Welcome to the SUSS series of podcasts that tackles growing technologies around us. Technologies that changed how we engage the world, connect and come together as a modern society. This series discusses how the tools of our everyday lives have evolved and changed our lives.
Previously on SUSS Podcast…
Now with more data and information available that is put on the internet, tracking of companies, analysis of companies is evolving to involve more than just financial statements.
We want to see what the companies are actually doing along the supply chain and whether it conforms to ESG principles or not.
How do you effectively measure the ESG efforts being taken by some of these companies?
I can say that there are many FinTech companies in Singapore that are focusing on solving these problems, which is having a clear taxonomy of the factors to be measured, having a clear mechanism to measure those factors and having an immutable record of a blockchain so that the investment community could actually tap onto it as well.
And then of course, in addition to that, there is that aspect of micro-investments as well. Now, even in micro-investments, there are a lot of requirements for impact measurement. So there are companies that are focusing on measuring that impact as well, on how those micro-investments are getting involved. There has been a lot of progress and there is only more to be done.
It's really very interesting to see because it will seem like the industry is quite fragmented with so many people doing different things. But how both of you are describing it, it is part of this ecosystem.
I just want to turn our attention to the youngest here, the youngest speaker as well. You know, with all these advancements, especially tech communities, it was driven by younger demographics. So, what is your take from a youth point of view? What attracts you to FinTech? What are some of the possibilities that make you feel I want to do something more in this space?
I think the first thing for youth when we come to what really attracts us is us being able to be connected with what we are doing. So for example, if you are talking about FinTech, I think one of the many things which youths, regardless of whether we are in finance, is robo-advisory. Because of this FinTech solution that has evolved, it's actually allowed us as youths, who may not actually have a lot of this investment startup capital amount to still invest and still be able to grow our wealth.
So I think this was a FinTech solution, which actually evolved over time with the help of FinTech companies, innovation and financial institutions and banks being more open to innovation and solutions that will help to increase their financial inclusion. So I think the first thing, which actually gets us connected to FinTech, it's connectivity. Whether we are able to associate ourselves with it, do we have a connection to what we are doing? And the next thing is, do we actually see the future in it? So for example, if you're talking about robo-advisories or NFT, how do we connect ourselves with it?
For example, I saw it on TikTok. So one of the NFTs was actually a selfie of this guy who took a photo every single day. And then it sold for quite a big sum. And so this helps to build inclusion in the sense that we as youths, even though we know that this is a digital asset, we are still trying to experiment with it. I think this actually helps to drive what we have for FinTech companies, which is innovation. Once we’re able to be innovative and creative, which is what FinTech companies can provide. I think it's something which youths feel connected to, and will help us to drive and grow our interest in the sector itself.
I guess it was coming back to the fundamentals. Innovation is actually what drove this entire acceleration for the industry. Shadab and Chong Hui, do you see more youths joining in the classes or trying to discover and find out more about this field?
I think youths are naturally tuned to the use of technology. The fact that now there are tokens that are translatable to value, to wealth, connected to these activities on the virtual space is good in the sense that we are able to carve out niches of activities on the internet.
To motivate youths to be able to contribute in a more meaningful way. In the past, the typical path for a youth to contribute to society would be to go to school, study and then join a company, progress in a company and so on.
But now this field has somewhat been levelled. And youths can participate almost immediately by being proficient in using software, writing programs, and connecting to the communities that quickly are able to produce things that matter to the society.
It is that sense of participation as well, that the youths feel connected. I mean that essentially was why de-centralised technology has been built, right? Shadab, but from a corporate's point of view, I'm sure this is a very lucrative pool of talents that the corporates will be wanting to engage. What's your view on this?
Before I go into that question, I just want to add to what Chong Hui was saying previously. The communities existed even before blockchain came in. When I was in school in NJ, in my own hostel, there were people who were already trading and they were in secondary schools at that time, just because there was an ability for you to do e-trading in the US market if you had the money. And some of them had wealthy families.
