The Monetary Authority of Singapore (MAS) has announced the provision of S$35 million in financial support for the Productivity Solutions Grant (PSG) under the Financial Sector Development Fund. The PSG helps to improve regulatory technology (Regtech) adoption in the financial services sector with the aim to reduce the cost of business overheads in relation to compliance and regulatory reporting.
The goal of the new MAS injection is to encourage smaller financial businesses to adopt Regtech and improve the accuracy of their data reporting. It will provide funding for businesses to purchase and integrate pre-approved Regtech software into their existing IT infrastructure and support the productive operation of the technology.
“The co-funding support for the adoption of regulatory reporting solutions will help smaller financial institutions leverage technology to better meet regulatory obligations,” said Sopnendu Mohanty, Chief Fintech Officer at the MAS, speaking on the benefits of the programme. “There are now a range of grant schemes specific to smaller financial institutions. Together, these schemes provide strong support for these financial institutions to adopt solutions that improve their operational capabilities in various domains.”
The MAS has been actively promoting the adoption of a variety of Fintech implementations throughout 2020, with an injection of S$125 million (US$ 88 million) into the industry during the worst period of the pandemic. The funding, announced in April of this year, aimed to mitigate some of the effects the pandemic has had on the country's economy. At the time, the government projected an 8.5% reduction in economic growth through 2020, although this has since decreased to around 5%.
Funded by the Financial Sector Development Fund, the package focused on assisting companies in the financial services industry with digitisation, operational resilience, and workforce training. It was presented along with a Training Allowance Grant and a Digital Acceleration Grant, which covered additional areas including risk management, customer services, and process efficiency.
The Importance of Regtech
With the rapid rise of the fintech industry over the past few years, financial regulators have struggled to meet the demand for sufficiently powerful and digitalised methods of gathering compliance and regulation data. With banks and financial institutions having paid over $300 billion in non-compliance fines since the 2008 global financial crisis, the need for better regulation is increasingly evident.
Regtech aims to provide digitised solutions to the often out-dated and overly cumbersome regulatory processes still present in many government agencies. Through automated monitoring, processing and reporting, regtech removes the need for costly and time-consuming compliance procedures for both private businesses and government agencies. For small businesses struggling to meet the additional requirements of new procedures like Anti-Money Laundering (AML) and Know-Your-Customer (KYC) checks, regtech offers a welcome relief.
In 2017, the International RegTech Association (IRTA) was established as an ethical non-profit association to facilitate the development and adoption of regtech solutions worldwide. It works with some of the best minds from a range of industries to improve the tools, software, and technology needed to build highly advanced regtech solutions. Key features include:
- Management and structuring of disorganised data sets.
- Automated generation of reports
- Quick and easy integration into existing IT infrastructure
- AI-enhanced analysis and feedback
The PSG is delivered as both a non-sector specific solution and sector specific solution managed by various government agencies, with the MAS managing the sector-specific financial services industry. PSG grants in the financial sector are only available to banks but the MAS is considering extending the programme to include other financial institutions, including capital market intermediaries, insurers, and other firms with related activities.
Presently, the grant will only be made available to smaller businesses with no more than 200 employees and requires the use of specific solutions as chosen by the MAS. The funding will cover up to 30% of the operating costs of the technology, to a maximum amount of S$250,000 (approximately USD$185,000).
Monetary Authority of Singapore - Solutions Providers
The MAS has pre-approved three solutions providers to facilitate the adoption of regtech services by small businesses. From these providers, the MAS has pinpointed 11 adequate solutions to select from, each suited to businesses with varying degrees of size and requirements.
Accounting firm KPMG has developed five solutions that incorporate Tier 2 and Tier 3 banks, with Auto ETL and both small and medium engine options. The US-based technology and analytics firm AxiomSL has provided three solutions that cover Basic, Standard and Custom data loading, and Singapore-based Wolters Kluwer Financial Services offers a three-tiered solution.
These three solutions providers were chosen after careful evaluation from the Infocomm Media Development Authority (IMDA)’s SMEs Go Digital programme, an initiative to help SMEs improve business through digitisation. Their solutions have been tested under stringent conditions to ensure highly efficient and accurate data collation and distribution.
A Financial Safeguard
With the lingering effects of the financial crisis still present and the global economy once again facing uncertain times, the MAS is eager to harness the advantages that regtech can offer to a world increasingly threatened by unregulated and fraudulent financial practices.
With Singapore working toward becoming a leading financial hub in the Asia/Pacific region, the MAS looks set to leverage the power of regtech as a powerful tool for business development and a safeguard against economic threats.
With this additional provision of S$ 35 million to the PSG programme over the next three years, the financial services industry in Singapore has been given a much-needed boost at a critical time. For businesses interested in the PSG programme, it’s coordinated by the Ministry of Trade and Industry and those companies eligible for the grant can apply via the Singapore government's Business Grants Portal.
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