The Monetary Authority of Singapore (MAS) announced this week that eligible non-bank financial institutions (NFIs) will have direct access to the banking system’s retail payments infrastructure from February 2021.
This applies to non-bank financial institutions that are licenced as major payment institutions under the Payment Services Act, they will be allowed to connect directly to Fast and Secure Transfers (FAST) and PayNow.
FAST is an electronic funds transfer service that enables customers of participating entities to transfer Singapore dollar funds from one entity to another instantly.
PayNow is an overlay central addressing service that runs on top of the FAST payment system. PayNow allows consumers and businesses to make instant payments across accounts using a proxy such as a mobile number, NRIC/FIN number, or Unique Entity Number (UEN). FAST and PayNow is also available 24/7, 365 days of the year.
Direct connection to FAST and PayNow will enable users of NFI e-wallets to make real-time funds transfers between bank accounts and e-wallets as well as across different e-wallets. Currently, most e-wallets require the use of debit or credit cards to top-up funds, and funds transfers between e-wallets are not possible.
Mr Ravi Menon, Managing Director of MAS said, “Direct access by NFIs to FAST and PayNow closes the last-mile gap in Singapore’s e-payments journey. Consumers who may not have ready access to debit or credit cards to fund their e-wallets will now have the option to do so directly through their bank accounts.”
“Our vision to enable complete real-time payments interoperability will now become a reality. Adoption of e-payments will become even more simple for individuals and businesses. MAS thanks the members of the DFWG for their spirit of partnership that brought to fruition this major milestone for e-payments in Singapore.”
Businesses that partner any of the 23 FAST or 9 PayNow banks, or e-wallets that have traditionally been closed-loop ecosystems will soon be able to receive real-time payments from other users of e-wallets or mobile banking applications that will be joining FAST or PayNow. This will enable businesses to access a larger market of consumers than before for receiving e-payments instantly and seamlessly.
NFIs will be able to connect directly through a new Application Programming Interface (API) payment gateway developed by the Direct FAST Working Group (DFWG), with guidance from the Singapore Clearing House Association (SCHA) and The Association of Banks in Singapore (ABS), which govern FAST and PayNow respectively.
The API payment gateway is better geared to the technology architecture of banks and NFIs, and can also be used by other banks and NFIs in future.
The Stock Exchange of Thailand (SET) will launch a digital asset trading platform in the second half of 2021 to allow trading on all types of digital token assets excluding cryptocurrencies. According to the SET, cryptocurrencies do not meet its product qualifications and could facilitate money laundering, while causing harm to the bourse’s image as a “high trust” exchange.
The Executive Vice-President of the SET stated that the digital asset platform will be similar to other popular e-commerce marketplaces but all products on SET’s platform will be digital token assets. He said tokens traded on the platform must meet at least one of three conditions. First, the token must have an underlying asset that investors can analyse on value. Second, it must be a valuable product that supports economic activities. Third, the product must have benefits to society and the environment.
The bourse also formulated a fully integrated distributed ledger technology (blockchain) and digital asset investment service in 2020 to link various digital asset exchanges, digital wallets and initial coin offering (ICO) portals in Thailand under one platform via a collaboration with an arm of a banking group in Thailand.
The bank will be responsible for sourcing and screening products entering the SET digital asset marketplace. The SET is looking to sign an agreement with other partners with an aim to achieve exponential growth through tech innovations and investments via its three arms.
The SET also has studied several ICO cases. Most projects being studied have the possibility of making profits in the future. In order to protect investors, the digital asset must meet at least one of the three conditions set by the SET but cryptocurrencies don’t meet any of them. Thus, they cannot be counted as the SET’s product even though some countries accept payments in cryptocurrencies.
Cryptocurrencies are currently used in some countries which are experiencing high inflation and currency fluctuations such as Zimbabwe and Venezuela as an equivalent of fiat money. Thailand has a strong economy. As inflation has remained low and the Bank of Thailand’s measures to keep the baht stable have worked in the past, the SET has no reason to support cryptocurrencies at the moment.
However, the Executive Vice-President said some stock exchanges in Europe currently provide cryptocurrency trading to attract digital asset investors before launching other digital token assets via their platforms.
He said one of the measures to prevent money laundering is to do “Know Your Customer” (KYC) with clients who open trading with the exchanges. KYC will filter and screen unusual investors who come to open trading accounts. Cryptocurrency is just one digital asset product among others, he added.
The bank and other ICO portal firms will search for new products and evaluate the ICO project before putting them on the trading platform. As each product has different characteristics, the bourse must employ experts from different areas to help screen the products.