But I think one of the key aspects, and I think, I'm probably speaking for Chong Hui here. It's clear that as employers of the future, people are looking for youth, and people are looking for talent who has actually gone through academic rigour as well, there is no shortcut to that. So, you can have your parallel experience in knowing about the new technology, experiencing it and actually using it, so you actually build your clear understanding of the technology going forward. But you still need to have your academic record to justify or certify to future employers.
So, let’s be very clear here, because I know we are talking to SUSS students. I want to be very clear. Please make sure that you get your academics right. And you really work hard for getting your grades right as well. There's no second or an easy choice out of that. But just to support what Bryan was saying, I'm glad he mentioned robo-advisory.
I'd like to highlight here that robo-advisory is a very good tool if you look at it just from a financial inclusion perspective as well. Because, earlier the kind of investment products and services that the financial institutions could provide to retail customers and mass approved customers was relatively limited just because of the marginal cost involved in delivering those services. Now, with the advent of technology and the ease of access, it's been possible for them to be able to provide these investment methodologies. And of course, access to teams or portfolios, which was not possible to be offered earlier, just because of the costs involved.
So it's actually very good to see the youth or a broader class of customers using these investment products. Because in the end, it talks about inclusion and people are able to get a better return on the money, hopefully. There are quite a few players in the market, especially in Singapore, who have actually grown quite fast in the past few years.
Some of them to name, and you might have seen some of their ads on the SBS buses as well. EndowUs, Syfe, Stashaway, these are some of the common names you might have heard of. So what these B2C robo-advisors, what they're doing is they're able to reach out to a much larger customer base and are able to offer them really professional investment services, which was not that easy earlier.
In fact, the banks or the financial institutions have also seen the need to be present in this market. And you can see some of the products that have come out, be it from UOB or DBS Digi portfolio. These are solutions which are exchanging the market as well. So you can see that what FinTech has done, has actually expanded the customer segment altogether, with new business models, with new services.
And at the same time, the ability to service the customers better at the click of a button. So I can see that youth are getting involved in the FinTech space. Now to your question on how the talent pool is being looked at by the employers or corporates or the FinTech companies. I think one of the key aspects that I will talk about from a FinTech segment perspective, given that we did a FinTech talent survey report last year . It was commissioned by SFA but done by Accenture.
One of the key findings of that report was 73% of the companies surveyed were looking at least a two-digit growth in their talent or in their employees in the next one or two years. So now, you can see clearly that there is a very high demand for tech talent and there is a very high demand for talent who are able to adjust and be able to perform in a completely new business environment altogether, with a different business model.
You can see that there is a bit of a mismatch between the talent demand and talent supply at the moment. But I'm sure the stakeholders involved are working towards it. So, the institutes of higher learning, the government, the regulators, as well as the employers are working together to find ways to solve that problem. But there is currently a bit of a mismatch there, which is all definitely good for the students, because you can see that you have definitely a much higher demand for your talent across. But from an employer perspective, one of the key abilities or traits that they are looking for in employees is the ability to have a critical thinking mindset and the ability to adapt and evolve, and grow your career as you go along.
You may get hired for one position and your roles and responsibilities may evolve into something different in a very short time period. That's the basis and nature of working for a smaller organisation or a growing organisation, like a maturing fintech also. But at the same time, it just clarifies to the community or the student community that there is a huge demand available.
If I may, so actually in 2016 when I first joined the MAS, how we got to know it is through internship. And the interesting thing is that during that period of time, when this job posting was out, none of the students actually wanted to join and sign up for this. And I think that was a few years back, when their position was probably still staying with the banks, looking at stability, choosing these kinds of bigger institutions. But eventually now, a few months back, I've seen an increase of students, my classmates actually, also asking me, ‘Hey, should I join a FinTech? What are some FinTechs that I should join?’ So I think the evolution for the past, maybe about five years? I can see that students and youth ourselves are actually more open, they are actually willing to take the risk. They are willing to join FinTech startups as their jobs, as their careers. It's no longer just purely focusing on big financial institutions, but I think we're slowly developing and understanding the key role that all these startups play and how they can actually contribute even as a job or even doing any internship.
Chong Hui, would you like to weigh in on this?
