Pre-Budget 2019 Perspectives - Financial Services

From Fintech Experimentation to Real-world Implementation.


Financial services in Singapore is moving from an innovation phase to a deployment phase in a number of key areas. The $225 million Financial Sector Technology and Innovation (FSTI) scheme (set up in late 2015/2016 to fund the setting up of innovation labs and experimentation through proof-of-concept projects, as well as to incubate new industry initiatives in digital payments and blockchain use cases) saw an explosion of ideas in 2016 and 2017. The scheme also propelled the setting up of fintech companies and a vibrant fintech community.

In 2018, both banks and fintech companies have reached a point where a number of “proven solutions” are now ready for deployment.

However, many companies are facing challenges for a number of reasons:

  • Supplementary costs of implementing new technology while managing/improving incumbent platforms.
  • Time needed to train artificial intelligence (AI) or machine learning (ML) platforms, where costs are incurred now but benefits come later, say, in three to five years.
  • Resistance to migrating to new technology, e.g. cloud platform, because of the effort required and security concerns.
  • Insufficient trained resources in emerging technology areas.

In the face of these challenges, the FSTI scheme that was designed for innovation and experimentation where proof-of-concept grants are capped at $200,000 per project is now inadequate. This is compounded by the fact that larger deployments are likely to be multi-year and multi-million dollar efforts.

Coupled with the above, to achieve its aspiration of being at the forefront of technology adoption in financial services and as a fintech hub, Singapore must be able to attract skilled data and new technology workers in the face of global competition. We can succeed as a vibrant financial technology hub using a two-fold approach – attracting foreign expertise in emerging technology areas and developing our own local expertise.

In the area of trade finance, the Networked Trade Platform (NTP) was officially launched on 26th September 2018 to digitise and streamline end-to-end trade processes which are historically paper-based and manual. As we move to digital platforms and connect with other trading hubs, financial institutions and companies will need to enhance their controls and processes to mitigate the risks of trade-based money laundering and proliferation financing. Financial institutions and trade participants must be convinced that the commercial benefits outstrip the added costs of compliance.

Our next course of action must help remove the barriers to adoption and move such fintech innovations into the deployment stage.


A new Financial Sector Digital Deployment scheme may be required to hasten the deployment of key technologies and ensure enhanced controls in this new digital environment.

1. Drive digital adoption.

  • Extend FSTI grants to cover deployment and implementation costs of new technology in areas of digital payments, blockchain, cloud, data & analytics, as well as AI/ML, based on 50% of outlay incurred for deployment (i.e. from design to “go live” phase).
  • Grants ranging between 30% to 50% should be provided on qualifying outlay to local fintech startups for talent search costs and relocation.
  • To address the tight supply of skilled resources and propel the adoption of new technologies.
    • Allow for a more open immigration policy for skilled resources in key areas of data science and emerging technologies (e.g. artificial intelligence, blockchain and robotics).
    • Establish a Fintech Academy with an apprenticeship programme where trainees can be deployed to banks and fintech companies at a subsidised fee on approved projects in digital payments, blockchain, cloud, data & analytics, as well as AI/ML. This Fintech Academy can run along similar lines as, which is currently funded by the National Research Foundation.

2. Encourage cloud migration.

Extend FSTI grants to cover cloud migration exercises which typically involve significant capital outlay.

  • Accord 200% tax deduction for qualifying expenditure (net of grants) on cloud migration exercises.
  • Recognise cloud under the FSTI scheme, and incentivise businesses in the financial sector that opt for cloud migration.

3. Develop a platform to monitor trade transactions for money laundering and proliferation financing activities.

To ensure the success of the NTP, extend the FSTI proof-of-concept scheme to provide up to 50% funding support for early stage development of platforms that can efficiently monitor trade transactions for money laundering and proliferation financing activities. This extended support should apply only to financial institutions that have substantial trade finance businesses in Singapore.


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