The Monetary Authority of Singapore (MAS) has this week published details of the third iteration of a funding programme to encourage private-sector fintech investment in hot topic areas.
The ‘Financial Sector Technology and Innovation Scheme’ (FSTI) was set up eight years ago. Grant funding of S$100 million (about £58m/US$74m) was awarded to almost 500 projects in its first iteration. Grant funding of more than S$200 million (about £117m/US$149m) in total went to more than 1,000 projects in the second round.
FTSI’s third tranche of grants – S$150 million (about £88m/US$112m) over the next three years – was announced by the island city-state’s deputy prime minister and minister for finance Lawrence Wong, who is also MAS chairman, in a speech at the Singapore FinTech Festival in November 2022.
‘FSTI 3.0’, as MAS refers to this latest edition of the scheme, has six ‘tracks’ (focus areas), including a newly introduced Environmental, Social and Governance (ESG) fintech track. The new programme puts greater emphasis on promoting the adoption of artificial intelligence (AI) and data analytics in smaller financial companies (though an artificial intelligence and data analytics track), as well as ‘supporting the needs of less digitally mature firms looking to acquire RegTech solutions’ through a RegTech track (RegTech is the application of technology to boost regulatory compliance).
The overall objective of the programme – whose own funding comes via MAS’s Financial Sector Development Fund – is to ‘accelerate and strengthen innovation by supporting projects that involve the use of cutting-edge technologies or with a regional nexus, while doubling down on MAS’ commitment to promote a vibrant technology ecosystem for the financial sector’, according to a press release.
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Grants coming down the tracks
The aim of the ESG fintech track is to ‘spur adoption of ESG fintech solutions’ by supporting the ‘development and deployment of projects that address ESG data, reporting, and analytics needs of the financial sector’. Funding support is up to 50 per cent of ‘qualifying expenses’, capped at S$500,000 (about £292,000/ US$372,000) per project.
The new track is MAS’s latest initiative in the field of ESG. The authority last October cut the ribbon on an ‘ESG Impact Hub’ workspace to encourage co-location and closer working between ESG (environment, social and governance) fintech start-up companies, financial institutions and ‘real economy’ stakeholders; and also announced the establishment of a Sustainable Finance Advisory Panel.
‘FSTI 3.0’ also includes a new ‘Centre of Excellence’ track. Formerly known as the ‘Innovation Labs’ track, the aim is to woo financial institutions, global technology companies and corporate venture capital entities (CVCs) to set up centres of excellence in Singapore to ‘test-bed innovative ideas and roll out market solutions’. The expanded scope of grant funding to include CVCs is new. Funding support is up to 50 per cent of qualifying expenses, capped at S$2 million (about £1.2m/US$ 1.5m) per project.
‘Given the importance of CVCs in identifying and nurturing the next generation of start-ups, the funding will enable CVCs to offer strong mentorship and support to help start-ups scale and develop resilient and viable business models,’ MAS states.
An ‘Innovation Acceleration’ track sees MAS ‘recognising the importance of partnering with the industry to support innovative fintech solutions arising from emerging technologies such as web 3.0’ (a reference to the third generation of internet-based technologies, incorporating concepts such as decentralisation and token-based economics). MAS will conduct open calls for the use of innovative technologies in industry use cases.
Across all tracks, applicants will be required to ‘devote resources to talent development, in order to strengthen the Singaporean fintech talent pool.’
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‘Catalysing’ industry efforts
In his Singapore FinTech Festival 2022 speech, Wong described the first two rounds of FSTI funding as having “generated many positive outcomes”, with the programme having “helped to anchor new digital asset ecosystem players, as well as catalysed industry efforts to adopt cutting-edge technologies.”
In this week’s announcement MAS managing director Ravi Menon highlighted the growing number and diversity of “transformative” technology projects that the authority has embarked on alongside the private sector.
These include the Singapore Financial Data Exchange (SGFinDex), described as the ‘world’s first public digital infrastructure to use a national digital identity and centrally managed online consent system’ (it enables individuals access to their financial information held across different government agencies and financial institutions); and ‘Project Greenprint’ – a collection of initiatives, launched in December 2020, that aims to harness technology and data to enable a ‘more transparent, trusted and efficient ESG ecosystem to enable green and sustainable finance’.
“Notably, FSTI 1.0 and 2.0 helped strengthen the digital capabilities of financial institutions which served them and their customers through the Covid pandemic,” Menon said. “With FSTI 3.0, we look forward to continued collaboration with the industry to advance purposeful financial innovation.”
*** The 8th ‘UK-Singapore Financial Dialogue’ was held in London on 26 July, with a focus on ‘identifying opportunities for further collaboration on joint projects in priority areas such as sustainable finance and fintech and innovation’. MAS launched a ‘consultation paper on proposed code of conduct for ESG rating and data product providers’ on 28 June and a UK ‘ESG Data and Ratings Code of Conduct Working Group’ published a ‘draft voluntary code of conduct for ESG ratings and data product providers’ for consultation on 5 July.
Lawrence Wong’s speech at the Singapore FinTech Festival 2022 (23min33sec), with the FSTI section from about 16min6sec to 18min20sec.
Source: Monetary Authority of Singapore YouTube channel