So our finance program actually heeded the changes and developments in the finance industry. About two years back, we did a revamp. Before that, the program was traditional finance. FinTech was seen as, you know, students would do that from computer science. But we saw that, that will not do. Technology will become more and more an integral part of financial knowledge.
So two years ago we had a revamp, and in the revamp, we streamlined the courses so that half of it is conventional finance; talking about financial markets or bonds, derivatives, all the products, all the industry markets are still there. Equity, security, investment methods and all that. And then the other half are all the fundamental FinTech topics.
That’s the thing that is special about the finance programme in SUSS. We have a good mix of both FinTech elements, as well as conventional finance elements.
We have been talking about the advancements and all these rapid changes that's been happening for FinTech. So I would expect the curriculum to keep up as well. So it’s really great to hear that for SUSS, there are all these consistent revamps to ensure that it's aligned and the students do get that sense of reality.
If we were to be really a bit critical, what do you think are some of the limitations and risks of the FinTech industry at this moment?
I can see risk along three fronts. Most public people are familiar with traditional financial services, where there is someone to complain to, to seek help from. But this is not so in the FinTech space. You are very much on your own. So your ID or pin, you have to keep it secured yourself. And many people are not familiar, not comfortable with that yet. So that's the personal risk.
Another front is in terms of cybersecurity. Many of these financial technologies on the internet are open source technologies, new technologies, decentralised technologies, which are still under development.
And they develop hand-in-hand with cybersecurity attacks. We are going to see improvements in this space, as well as improvement in the attacker's abilities to hack these software. So we have to be careful whether platforms that are being used for FinTech are secured or not. So that's another kind of risk.
A third kind of risk would be the products themselves. So while Shadab was talking about NFTs. Some of these NFTs are questionable. There are benefits to NFTs being used for artists, musicians to tokenise their artwork. But at the same time, we see trivial things being made into NFTs. And when investors get into them, the next day the market is dried up. So you are left with something that has no value.
Financial products created within financial technologies can be questionable. So that's where regulation comes into play as a factor. So these are at least three different fronts I can see where the public should be aware of the kind of risk involved.
If I may just add to what Chong Hui was saying. I agree that there are always bad actors and bad apples that play in any industry, in any segment, in any business model. We can't run away from that. And that's the reason why we have the right legal and the regulatory structures in place. But I'd add that, what FinTech is doing sometimes is probably running ahead of the regulations as well. And we have seen that happening, with going into FinTech. Let's talk about the ride hailing apps.
Singapore allowed the ride hailing apps to continue for a while before they actually came up with the regulations. And I completely agree with that approach. I mean, unless you let the business model evolve, if you are actually putting in regulations. Firstly, regulators may not know the actual implication of doing that, nipping the innovation in the bud right away.
And secondly, you may not know the risks involved until a business model has evolved to a certain critical threshold as well. So I would say that's the way of how we as a country have evolved our regulations. And I think that's pretty much applicable to any segment including FinTech.
We can see how digital advisory guidelines came in and some of these robo-advisors started offering their investment advice directly to customers. We have seen how the Payment Services Act came in 2020 to cover the various payment services providers and payment systems. In fact, quite a few of our Singapore FinTech association members, SFA members, are regulated entities in various business models. Be it payment services, investments and even cyber risk as well.
And some of them are not regulated. The simple reason being they're actually B2B companies which are servicing the financial institutions directly. So the licence or the regulation becomes the responsibility of the financial institutions that they are servicing. In fact, a majority of the SFA members, and we have close to 900 members at the moment, with about 500 plus of them are FinTech companies. Majority of these FinTech companies are B2B companies just by the nature of how Singapore is. We are a small market. We are a small nation. What we do very well is provide a very high quality of services and the environment to actually grow these business models.
But we don't have a sizable market segment compared to some of the ASEAN countries that we work with closely. So Singapore is a test bed. Singapore can be a sandbox for the lack of a better word. But Singapore may not be the overall consumer market that the FinTechs are targeting.