Digital token assets can be many valuable things such as diamonds and title deeds.
The SET expects that the digital asset marketplace will grow faster than today’s stock market as it emerges in the 4.0 era, while the traditional markets were established in the 1.0 or 2.0 eras which had less technologies to facilitate trading. The stock and bond markets are also governed by regulations that are far less flexible than the digital asset law and usually need intermediaries such as brokers and banks to make transactions.
Hong Kong Science and Technology Parks Corporation (HKSTP) launched its new FinTech Centre located at the InnoCentre in Kowloon Tong to accelerate cross-industry innovation and forge the new era of financial services. This reflects HKSTP’s ongoing commitment to reinforcing Hong Kong’s global leadership as an international financial hub through innovation and technology.
FinTech Centre is the latest addition to the evolving InnoCentre and a key pillar in HKSTP’s growing Fin+Tech ecosystem. The close-knit ecosystem brings financial institutions, regulators and academics, together with fintech startups and companies focusing on extensive R&D in Hong Kong and globally.
The CEO at HKSTP stated that fintech is a strategic focus for HKSTP. Their vision is to nurture the best possible Fin+Tech ecosystem, which has seen rapid growth in recent years. The FinTech Centre’s launch is a new chapter in Hong Kong’s path to be a world-leading fintech hub. Our fintech companies will create the advanced technologies necessary for the financial sector to build a new era of financial services in Hong Kong, Greater Bay Area and beyond.
The Centre will provide a focal point for different stakeholders to collaborate with fintech companies and co-create projects for the financial sector that harness advanced technologies including artificial intelligence (AI), blockchain, cybersecurity and data analytics. The Centre will also serve as a base for business matching, a soft-landing for overseas fintech companies, talent nurturing, laboratory and proof-of-concept trials.
The launch is one of several HKSTP-led initiatives to drive fintech collaboration and co-creation in 2021.
Building Next-Generation Banking Services
HKSTP is also rolling out its Banking Virtual Lab which aims to accelerate fintech innovation. The virtual lab hosts synthetic banking data and relevant APIs in partnership with financial institutions. This will make it easier for developers and banks to work together to rapidly develop, test and validate new APIs and solutions against synthetic data.
As the lab’s first partner, a bank, has already contributed synthetic data and will create a sandbox to collaborate with innovators to address specific business pain points.
The CEO of the bank stated that it welcomes new initiatives that will drive innovation in fintech; supporting HKSTP in the development of its Banking Virtual Lab by contributing synthetic banking data, with the aims of creating a cross-industry ecosystem on the data platform, deepening collaboration with fintech companies, and accelerating the speed of development and success rate of these collaborations.
The collective initiative will help drive the continued development of Hong Kong’s banking industry and generate more opportunities to work with fintech companies on the co-creation of customer-centric products that meet the evolving needs of our customers.
Fast-Tracking Corporate Innovation
Another major initiative is the Banking, Financial Services, and Insurance (BFSI) Accelerator under HKSTP’s Global Acceleration Academy (GAA), announced at the Asian Financial Forum on 19 January 2021. This will fast-track corporate innovation across the BFSI sectors and address the sectors’ critical pain points by developing solutions through co-creation.
The Accelerator will match financial corporates with HKSTP’s 1000-strong network of technology ventures to enhance operational efficiency, customer experience, wealth management, regulation and compliance.
The Accelerator is supported by industry leaders including the Hong Kong Monetary Authority (HKMA) via the HKMA-HKSTP Fin+Tech Collaboration Platform, Insurance Authority, InvestHK, Hong Kong Association of Banks (HKAB) and the Hong Kong Institute of Bankers (HKIB). It is carried out in collaboration with 17 BFSI corporates.
Fintech Innovation Hub
Another key development is the establishment of a new Fintech Innovation Hub (FIH) at the FinTech Centre. A collaboration between Hong Kong Applied Science and Technology Research Institute (ASTRI), HKMA and HKSTP, the FIH will serve as a neutral ground for collaboration between financial institutions, technology companies, corporations, universities and government bodies for idea exploration, proof of concept and prototype development, technology testing as well as education and demo purposes.
The Chief Operating Officer and acting Co-CEO at ASTRI stated that as Hong Kong’s largest applied science and technology research institute and having fintech as one of our focus areas of application, research and development, ASTRI is constantly finding ways to benefit the entire financial industry and help drive the sector’s growth into a new era.
The establishment of the FIH marks another milestone and the agency looks forward to an even closer collaboration with HKMA, HKSTP and other stakeholders to support and promote the continued growth of our thriving fintech ecosystem.
