Over the past 18 months, fintech and, more recently, regtech have dominated headlines. Banks are racing to implement new technology to streamline processes, cut costs and secure their presence in the financial system.
Central banks are no exception to this, and leading the charge on multiple fronts is the Monetary Authority of Singapore (MAS). In Asia, where technology is evolving at a rapid rate, the MAS has been supporting technological innovation both on a global and local level. The MAS has formed partnerships with a number of official sector institutions, including the Bank of Thailand, the Association of Supervisors of Banks of the Americas, Abu Dhabi Global Market and the Central Bank of Egypt. It has also engaged with academia.
In November 2017, the MAS formed a research and development partnership with the Massachusetts Institute of Technology (MIT). Working with MIT’s media lab, the central bank has allowed local talent to work alongside world‑class researchers, running pilots on distributed ledger technology (DLT), cryptography, big data and artificial intelligence (AI).
Not wanting to be a ‘fast follower’, the central bank has taken an active approach at a local level to understand firms’ products and the implications their entrance to the market will have on financial stability. Its regulatory sandbox has been instrumental.
For more traditional financial players, the central bank has gone one step further. The Artificial Intelligence and Data Analytics Grant, worth S$27 million, will support the adoption and integration of AI and data analytics in financial institutions and provide training on adapting to new technology to those established in the market.
The MAS has also been one of the first central banks to respond to challenges associated with disruptive innovation and the digital economy. In February 2017, it set up the Data Analytics Group to improve its work efficiency with fintech and regtech tools, enhance supervision of firms and make compliance more efficient.
At home, the central bank has also been doing its due diligence. One of the most active technologies in the market has been blockchain – the MAS has examined the benefits of this technology from a central bank perspective.
Project Ubin began exploring the use of DLT for the clearing and settlement of payments and securities in 2016. After numerous rounds of testing, the central bank concluded there were options on the market that could serve as a base for a DLT‑based real‑time gross settlement system. The MAS has recently made the decision to extend Ubin beyond Singapore, releasing the source code publicly and free of charge. The project’s success will form the basis of a new partnership with the Bank of Canada, which will further explore cross‑border payments.