In Part 2 of our interview with Reuben Lim, a key figure at the Singapore FinTech Association (SFA), we deep dive into the driving force behind SFA's success – its key performance indicators (KPIs). Reuben sheds light on the diverse set of KPIs, both internal and external, that SFA employs to measure its progress, financial sustainability, member engagement, and the impact of its initiatives.
Next, we explore Singapore's pivotal role in the Asia Pacific FinTech landscape. Reuben highlights the strategic advantages that make Singapore a magnet for FinTech innovation, including its status as a strategic hub, gateway to Southeast Asia, and robust infrastructure. It becomes evident why many businesses choose Singapore as their base to tap into the dynamic FinTech opportunities in the region.
Now, let’s move on to Part 2 of the interview with Reuben.
Edward: Can you share with us the Key Performance Indicators (KPI) that you use to achieve the goals and objectives set out by SFA?
Reuben: SFA employs a range of KPIs to measure both internal and external success. Internally, financial sustainability is a key focus, with a goal to cover operational costs through revenue from membership fees and event sponsorships.
Externally, the organization evaluates the impact of its initiatives. Key indicators include the number of events organized, member participation, and overseas trips with associated member benefits. Additionally, SFA tracks the business opportunities and deals generated through its network.
Furthermore, SFA produces insightful reports, focusing on ecosystem reviews and topical issues like Asset Tokenization and Sustainability. These reports contribute to a deeper understanding of the FinTech landscape.
Edward: Can you explain to us Singapore’s role in the FinTech landscape in Asia Pacific?
Reuben: Singapore plays a pivotal role in the FinTech landscape mainly due to three aspects: strategic hub in the macro economy, gateway to Southeast Asia, and robust infrastructure.
Strategic Hub in the Macro Economy: The macro economy in Southeast Asia is booming and Singapore is the hub because of its political stability, robust financial markets, and superior connectivity to the adjacent economic bodies. As such, Singapore is the top choice for investment, so it has a more dynamic venture capital ecosystem to support the modernization of the FinTech landscape in the region.
Gateway to Southeast Asia: Serving as a strategic gateway, many companies establish their base in Singapore to tap into the broader Southeast Asian market. This hub-and-spoke model enables efficient access to multiple markets simultaneously, a distinct advantage over entering individual countries separately.
Robust Infrastructure: Singapore boasts outstanding infrastructure, encompassing robust sea and air connectivity, a well-established supply chain, and a stable banking system. These elements facilitate seamless operations and connectivity across the entire region.
Edward: Why should FinTech startups choose Singapore as their homebase?
Reuben: Actually there are many benefits for FinTech startups to choose Singapore as their headquarter, and the major reasons, from my perspective, include financial ecosystem, legal framework, and diverse opportunities.
Financial Ecosystem: Singapore offers a thriving financial ecosystem, featuring capital markets, currency flexibility, and a range of financial instruments. This ecosystem empowers businesses to raise funds and manage finances effectively.
Legal Framework: Singapore provides a strong legal framework, including internationally recognized arbitration and mediation services. This ensures businesses can resolve disputes swiftly and impartially.
Diverse Opportunities: The Asia Pacific region presents a wealth of opportunities for FinTech companies. In the B2B sphere, countries like Singapore, Thailand, and Indonesia offer attractive collaboration prospects with established banks and corporations. In the B2C sector, nations such as Indonesia, Thailand, Vietnam, and the Philippines present untapped markets with a growing appetite for financial services.
Edward: How do legacy financial institutions collaborate with fintech companies?
Reuben: Legacy financial institutions in Singapore collaborate with FinTech companies through 3 approaches: buy, build, and partner.
Buy: Some banks opt to acquire FinTech firms outright. This involves purchasing the technology or the entire company to integrate innovative solutions into their services.
Build: Banks with strong technical capabilities develop their FinTech solutions in-house. They have sizable tech teams and can create digital solutions to enhance their services.
Partner: Many financial institutions choose to partner with FinTech companies. This approach involves collaboration on specific projects or services, leveraging the expertise of FinTech firms to enhance their offerings.
Singaporean banks, including DBS, OCBC, and UOB, have substantial tech resources and capabilities. While they often operate on legacy banking infrastructure, they are actively evolving towards digital solutions. For instance, consumers in Singapore can perform most banking tasks through mobile apps.
Collaborations between banks and FinTech firms vary based on each institution's unique risk profile and risk appetite. While it's not possible to quantify the exact number of collaborations, it's evident that all major banks in Singapore, as well as international banks operating here, engage with FinTech in some capacity. The extent of these collaborations depends on the specific needs and strategies of each bank.
Edward: Silicon Valley has been taking the lead in terms of innovation. Do you think Singapore will become the leader in innovation in Asia Pacific?
Reuben: Singapore may not necessarily become the leader in innovation in Asia Pacific, but that's not necessarily a drawback.
Innovation is often about contextualization, taking existing technologies and adapting them to local needs. While Silicon Valley has been a pioneer in technology, other regions, including Singapore, have shown their ability to innovate by contextualizing and applying these technologies effectively to their respective markets. The focus should be on meaningful innovation that addresses specific needs rather than solely pursuing leadership in innovation for its own sake.
