In a recent speech by the Managing Director of the Monetary Authority of Singapore (MAS), Mr Ravi Menon discusses, among other topics, his view on FinTech and the regulatory future the industry faces. Below we summarize some of the key points Mr Menon presented.
In pace with the rapid growth of the FinTech industry, it is important to develop deep understanding of the emerging technologies as well as the risk and opportunities they present. In retrieving this, MAS points out that financial regulators should not be afraid to work collaboratively with financial institutions and FinTech companies as such collaboration can help develop guidelines that can facilitate adoption by industry. In addition, it is important that regulation does not front-run innovation as the result of prematurely introducing regulations that may stifle innovation and potentially derail the development and adoption of useful technology. The development of regulatory sandboxes plays a central role in this process as it allows an experiment that facilitates FinTech, while at the same time limits its risks to consumers and the financial system if such innovation should fail.
In addition, MAS highlights the importance of harnessing the FinTech industry as it allows to better regulate and supervise financial institutions and at the same time help them manage their risk. From a regulatory perspective, among the more promising applications of technology is what is called “RegTech” which aims at enhancing the efficiency and effectiveness of financial firms’ risk management and compliance. The advancement of RegTech is seen in several areas including;
Mr Menon concludes by stating that it is important to look ahead to a world of technological change. FinTech which, if smartly harnessed and safely managed, offers hope and dynamism for an industry facing slower growth, tighter regulation, and growing competition.