentivised, by scaling up or down the extent of reimbursement of subsidies.

Organised by Hong Kong Science and Technology Parks Corporation (HKSTP), the API EcoBooster (the Programme), a first-of-its-kind programme in collaboration with a British multinational investment bank and financial services holding company, has resulted in close to 30 Hong Kong and overseas start-ups and technology ventures showcasing their innovative open banking solutions at the Demo Day.

To drive smart banking innovation in Hong Kong, the Programme, launched in mid-July, has provided start-ups and the developer community with the opportunity and resources to co-create a range of solutions in the areas of transactions and operations, loans, credit card, digital payments or customer records management for commercial and retail banking sectors in Hong Kong.

These shortlisted companies from Hong Kong and overseas markets like the UK and France were provided with mentorship and coaching from the bank’s digital banking specialists during the six-week programme. HKSTP’s technology partner, an API development company, offered dynamic support from technical clinics to sandboxes for the innovators to conduct trials by making use of more than 100 banking APIs and mock data from the bank.

The Demo Day featured a fireside chat titled “Driving Innovation in Open Banking” with HKSTP and representatives from the bank, who shared the challenges and opportunities arising from the API developments. It was followed by a series of pitch presentations from the 28 teams about their respective innovations, as well as on-and-offline one-on-one demonstration on site.

The Chief Corporate Development Officer of HKSTP stated that the success of API EcoBooster highlights the enormous opportunities for both start-ups and established enterprises to jointly pilot various ideas and solutions in a fast and risk-free environment.

As Hong Kong and the world embrace the new normal, the transformative power of innovation becomes even more apparent and effective. Open APIs propel us towards an era of rapid evolutions within the Fintech ecosystem and as an international financial centre, Hong Kong is at the forefront in driving such adoptions.

HKSTP is a tale of more than 1,000 technology companies, as well as the stories of over 9,000 R&D entrepreneurs, who are driving Hong Kong’s innovation using their various platforms and infrastructure. HKSTP strives to continue to unlock new opportunities for innovators and business partners and aims to cement Hong Kong as a global centre of Fintech innovation.

The Head of Commercial Banking at the Hong Kong arm of the bank stated that the financial institution and HKSTP have forged strong partnerships to support the innovation and technology ecosystem for years. Committed to driving digital banking innovation for our customers, the bank’s leadership is thrilled to see the enthusiastic response and inspiring submissions to this meaningful programme.

This new level of crossover between banks and tech ventures has opened up many new possibilities. This paves the way for more co-creation to bring continuous breakthroughs to the financial services industry, making banking more accessible to customers in the long term.

According to the HKMA, the formulation of the Open API Framework was one of the seven initiatives announced by the HKMA in September 2017 to prepare Hong Kong to move into a new era of Smart Banking. Following a public consultation, the HKMA published the Open API Framework for the Hong Kong Banking Sector on 18 July 2018.

The Framework takes a risk-based principle and a four-phase approach to implement various Open API functions, and recommends prevailing international technical and security standards to ensure fast and safe adoption. It also lays out detailed expectations on how banks should onboard and maintain a relationship with TSPs in a manner that ensures consumer protection. The HKMA believes that the Framework will serve as an important guide for the banking industry in Hong Kong to adopt APIs effectively and strike a good balance between innovation and risks.

The Philippine government is set to utilise technology in extending financial assistance to families in strife-torn Marawi City. The Department of Social Welfare and Development (DSWD), has announced in a statement that it will release additional Livelihood Settlement Grants (LSGs) to households in less affected areas in the city through a mobile application. 

To disburse these LSGs, the DSWD has partnered with financial service provider Starpay Corporation. Under the agreement, the department will use the firm’s smartphone app to extend an additional P10,000 worth of LSGs per family.  The application is now in the initial stages of gathering data from households in Marawi City. DSWD Region X Director Mari-flor Dollaga-Libang noted: “Registration was already facilitated by Starpay Corporation and log-in details were distributed to the families through their nominated mobile numbers”. 

As of current data, 28,204 families from less affected areas will be receiving livelihood assistance. Of this number, 5,000 families have already been notified daily about the financial grants that they will be receiving. 

