Insights from the Singapore Fintech Festival 2023

Insights from the Singapore Fintech Festival 2023

The Singapore Fintech Festival seemed bigger than ever this year with approximately 60,000 bankers, payment enthusiasts, technologists and start-ups circulating around the six large conference halls.

Kristalina Georgieva the Managing Director of the International Monetary Fund (IMF) was the opening keynote speaker. Kristalina had a call out to the attendees to set sail on enabling more cost-effective cross border payments to stimulate global commerce and financial inclusion.

Kristalina explained how current global international FX remittance charges are in the region of 7-8% of total transaction value and the G20 target is for this figure to come down to 3%.

President of Singapore, Tharman Shanmugaratnam was next to speak and he eloquently explained how we must always seek to be ourselves and not try to be anyone else. He also mentioned the importance of supporting seniors in the financial ecosystem and advised everyone including seniors ‘must keep learning’.

Aside from lower cost, more efficient cross border payments, AI was a big theme at the conference. Henry Aguda, CEO of UnionDigital Bank in the Philippines mentioned how they were continually investing in finding the magical algorithm for lending to stimulate financial inclusion.

Aroonrath (Jane) Sangalungkarn, EVP of Digital Banking at Siam Commercial Bank in Thailand also reinforced this point and explained how artificial intelligence was allowing her bank to provide small micro loans to SME’s, traders and stall holders across Thailand digitally. This instant credit scoring from mobile was offering rates around a tenth of the price of local loan sharks who often charge 200% interest to people trying to enter the financial system.

Karen Pepper, Head of Strategic Initiatives at Amazon clearly explained how different countries are often so different in their payment infrastructures and modes of payment used. Karen mentioned Brazil which has recently launched its Pix real-time payment system and now has 85% take up. On the other hand, Mexico nearby is still a 90% cash economy. Large merchants such as Amazon have to adapt and manage their business around these trends and customer preferences.

Jim McCarthy, CEO of Thredd (ex-Visa) reinforced the point that new payment innovations often take ten or even twenty years to reach full market penetration. Jim explained how even Apple Pay and Google Pay are in their infancy still and have some time to reach critical consumer mass.

I had numerous discussions with large banks and payment companies around the importance of working capital and transaction banking in their product offerings. With higher interest rates and expansion of real-time payment programs, Transaction Banking and Commercial Payment spend is getting way more focus. You can read more about my new Working Capital Sales Program here.

There was a fascinating debate between two teams pitting the benefits of stablecoins versus tokenised deposits (banking) against each other.

Caroline Butler, Head of Digital Assets at BNY Mellon ably put forward the case that unstable, stable coins had failed to peg against their fiat currency equivalent year to date. The tokenised deposit team also explained how the stablecoin Luna was able to lose ~ U$40 billion in value.

Dante Disparte, Chief Strategy Officer at Circle countered with the fact that stablecoins are often used to generate financial inclusion in countries with hyperinflation. He also mentioned that stablecoins are often the first port of call in catastrophic support situations, such as when banking infrastructure is affected for example in the war in Ukraine. Dante also mentioned how banking was still a business of death by a thousand cuts in fees and charges and that the industry had not innovated until stablecoins came along.

It was a fascinating debate with stablecoins winning the audience vote 65% to 35%.

Eswar Prasad, Professor at Cornell University and the author of ‘The Future of Money’ summarised many of the developments taking place and advised the future of money will continue to be digital.

Eswar advised there wasn’t really a strong user case for a retail central bank digital currency (CBDC) as retail systems such as Alipay, Wechat and UPI in India are working well.

He also advised despite the negative news around crypto it has highlighted issues and inefficiencies in normal finance.

There were many cross-border collaborations on display such as the tokenised transaction from SGD-USD between OCBC in Singapore and Bank of New York Mellon in the USA.

The Monetary Authority of Singapore (MAS) also announced some interesting real time cross border projects with Malaysia and Indonesia to promote business and lower cost migrant remittances between these economies.

Anjay Banga, President of the World Bank (ex-Mastercard CEO) brought many of the conference themes together in his speech by explaining the world needs to build a better more interoperable financial infrastructure to promote inclusion and stimulate growth.

The conference was a great success and promised to be even bigger next year. The SFF team are also expanding their conferences into other geographies including Japan in March 2024. I hope to see you there!