SINGAPORE – Singapore’s financial sector will receive a boost to its tech and innovation efforts with support from a renewed scheme that will see up to $150 million in grants for projects.
The Financial Sector Technology and Innovation (FSTI) Scheme, which the Monetary Authority of Singapore (MAS) said has been renewed on Monday for three years, is aimed at accelerating and strengthening innovation by supporting projects that involve the use of cutting-edge technologies.
It is also a reflection of the MAS’ commitment to promoting a vibrant technology ecosystem for the financial sector.
The scheme, in place from August 2023 to March 2026, will help fund several projects, including those under three new tracks aimed at promoting a strong culture of innovation and more experimentation as well as the adoption of environmental, social and governance (ESG) tech and fintech solutions.
The Enhanced Centre of Excellence track, formerly known as the Innovation Labs track, will see its scope of grant funding expanded to include corporate venture capital (CVC) entities, at funding support of up to 50 per cent of qualifying expenses, capped at $2 million per project.
This will allow CVCs to identify and nurture the next generation of start-ups. The funding will enable CVCs to offer strong mentorship and support to help start-ups scale and develop resilient and viable business models.
Previously, the Innovation Labs track provided support to financial institutions, including companies and banks such as DBS Bank and Deloitte, to set up innovation labs.
Under the Innovation Acceleration track, MAS will conduct open calls for the use of innovative technologies in industry use cases. Grant funding will be provided to support actual trial and commercialisation.
MAS said it “recognises the importance of partnering with the industry to support innovative fintech solutions arising from emerging technologies such as Web 3.0”.
To spur adoption of ESG fintech solutions, the ESG FinTech track seeks to support the development and deployment of projects that address the ESG data, reporting and analytics needs of the financial sector.
ESG usually refers to a framework used to assess an organisation’s business practices and performance on various sustainability and ethical issues.
The scheme will also continue to support advanced capability development and adoption in key areas such as artificial intelligence and data analytics (Aida), and regulation technology (RegTech).
MAS said: “Specifically, MAS will focus on promoting Aida adoption in smaller financial firms and supporting the needs of less digitally mature firms looking to acquire RegTech solutions. Across tracks, applicants will also be required to devote resources to talent development, in order to strengthen the Singaporean fintech talent pool.”
The new wave of funding is timely, as the global and Singapore fintech markets appear to have suffered in the first half of 2023.
According to a report by professional services firm KPMG, Singapore raised US$934 million (S$1.25 billion) across 84 fintech deals in the first half of 2023, falling 41 per cent from US$1.6 billion across 117 deals in the second half of 2022.
KPMG said fintech funding has yet to fully correct from the pandemic funding surge that began in the second half of 2019, reflecting a three-year low in performance in the first half of 2023.
The drop in fintech funding has also been reflected in the global market.
MAS managing director Ravi Menon, addressing some notable projects that the Financial Sector Development Fund (FSDF) has supported as part of the FSTI programme, said that since 2015, the fund has awarded $340 million in funds to drive the adoption of technology and innovation in the financial sector.
Some transformative technology projects that MAS has piloted include SGFinDex, launched in late 2020.
SGFinDex, or Singapore Financial Data Exchange, is a public digital infrastructure that uses a national digital identity and centrally managed online consent system to enable individuals to access their financial information held across different government agencies and financial institutions.
It was launched by MAS in collaboration with Singapore’s Smart Nation and Digital Government Group.
Another project launched was Project Orchid’s Purpose Bound Money (PBM) amid a rise in use of digital monies and blockchain currencies globally.
In June 2023, the central bank put out a White Paper proposing standards for the use of digital currencies, including a technical overview of PBM.
PBM is a form of tokenised digital currency that is limited in how it can be used. In simple terms, a PBM can be imagined as a voucher of sorts – where users can safely exchange value without directly transferring funds.
Project Orchid is an exploratory project launched by MAS in 2021, which looks to examine the infrastructure needed to create a Central Bank Digital Currency system for Singapore, along with its use cases.
Referring to the first two iterations of the scheme, which began in June 2015, Mr Menon said: “FSTI 1.0 and 2.0 helped strengthen the digital capabilities of financial institutions which served them and their customers through the Covid-19 pandemic.
“With FSTI 3.0, we look forward to continued collaboration with the industry to advance purposeful financial innovation.”