The pandemic has been seriously affected Vietnam’s economy in general and the tourism industry in particular. Data at the end of last year shows that COVID-19 has had a negative US$1 trillion to tourism worldwide and a reduction of 61% to Vietnam’s tourism revenues compared to 2019.
Clearly, traditional management and business methods cannot adequately cope, globally and in Vietnam as well. The pandemic has required the tourism industry to implement digital transformation solutions and establish a smart tourism data integration and sharing system. Various cities and provinces of Vietnam plan to leverage technology to boost their tourism sectors. This is in line with the governments overall emphasis on digital transformation across the board.
Vietnam’s northern province of Ha Giang is looking to promote the local tourism industry through digital transformation and smart services in partnership with the National Administration of Tourism (VNAT) and a mobile carrier. Under the agreement, VNAT and the mobile carrier will assist Ha Giang to use the carrier’s Smart Travel system to ramp up promotion of tourism as well as to provide useful information to potential travellers.
Ha Giang authorities will provide relevant data about local destinations, scenic spots, historical sites, culture and food to be incorporated in the Smart Travel system. The provincial authorities will also facilitate connection with local organisations and businesses to develop tourism through digital transformation.
The platform features advanced technologies such as virtual reality, augmented reality, big data and e-commerce. The portal has been designed to meet the needs of tourists, businesses, service providers and regulators alike. The data collection and analytic tools will give tourism authorities an overview of their local tourism’s advantages and challenges, allowing them to formulate and introduce policies and provisions.
VNAT has also signed an agreement with Ha Giang to assist the province create and develop tourism products, promote the brand of Ha Giang tourism and develop the workforce for tourism. VNAT Director Nguyen Trung Khanh said the cooperation will open new opportunities to boost the tourism of Ha Giang and Vietnam at large in a more effective manner. He added that digital transformation and smart travel development are the inevitable processes, especially as the COVID-19 pandemic has affected all aspects of life. Ha Giang Vice Chairman Tran Duc Quy was confident that the agreement would significantly drive the growth of the local tourism industry and harness its full potential.
Vietnam has been eager to boost its tourism sector after it was hit by the pandemic. In November 2020, Việt Nam International Travel Mart (VITM) finally took place after being postponed three times. Thousands joined the annual Việt Nam International Travel Mart, one of the tourism industry’s most anticipated annual events.
Vũ Thế Bình, deputy chairman of the Vietnam Tourism Association, said that while the event was smaller, the content is more profound and discusses how we overcome the consequences of the pandemic and also other kinds of crises. Bình stressed that the theme for the event was digital transformation for tourism development, “All of our economic sectors will gradually transform with digital technology. But tourism is one of the first economic sectors to have a chance to transform with digital technology.”
The platform featured over 300 stalls of tourism enterprises, airlines and tourism service providers from 47 cities and provinces throughout the country and six foreign countries and territories, namely Thailand, Peru, Japan, South Korea, Colombia and Taiwan. The exhibition had a separate zone for digital transformation exhibition, where companies could introduce new products at a hall for four days – the very first time the tourism sector got close to technology.
Recently, Vietnam’s tourism industry launched the online tourism mobile app “Du Lich Viet Nam An Toan” (Safe travel in Vietnam) that integrates electronic payment and the monitoring of public health in just one card. The app is aimed at more than 43 million smartphone users. This is a useful tool for travellers in recommending safe destinations and advertising destinations to tourists, as well as effectively serving the second domestic tourism stimulus programme. The app is also considered to be one of the practical digital transformation activities of state management agencies in the tourism industry.
As banking becomes more increasingly online, and with the data touchpoints on the rise, AI and ML have become an integral part of a bank’s DNA. It is a natural outcome that the more the data touchpoints, and the wider the data exposure, the greater the chances of things going wrong. Understanding this vulnerability, banks and financial institutions are keen on deploying AI/ML to keep a check on fraud incidents.
To get a better insight into how banks are adopting and adapting new technology and what is the future looking like for them, OpenGov Asia had a conversation with Dr David Hardoon, Senior Advisor for Data and Artificial Intelligence, Union Bank of Philippines.
David acknowledged that the rise in digital data points, as a result of increased online banking, has necessitated leveraging technologies like AI and ML to derive actionable insights. Additionally, more financial institutions see the benefits of adopting technology to keep fraud in check. The headway in security has encouraged them to scale it to other core functions like floor management, compliance, and regulation.
This is an almost-radical departure as historically there has been a reluctance in adopting technology among financial institutions due to unfamiliarity and the stern regulations around it. The pandemic has driven this paradigm shift, forcing organizations to think beyond their existing boundaries and comfort zones.
