Singapore has the most developed finance sector, especially in the area of financial technology (fintech), of all the Association of South-East Asian Nation (ASEAN) territories. The city-state is, therefore, well-placed to promote sorely-needed financial inclusion across the region, which its central bank, the Monetary Authority of Singapore (MAS), has just teamed up with the UN to do.
Developing the sector
Singapore is the London of Asia when it comes to finance. It was crowned Asia’s largest financial centre last year by the Z/Yen Group, a think tank, for various reasons. The city-state is home to over 200 banks, many of whom operate from Singapore as their regional base, it has a triple-A rated economy, and is a top global wealth management hub, giving it the strongest finance industry in Asia.
One key reason why Singapore was recognised as Asia’s top finance centre, was its emerging fintech sector. The MAS has made it its mission to promote Singapore as a fintech innovation destination, investing heavily in the sector, and creating a ‘sandbox’ regulatory policy, which fosters innovation with minimal regulatory oversight, which is why Singapore is now one of the world’s top fintech hubs.
Singapore possess the robust traditional and digital financial infrastructure, therefore, to take on the task of promoting financial inclusion throughout ASEAN. According to The Business Times, a regional news portal, the MAS has announced that it will collaborate with United Nations Capital Development Fund’s (UNCDF) Shaping Inclusive Finance Transformations (SHIFT) programme, to achieve this aim.
The two bodies will foster greater financial inclusion in ASEAN, by encouraging access to digital services, as well as the development of this industry, in the region. Specifically, MAS and UNCDF will strive to digitise ASEAN’s low-tier financial institutions, with an emphasis on extending the last-mile distribution of these financial services, so that ASEAN’s consumer can access vital financial tools.
This plan, The Business Times added, is targeted to rapidly digitise the operations of ASEAN finance firms, so they can increase both access and usage of these services to promote region-wide economic growth. MAS and UNCDF’s first project under this agreement, will see the former aid the latter’s latest Challenge Fund Window, an initiative designed supply grants to scalable, innovative business models which encourage regulated global remittances to Cambodia, Laos, Myanmar and Vietnam for women.
This funding round, which closes on 9th June and will finalise grant awards in October, is also designed to foster the adoption and usage of remittance-related financial products in these nations. Meanwhile, the MAS will host a SHIFT Challenge Fund workshop in the city-state, where they will select projects from various applicants, which will then be displayed at the Singapore Fintech Festival in November this year. This could help them draw the investors needed to launch and hasten financial inclusion.
It is essential that financial inclusion grows in ASEAN, as it could help the region expand its economy, providing a better quality of life to its people. If citizens can access financial services, they can do things such as take out loans, which they could use for purposes such as expanding businesses, putting more cash back into their local economies for everyone’s benefit. Digital technologies promote inclusion, as they make it more convenient for people to access financial services, so with its developed fintech infrastructure, the MAS is well-placed to make this a reality in ASEAN.
It is important to note that unbanked rates are high across various ASEAN countries. In Myanmar, for example, 77% of people lack access to financial services. We have seen in Myanmar, however, that fintech projects are set to change this, as citizens are already utilising new financial technologies, due to the convenience they provide, so financial inclusion can only rise from here. Similar trends are making themselves in other ASEAN countries, from Thailand to Vietnam, and with both Singapore and the UN pushing financial inclusion in the region, ASEAN could see real economic growth in future.