To register and receive their LSGs, beneficiaries may download the Starpay application and fill in personal details like name, date of birth and address. Upon updating these data, users may take a photo and upload any acceptable government ID including passport, driver’s license, Philhealth ID and Social Security System ID. After updating their accounts, beneficiaries will then receive a message confirming their transaction. Beneficiaries can subsequently cash out funds from their online ‘wallet’ within the app through ATM withdrawal or other forms of payout. 

One of the primary concerns in using the application is blocked accounts on the mobile provider’s end. Another challenge is that some beneficiaries do not have access to smartphones and internet services. To address these issues, the DSWD Region X requested assistance from the local government of Marawi and officials from the Task Force Bangon Marawi Field Office to take a list of users experiencing these challenges. The DSWD will then request manual beneficiary reference numbers for these beneficiaries. 

The Social Welfare Department has already distributed a Transitory Family Support Package worth PHP 53,000 (US$ 1,103) and PHP 14,400 (US$ 299.81) to over 17,000 displaced families in the most affected areas of the city. Aside from financial assistance, the agency also dispatches a Pabaon Package to beneficiaries there. 

The DSWD has been ramping up efforts to help households in Marawi City since 2017, following an Administrative Order signed by the Philippine government. The Order provided for the creation of an Inter-Agency Task Force for the Recovery, Reconstruction and Rehabilitation of the City and other affected localities. It also directed government agencies to support and cooperate with the Task Force. 

Pursuant to this, the Department of Budget and Management has released funds to the DSWD to be used for its LSG project. The LSG programme aims to provide assistance to internally displaced persons of IDPs in most affected and less affected areas who were affected by the Marawi Siege. 

The LSGs shall be used as seed capital for start-up enterprises that were damaged during the siege. The funding shall likewise be allotted as capital for the purchase of starter kits of damaged livelihoods and rehabilitation of small and micro-businesses. 

The Social Welfare Department joins a string of government agencies that continue to innovate and help Micro, Small and Medium Enterprises. As recently reported by OpenGov Asia, the Department of Science and Technology announced that it has put up a website called Mimaropa Ventures PH that would allow businesses in the MIMAROPA Region to showcase their products and services. The new site is anticipated to help community-based MSMEs which the DOST has supported through fund assistance and technology-sharing. 

One of the largest commercial banks in Thailand announced the launch of its Thai language Artificial Intelligence (AI) powered chatbot that was built in-house in a joint collaboration with a Singapore-based fintech start-up. The chatbot called, TT01, was a result of the bank’s innovation programme, InnoHub. The development began earlier in 2020 and the chatbot was fully completed in October. The solution will be available to clients of the start-up.

Meanwhile, the bank will use this as a digital sales assistant on LINE for their sales and relationship managers, scheduled to launch in Q1 2021. This solution adds to the start-up’s growing portfolio of languages available on its proprietary conversational AI chatbot, which includes English, Chinese, Bahasa Malaysia, and Bahasa Indonesia.

The Head of the bank’s Innovation Department stated that they are excited about TT01, which they believe to be the first in-house built advanced Thai conversational AI engine that works. According to multiple internal tests, TT01 has achieved an accuracy rate of up to 96%.

Thai is a complicated language and has long been neglected by the global data science community, so the team is proud to be able to finally build this engine with the start-up, and hope this will lead to more interest in Thai conversational AI in the region, he added. TT01 was reportedly trained to process mixed-use language in Thai and English, as well as emojis, both of which are commonly used in daily text-based communications.

Commenting on this approach, the Founder and CEO of the start-up noted that the team wanted to build a Thai conversational AI engine for everyone. Therefore, it must be able to process utterances that reflect how ordinary people communicate in their daily lives. Through their first partnership with the bank, the start-up accomplished just that, he said.

The Singapore-based start-up is an alumnus of Bangkok Bank’s InnoHub which is a global accelerator programme in 2019. The launch of TT01 comes shortly after the pre-Series A funding by the corporate venture capital arm of the bank.

Growing demand for chatbots

Market research from 2019, showed that the chatbot market size is expected to grow to US$9.4 billion by 2024, at a Compound Annual Growth Rate (CAGR) of 29.7% during the forecast period (from 2019). Key growth factors for the market include advancement in technology coupled with rising customer demand for self-service and 24/7 customer assistance at lower operational costs.