David noted that even the support office is catching up with the front office in terms of robustness, scalability, and capability to know when something is wrong. This is driven by the need to ensure a smooth and secure online experience for the customer.
On being asked about the notion that online malls and shopping sites are leading the way in customer experience and engagement over online banks and financial institutions, David agreed the banking industry is lagging but highlighted an important issue. The pandemic has driven people online but there is a fundamental lack of trust among customers engaging with such e-commerce sites.
“Trust is an equity financial institutions have, he opined. But it needs to be leveraged appropriately to build customer engagement online.”
Speaking about fraud and risk management in financial institutions in the post-COVID-19 era David shared that there has been a tremendous increase in the adoption of technology among banks. The strategy has been to use existing systems and adopt/adapt more sophisticated data techniques to achieve operational efficiency.
Banks are also focusing on taking the marketing mantra of hyper-personalization to compliance. David shared that data is the tool that equips banks with the ability and capacity of seeing and engaging individuals as individuals. Adding to this, he believes that such technologies can only be deployed in an institution when the top management believes in its power.
Elaborating on the future of AI/ML in fraud, David believes that the conversation is going to shift from digitizing the front office to bringing in the latest technology in the middle and back office in financial institutions. Apart from focusing on driving top-line growth, companies will need to get a better handle to know if anything wrong or irregular is happening.
David is confident that discussions around using AI/ML to manage fraud and risk will convert into action. The implementation might not be uniform across all institutions, but will it will move forward. Bigger institutions who have focused teams and resources will look to develop in-house fraud and risk management systems initially. A major reason behind it is the need to understand the complexities and difficulties associated with this process. Once they have familiarized themselves with it, they might partner with experts who champion the field.
All in all, David is an optimist who believes in the power of AI/ML, in risk and fraud management, and believes that conversations around it will get more operational.
The Ministry of Electronics and Information Technology (MeitY) has announced it will establish a Quantum Computing Applications Lab, in collaboration with Amazon Web Services (AWS), to accelerate quantum computing-led research and development and enable new scientific discoveries.
The MeitY Quantum Computing Applications Lab will provide quantum computing as a service to government ministries and departments, researchers, scientists, academia, and developers. It will enable advances in manufacturing, healthcare, agriculture, and aerospace engineering.
According to a press release, AWS will provide hosting with technical and programmatic support for the ab. The initiative aims to provide scientific, academic, and developer communities access to a quantum computing development environment aligned with the government’s science and technology priorities.
Quantum computing is an emerging field that harnesses the laws of quantum mechanics to build powerful tools to process information. It has the potential to solve computational problems that are beyond the reach of classical computers and lead to breakthroughs that can transform chemical engineering, material science, drug discovery, financial portfolio optimisation, machine learning, and much more.
The lab will identify quantum computing problem statements for experimentation from among central and state governments, research institutions, and academia. It will work with subject matter experts from the government sector to define the problem statements, and make them public, inviting applications from researchers, academia, and organisations to address them. The lab will then provide select applicants with free access to quantum computing hardware, simulators, and programming tools, on-demand. This will help scientists and developers to build algorithms, conduct advanced simulations, and run experiments.
Amazon Braket provides a development environment to enable users to explore and design quantum algorithms, test and troubleshoot them on simulated quantum computers, and run them on different quantum hardware technologies.
The Secretary of Meity, Ajay Sawhney, said that India has a rich legacy in science, technology, and innovation. The government believes that India’s path forward will be driven by achieving world-class scientific solutions. Enabling the scientific community with advanced technologies plays a key role in scientific advancements and learning.
An early and successful foundation in quantum computing is important to achieve leadership in this emerging field. The MeitY Quantum Computing Applications Lab is the first of its kind initiative in the world and aims to enable India’s talented researchers to explore the unchartered applications of quantum computing, and pave the way for discoveries and disruptions, another government official noted.
A core mission of MeitY is to identify and deploy technologies to promote innovation and discovery to help India advance and achieve a more sustainable future. Quantum computing has the potential to help countries leapfrog technology generations, achieve scientific leadership, and deliver answers to complex economic and social challenges. This initiative will augment India’s ongoing efforts in developing quantum computing applications, the President and CEO of the National e-Governance Division (NeGD), Abhishek Singh, explained.
The MeitY Quantum Computing Applications Lab will help government bodies and the scientific community identify problems and opportunities rapidly and test real-world challenges through experiments and prototypes in a low-risk environment. Outcomes from these experiments will help researchers evolve problem statements, proofs-of-concept, and prototypes that will lead to the development of new applications, models, and frameworks in quantum computing.
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.