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In Race To Be Asia’s Fintech Hub, Singapore Leads Hong Kong


Singapore
is rushing to reinvent itself as Asia’s financial technology, or fintech, hub
to fend off a regulatory threat to its wealth management industry and revive a
sluggish economy.



State
funding, light-touch regulation and a recent move to allow start-ups to test
financial products in a controlled environment have put Singapore ahead of
rival Hong Kong to be Asia’s fintech hotspot.



Much
like Uber, Airbnb and others have harnessed technology and online social
networking to disrupt taxi and hotel services, fintech firms are shaking up the
traditional banking and financial services industry.



Singapore’s
fintech drive comes as its role as an offshore private banking center is under
threat from a multi-billion-dollar money laundering scandal in neighboring
Malaysia, and as Indonesia chases undeclared money parked in the low-tax city
state.



Also,
Singapore’s traditional shipping and manufacturing growth drivers are faltering
amid a global economic slowdown and a slump in commodity prices and demand.



 



Brexit boost?



Singapore
is attracting interest, too, from among the 60,000 or so fintech firms based in
London’s near-$9 billion market – a trend likely to accelerate with Britain’s
referendum vote to leave the European Union.



“We
already have registered interest from UK-based companies to move to Asia as
it’s getting very crowded there,” said Markus Gnirck, partner and co-founder of
tryb, a fintech consultancy. “Brexit will probably accelerate a few of these
conversations.”



Britain’s
soft approach to regulation and its influence on Europe would likely wane with
Brexit and any new barriers that would create.



“In
the long term (this) makes Europe much less attractive as a place for
entrepreneurs,” Taveet Hintikus, CEO of peer-to-peer money transfer firm
TransferWise, told the World Economic Forum in the Chinese city of Tianjin this
week. He told a panel session that his company was looking at Asia for
expansion, and Singapore appeared a more vibrant fintech center than Hong Kong.



A
KPMG report said Singapore has been more aggressive in pursuing fintech
opportunities, and try noted that all but a dozen of the around 210 fintech
firms operating in Singapore have opened in the past two years – the fastest
growth rate in Asia.







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Obstacles



However,
Singapore’s immigration laws are an obstacle, start-ups and consultants say, as
measures to curb the number of foreign workers and give priority to
Singaporeans have left a shortage of talent.



And
Singapore’s banking regulations have created a risk averse culture that is at
odds with the trial-and-error approach of fintech start-ups.



But
the city state’s efforts are bearing fruit.



SmartKarma,
a start-up that operates a platform offering Asian institutional research and
analysis on demand, chose Singapore over Hong Kong for its headquarters.



“There’s
no other city in the world where you have such a progressive government when it
comes to supporting innovation today – be it from grants, to having funding
vehicles to operational support,” said co-founder and CEO Raghav Kapoor.



Singapore
state agency SPRING is an investor in SmartKarma, and government agency
International Enterprise is helping the firm expand overseas.



With
Moody’s expecting Singapore’s economy to grow at its slowest pace since the
global financial crisis, government officials are keen to engage with new
industries: one fintech entrepreneur in shorts and flip-flops says he keeps in
touch by WhatsApp with regulators and meets them once a week.



 



“Not moving fast enough”



In
Hong Kong, despite nearly $300 million in fintech funding, start-ups face tough
regulatory hurdles say lawyers, consultants and fintech executives. There are
fewer than 100 fintech firms in Hong Kong, according to tryb.



Hong
Kong’s rules and regulations make it difficult to set up crowdfunding
platforms, payment firms and peer-to-peer lending operations, and to secure
operating licenses.



For
example, Chinese peer-to-peer lender Jimubox spent nearly a year setting up in
Hong Kong only to abandon the plan because strict rules on account openings
made it hard for the firm to take on customers.



“I
spent time and money and hired a couple of people to explore this and ended up
having to kill it because it didn’t make sense from a commercial standpoint,
purely around the account opening process,” said Jimubox co-founder Barry
Freeman.



In
Singapore, any entity can operate payment systems and e-wallets without seeking
approval, while rules introduced in Hong Kong last year require firms to have a
license for Stored Value Facilities, or a prepaid electronic cash or card.



Monetary
Authority of Singapore (MAS) managing director Ravi Menon said fintech firms
would only be regulated when they grow large enough to pose a risk to the
traditional financial system.



A
spokeswoman for Hong Kong’s Financial Services and the Treasury Bureau, the
agency overseeing fintech policy development, said the government “is committed
to facilitating the development of fintech in Hong Kong, whilst upholding the
‘technology neutrality’ principle and ensuring appropriate consumer
protection.”



“We
are absolutely not moving fast enough” on fintech, said Laura Cha, chairman of
Hong Kong’s Financial Services Development Council (FSDC). “This is an area of
development that is a very key element of the financial industry that we cannot
ignore.”



 

Posted on: 8th July 2016

Source: Free Malaysia Today