Further, initiatives toward the development of self-learning chatbots to deliver more human-like conversational experience, growing use of chatbot among various industries, and increasing focus on customer engagement through various channels to create many opportunities for vendors in the global market.

Customer engagement and retention is one of the main focus areas of various verticals. These verticals have started deploying Artificial Intelligence (AI)-powered chatbots into their operations to engage customers and offer them seamless experiences throughout their journey.

Chatbots act as an effective tool for verticals to attract, retain, and engage new customers, owing to their ability to engage customers, collect new data, and shorten sales life cycles. Hence, customer engagement and retention is projected to become a crucial application area to deploy chatbot solutions.

The global chatbot market covers 5 major geographic regions, namely, North America, Asia Pacific (APAC), Europe, Middle East and Africa (MEA), and Latin America. North America is expected to hold the largest market size during the forecast period.

The APAC region shows rapid growth in the market, as the APAC region holds more than 50% of the world’s population, and therefore any major technological shifts, such as those being heralded by AI are likely to shape the future of the region.

Many Asian countries, such as China, Singapore, India, and Japan are leveraging information-intensive AI technologies, and chatbots are some of the leading technologies trends and hence, APAC is expected to show promising opportunities to deploy chatbot solutions.

The formation of an alliance between the HKU Business School and the School of Economics and Management of the University of Chinese Academy of Sciences (UCAS) marks another step forward for the international engagement and Fintech research projects of HKU Business School.

HKU Business School strives to advance academic and research excellence through new initiatives and collaborations. Building upon the existing collaboration in respect of the Theme-based Research Scheme Project on “Financial Technology, Stability, and Inclusion”, the HKU Business School and UCAS signed a memorandum of understanding (MOU) to establish the HKU-UCAS FinTech Lab, which enables both Schools to realise their complementary strengths and create mutual benefits through co-efforts in research and activities.

Capitalising on the strength of the two schools in financial, machine learning and engineering system research, the collaboration platform is expected to be a powerhouse of trailblazing Fintech research. More collaborative research and grant applications will be supported with more academic exchanges of faculty members.

The platform will be a cradle of next-generation researchers through joint supervision of PhD students and cultivation of talents. In addition, the collaboration will benefit the broader society with the co-created insights shared through publication of research, and organisation of knowledge exchange events with external stakeholders.

The Associate Dean (Research and Knowledge Exchange) of HKU Business School and the Project Coordinator of the Theme-based Research Scheme Project stated that amidst the backdrop of the challenging local, regional and global economy, it is vital for HKU Business School to build a stronger community sharing different views and expertise.

He noted that Fintech is a technology for all – it is essential to maintain financial stability among the institutions and economies, as well as fostering financial inclusion at the individual level to strengthen the economies’ resilience to future challenges.

“I look forward to creating synergies with UCAS, which is home for leading data analytics research in Mainland China, and contributing in the long-run to the development of Fintech industry for the benefit of Hong Kong, China and beyond,” he added.

The Dean of HKU Business School stated that the university is honoured to partner with the School of Economics and Management of UCAS to leverage the strengths of the two Universities as well as the two regions. This partnership represents a new milestone of HKU Business School for academic collaboration in Mainland China and we will continue to establish stronger connection around the globe.

Meanwhile, the Dean of UCAS School of Economics and Management, expressed that UCAS scholars have exemplary research in information management and digital economy, which are intertwined with FinTech in this digital age. One of the School’s strengths is its strong network with the government authorities and the industry. They are frequently engaged by these stakeholders on large scale FinTech initiatives and product developments.

Their work has successfully facilitated the policy-makers and company decision-makers to resolve major challenges in the highly sophisticated operational environment. The School values the establishment of the HKU-UCAS FinTech Lab and looks forward to having more collaboration with the HKU Business School through this platform.

In addition to contributing to the academic community, it is hoped that the platform will open the door for collaboration with international partners, as well as benefiting individual consumers and investors through promulgating our research and greater uptake of the applications.

OpenGov TV Speaker Panel – Open Banking

Part 2 of our OpenGov TV Speaker Panel series with OneConnect. Listen to experts talk about Open Banking and how it can impact the banking world!