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Singapore Leads in Banking-as-a-Service Adoption Globally

According to a survey done by a UK-based fintech company recently, Singapore is leading in banking-as-a-service (BaaS) adoption globally,

The research was conducted among hundreds of professionals at banks and financial institutions across Singapore, Hong Kong, the US, the UK, France, Germany and the UAE. It delved into the Open Banking and finance landscape, the technology and initiatives set to make an impact in financial services over the next year, and how COVID-19 has impacted the sector.

Almost half of the respondents surveyed (47 per cent) said they have deployed or improved their BaaS capabilities in the last year, said the ‘Financial Services: State of the Nation Survey 2021’. A similar proportion (45 per cent) are looking to do so in the next 12 months, which is higher than in any other market surveyed. This investment activity is accompanied by some of the highest confidence globally in BaaS, with 87 per cent of those surveyed expecting to see benefits in the coming year.

The survey further finds that Open Banking has become important to 97 per cent of Singapore respondents’ businesses, with over half (56 per cent) calling it a “must-have”. For the city-state’s audience, Open Banking has provided several benefits to their organisation, including improving the customer experience (79 per cent), delivering new services (93 per cent), and improving internal systems (57 per cent).

In addition to helping to attract new customers (71 per cent), Open Banking has also helped Singapore finance professionals to attract different types of customers (64 per cent). Only less than two per cent of respondents in the island state now think that Open Banking will not have any impact.

Almost 90 per cent of those surveyed in Singapore agreed that adoption and integration of technology and innovation should be at the forefront of the financial services sector.

However, several key barriers to innovation persist, showing little change compared to the fintech firm’s 2020 survey:

  • 56 per cent said management or decision-makers are stuck in old ways of thinking (vs 58 per cent in 2020)
  • 53 per cent said regulations are too tight (vs 56 per cent in 2020)
  • 44 per cent said there is not enough industry or government support to foster innovation (no change from 2020)
  • 56 per cent cited the cost of development/expense of R&D (vs 51 per cent in 2020) COVID-19 response

In line with the rapid shift towards digital services last year, nine in 10 (87 per cent) of those surveyed said the pandemic had accelerated the integration of new technology and innovation.

In Singapore, this translated into the largest average increase in digital banking investment of any market (25 per cent) and the highest proportion of respondents globally saying their bank increased overall investment/budgets in response to the pandemic (84 per cent). Adapting to the challenges brought by the pandemic was the third biggest driver of the adoption of technology (47 per cent), just behind cost-cutting and efficiency (54 per cent) and business growth (48 per cent).

In Singapore, the development of open banking has been largely facilitated by the Monetary Authority of Singapore (MAS), which has encouraged banks to adopt application programming interfaces (APIs) since 2016.

MAS has spearheaded several initiatives to promote open banking and facilitate the adoption of open APIs. The regulator has provided guidelines for open banking and APIs and has also been involved in the API Exchange (APIX). Launched in 2018, APIX is an open architecture API marketplace and sandbox platform. There are currently 54 financial institutions and 351 fintech companies on APIX and the platform has registered more than 120 transactional APIs and nearly 200 informative APIs.

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