So that's why the majority of them are B2B Fintechs and that's where, you know, the regulation can probably be applied to the financial institutions that they are servicing. So in addition to that, I think there is some work happening and as SFA, we work very closely with the regulators as well, is to be able to provide feedback, and to work closely on guidelines and regulations that are coming in. And I think we are very blessed to have a collaborative regulator like MAS as an example, who actually work very closely with the community or the industry participants in ensuring that the right amount of regulation comes in.
And we have seen that success happening. It's all about dialogue, all about making sure that you are aware of the risk and you take the necessary steps at the right time. But you don't want to nip the innovation in the bud as well. That's very critical. But I do agree with what Chong Hui said, clearly there are bad actors, there are risks involved, like with any other business model. And we have to make sure that we keep our eyes and ears open when dealing with any entity through a mobile app or desktop.
I like this very grounded view. Bryan, anything to add?
I think with this, especially when FinTechs give us an easier access to finance. That brings about a regulatory issue. As to when should the regulators step in, when should they control and how much should they control? Because with easier access to finance and FinTech solutions, that brings about a different kind of pool of customers. So for example, let's say robo-advisory. You do not have to be from finance to be able to invest in such solutions.
You can be from nursing or any other different kind of majors. So that brings about another issue: do they really understand the risk? And after they understand the risk, if anything were to happen, how much of this regulation will actually be needed to come into play?
And I think even if we see like, one or two years back when like wall street bets, right? Many of the youths were also involved, and that came about because people had easier access to finance. People have easier access to this sort of solution. But the issue now is, when do regulators step in and when are they needed to protect the larger consumer base.
Definitely from all these different points of view, we are not painting a rosy picture of FinTech, right? It does come with innovation, at such a pace, it does come with its fair share of limitations and risks as well. Now that we understand the landscape, we see where Singapore isheaded, how do you think FinTech can continue to be useful?
Maybe I'll just start by saying that for fintechs or for any business model to be able to evolve quickly and effectively, there is a lot of collaboration needed from our various stakeholders. And like I pointed out earlier, I think in Singapore we are blessed that we work with a collaborative regulator and at the same time, there is a good enough supply of quality talent available. I mean, that's been Singapore's major success story.
Now, if I were to tie it into the fintechs, there are a lot of, I would say, foundational public infrastructure needs that need to be done. If let's say some of these business models were to evolve more efficiently and effectively, you talked about supply chain earlier Chong Hui. The elements of it, I think they are quite due for disruption with technology, especially supply chains across borders.
One of the things that Singapore has done last year was to start implementing some of this common public infrastructure needed as well. PayNow, as we know, the rails for payments between multiple banks in Singapore has been now connected with PromptPay in Thailand as an example. That project actually allows for Singapore suppliers and customers in Thailand and vice versa to be able to transact much more effectively, quickly as well as at a much lower cost.
That is one of the very key examples of how a good public infrastructure can accelerate the growth of innovation. Now, I'm sure there will be many companies who would be riding onto these rails, who were probably not able to do that earlier, to be able to service the suppliers and customers on either side of the two countries.
So these are some of the examples where you can see how the future is heading and some of the factors that would help the growth further.
From the youth’s point of view, it especially helps to be a more inclusive society. As mentioned earlier, the different kinds of access that you have to financial products. And I think the other thing would also be, for example, during the COVID pandemic was the hawkers go digital. MAS pushed for hawkers to accept QR codes. I think, as a youth myself, and I think for some of us here also, we don't really carry cash.
So that's an issue if we go to our daily necessities, such as hawker centres and they only accept cash. So by promoting and pushing for FinTech solutions, it actually helps to bridge the gap, where one is, ‘Do I have to use cash?’, and the other one is ‘Do I want to accept these digital payments and what is the safety of it?’ And so once we are able to bridge that gap when it comes to safety for the hawkers itself and the other side of the consumers, where they can actually make it easier for them to conduct their payments and day-to-day activities. Now, I think that's a FinTech possibility, which I think has a long way to go as well.
Chong Hui, what's your take on the possibilities?
I think what's interesting is to analyse or to think at a deeper level what's the nature of all these developments. Very often, what's happening in that space, FinTech, it causes or brings about developments in other areas which may have a greater social consequence.