Edward: What are the challenges for FinTech and SFA?
Reuben: I will break down the challenges into three pillars - regulatory complexity, macroeconomic factors, and talent shortage.
Regulatory Complexity: Regulatory challenges exist globally as regulations often lag behind rapid technological advancements. SFA addresses this challenge through open consultation and collaboration with regulators.
Macroeconomic Factors: Macroeconomic challenges, such as fluctuating interest rates and fund availability, impact the FinTech ecosystem. Recent interest rate hikes have affected the region's FinTechs, given the significant increase from near-zero rates.
Talent Shortage: The demand for skilled talent in FinTech is high, leading to talent shortages and escalating labor costs in Singapore. Balancing talent retention with operational budgets poses a persistent challenge.
These challenges are not unique to Singapore and require thoughtful management and adaptation to sustain the growth of the FinTech sector.
Edward: What are the opportunities for FinTech and SFA?
Reuben: I think there are abundant opportunities in FinTech and I will just point out a few below.
RegTech: Regulatory technology offers continuous opportunities due to evolving regulations, compliance needs, and customer onboarding requirements.
Cross-Border Payments: Facilitating cost-effective and efficient cross-border payments remains a growing opportunity as current methods are costly and slow.
Payments: Innovations in payment solutions are ongoing, with a focus on reducing costs and latency in B2C and C2P* transactions.
Capital Markets: Asset Tokenization and novel bond issuance methods present opportunities, particularly in more developed markets like Thailand and Indonesia.
Banking Infrastructure: The enhancement of banking infrastructure, including buy now, pay later solutions, continues to provide opportunities.
In the coming years, opportunities will persist across these subsectors, although some may be more apparent and widely discussed than others.
Note: C2P payments, also known as "Consumer-to-Point of Sale" payments, refer to financial transactions in which a consumer makes a payment directly at the point of sale (POS) or purchase. In these transactions, the consumer uses various payment methods, such as credit or debit cards, mobile wallets, or other electronic payment options, to pay for goods or services at a physical location, such as a retail store, restaurant, or any other business establishment where products or services are sold.
C2P payments are a common and convenient way for consumers to make purchases in person, and they have become increasingly digital and cashless with the adoption of technologies like contactless payments and mobile payment apps. This method of payment allows consumers to quickly and securely complete transactions, making it easier to shop and conduct business in various retail and service environments.
Edward: What are the new initiatives that SFA will be working on this year?
Reuben: In 2023, SFA will introduce several new initiatives, including:
Project Lorikeet: Collaborating with government agencies in different countries to create programs that assist qualified companies in establishing a presence abroad, going beyond traditional mission trips.
Career Conversion Program: Partnering with Workforce Singapore to address the talent shortage by offering training programs for individuals seeking roles like QA engineers. Companies participating in this initiative benefit from government subsidies and trained professionals.
These initiatives demonstrate SFA's commitment to fostering growth and addressing industry challenges in the coming year.
Edward: How do SFA events, webinars, and knowledge sharing initiative facilitate a deeper connection within the FinTech community?
Reuben: SFA events, webinars, and knowledge-sharing initiatives play a vital role in fostering deeper connections within the FinTech community. These interactions are facilitated through:
Content-Driven Approach: SFA ensures that all its events focus on informative content rather than sales pitches. This approach encourages participants to attend with the intent of gaining valuable knowledge.
Clear Key Takeaways: Each event is structured to provide clear key takeaways, ensuring that attendees leave with new insights and information relevant to the FinTech industry.
Networking Opportunities: SFA events include networking sessions, allowing participants to connect with like-minded professionals. These sessions promote interaction and the building of new relationships within the FinTech community.
Edward: During your tenure with SFA, could you share any accomplishment or a standout moment that is significant?
Reuben: SFA is dedicated to fostering the FinTech community with collective accomplishments. Some notable highlights include:
Buy Now, Pay Later Code of Conduct: Collaborating with regulators to establish an industry code of conduct, providing an alternative framework for regulation.
Mission Trips: Organizing missions abroad to foster business leads and knowledge sharing among members, enhancing the global outreach of the community.
Reports: Meticulously crafting reports that offer valuable insights and takeaways for various stakeholders, from venture capitalists to government agencies and FinTech companies.
Ultimately, the SFA team is passionate about the tangible positive impact on the FinTech ecosystem by these efforts, such as improved recognition, funding, and opportunities for community members.
Edward: Is there anything else you want to share with our audience?
Reuben: I encourage foreign businesses to consider Singapore as a hub for their international operations. Singapore offers more than just business opportunities; it's a destination with excellent food and a favorable climate. By establishing a presence in Singapore, companies can efficiently manage their global operations from a central location.
Edward: Thank you Reuben for your valuable insights into the FinTech landscape in Southeast Asia and for clearly explaining the mission and objectives of the SFA. Your contributions are greatly appreciated, and we look forward to witnessing the continuing growth of the FinTech sector under the SFA’s influence and support.
Compiled and edited by Christing Wei