So for example the idea of a smart contract, which is implemented on platforms like Ethereum. Now it's very visible that they are working, they are contracts and they bind people together to interact in a certain way. And the legal community, the lawyers can see that, ‘Oh! Smart contracts, they are actually working in the real world’.
So what does that mean for real legal contracts? Going forward, are we going to see more legal contracts becoming smart? Smart contracts are not yet legal contracts, they are just simple programming languages. But however, the ability to have contracts, fundamentally legal contracts are contracts that bind people together to operate in a certain way, otherwise they’ll be penalised and so on.
So going forward, can legal contracts be smart as well? Thinking along that line, going forward, there will be developments in programming languages, implementing smart contracts and real natural languages in which legal contracts are written. There's going to be a confluence of these two areas. So we're going to see more languages that are machine understood, being expressed in a way that humans can easily relate to as well. And we are going to see from the other end, more real world contracts written originally in natural languages being expressed in terms of computer languages.
So it means humans and machines are going to be interacting more and more in virtual spaces. Things like that which stems out of FinTech development may be more interesting than whatever is going on in FinTech itself, because there's more and more of the same thing now.
Shadab, do you agree? I see you nodding, anything else to add to what Chong Hui shared?
I'll just add that financial inclusion is a major outcome of FinTechs as well. And micro investments, as an example, is a clear way of how people who did not have access to sophisticated investment methodologies, nor have access to it as an example. The other aspect is of course the ESG impact measurement, which is helping in curbing greenwashing to a certain extent. Now that we are realising that ESG is going to be a key factor for any investments to happen, curbing greenwashing as much as possible is important, and I think that's where we are working towards.
So overall I completely agree with Chong Hui. The outcome of FinTech is of course how it affects a society, how the new emerging technologies are making financial services more accessible, more cost efficient, and creating more of an impact across communities, which is where I think the example given where Bryan is quite an apt one. How QR codes actually made life so much easier for people buying food or small goods and services from smaller businesses.
COVID of course helped in pushing for that. Singapore is definitely moving towards a, I wouldn't call it ‘cashless’, but ‘less-cash economy’ as much as possible. I don't think we have a goal of removing cash altogether. Compared to some of the Nordic countries who’ve already done that.
We will continue to have some cash, but you know, less and less usage of it as much as possible.
Of course with all this growth, we have to be cautious about the risk involved. The security incidents that happened in late 2021 have taught us clearly that we need to take a pause sometimes and be careful about how this growth is evolving and how new risks are being introduced into the system.
Sometimes we have to think like a hacker would, in terms of ensuring that we are very clear what could be the possible ways of going around the existing safeguards in place. So I think as we grow the various technologies used across the communities, we need to be cautious of how the new risks are being introduced and take the necessary safeguards to mitigate those risks.
On the association or, I would say, the FinTech members side as well. We do run many subcommittees which are actually the various segment representations. So we have like a tech subcommittee, an insuretech subcommittee. We have a cyber risk subcommittee as well. So one of the things that we are looking at now is to work with the authorities and regulators to ensure that there is some kind of a certification or some kind of, I would say, a standard that the companies that are providing these services have to do in terms of cyber risk assessment, cyber risk mitigation, as much as possible as well, which can be a standard across the board.
So in the end, fintechs need to work with the community on specific implementation. But at the same time, making sure that all the risks are mitigated and the right safeguards are in place, which applies across the board, across the cryptocurrency community or the crypto-assets community. Or any other investments and even insure tech and so on.
There are certain common themes that we need to be aware of, certain common risks that we need to be aware of. But there are standards that need to be met to ensure that those risks are being mitigated. And there is some affirmation of that happening as well.
Thank you, Shadab. You summarised the dialogue really well. And I think we all agree that Fintech, alongside the technology advancement, it is changing the whole landscape of payments or transactions, or financial instruments and all the other industries as well surrounding it.
Once again, thank you so much for joining me and sharing so much insights about the FinTech industry. That's all the time we have. So once again, thank you all so much. Thank you.
You’ve been listening to the SUSS series of podcasts. To find more episodes, visit suss.edu.sg/podcast.