How is the Fintech landscape transformed and what are the emerging trends of 2020? There is no better place to find out rather than the Singapore Fintech Festival – the biggest Fintech event worldwide, with more than 60,000 attendees, from 140 different countries, discussing new technologies, ideas and products brought to the ecosystem.
Earlier this month, our team went to the Festival. During the week of great talks, immersive workshops and other industry events we learned a lot about the recent developments in Fintech and we thought we’d share with you some of the key takeaways from the event!
Top 5 takeaways:
- AI industry applications were omnipresent
- Sustainable finance is about real business not just greenwashing
- The focus remains on people
- Blockchain is still pivoting on the best use case
- Cybersecurity is on every regulator’s agenda (and so is Libra!)
AI in Compliance discussion
The week kicked off with a long-awaited AI in Compliance event organised by CFTE with Paypal. We invited some exceptional experts from UOB, Onfido and Tookitaki to discuss the opportunities and challenges of AI in regulatory systems.
Victor Ngo from UOB explained a technique employed by UOB when they conduct KYC and AML called name screening. Through the use of permutations, they are able to gain huge data sets of connected financial transactions which are broken up into false positives and true positives. They do it by incorporating AI to filter the data and distinguish between false positives (around 70% of all data points) and true positives, which constitute approximately 30% of the whole dataset. The AI implementation started from feeding 2018 data to teach the machine after which they “practised” with real, updated data, making the implementation of AI tools more successful.
As Victor said, “AI is only one component of Compliance”, and the other one is people. Analysts have to go through each alert, review each data point, and all of the documents attached to each transaction to be able to either close it as “false positive”, or report it. Before, people used to do this manually, one by one. Now, AI allows for Automations, allowing UOB workers to not waste as much time in filtering the data and going through the documents, and actually focusing on their job – compliance. Besides automating the follow-up of the transactions that are marked as “true”, and besides the name screening and the ability to filter, AI in Compliance allows for Network Analysis. This is especially useful for banks and financial institutions that can give a credit score. By getting two names into the system, you can get 20-30 names of people that have “dodgy-looking” transactions. This can allow you to force the original company to comply by providing more proof, but also identify new cases of fraud, through these connections.
In a nutshell, whereas in the past compliance officers had to go through every name, every alert in their data system, check all their transactions… now, AI has dramatically changed this industry and allows workers (through data filtering, name screening and automation) to react faster in financial crime investigations.
Sustainable finance conference: The trillion-dollar opportunity
-Moderator: Suvir Varma, Senior Advisor, Bain & Company
– Beatrix Anton-Grönemeyer , Managing Director Chief Sustainability Officer, Allianz Global Investors GmbH
– Céline Soubranne, Head of Group Corporate Responsibility, AXA Group
– Michael Baldinger, Head of Sustainable & Impact Investing, UBS Asset Management
– Robin Hu, Head, Sustainability & Stewardship Group, Temasek International
Sustainable finance includes responsible investments. i.e secure, long term, maintainable and justifiable finance. It is believed that all investments in the future will be “ESG investments” (“Environmental”, “Social” and “Governmental” conscious investments, which reduces the risk) Starting in 2020, Singapore will invest US$2 billion (S$2.7 billion) in funds that have a strong green focus as part of its ambition to be a leading centre of green finance in Asia and globally.
This huge investment aims to place Singapore at the forefront of creating a greener financial system.
Blockchain and the Tokenisation Conference: What does the future hold?
– Moderator: Pradyumna Agrawal, Director, Blockchain@Temasek, Temasek International
– Conan French, Senior Advisor Digital Finance, Institute of International Finance
– Matthew Roszak, Founding Partner, Tally Capital
– Paul Veradittakit, Partner, Pantera Capital
Blockchain is currently facing increased scrutiny by regulators and post-bubble market dynamics. Nevertheless, these conditions should give blockchain greater clarity and a more solid market footing. In this climate, several projects and companies have shown flashes of great things to come. Some blockchain ventures are a safer bet than others simply due to their association with accomplished, established and highly successful companies. Although it might not be as popular, it is an area that could well boom again.
Securities Dematerialisation to Assets Tokenization
– Moderator: Mohsen Alzahrani, Vice President of Strategy & Excellence, Saudi Payments
– Charles Cascarilla, Co-Founder Chief Executive Officer, Paxos
– Jos Dijsselhof, Chief Executive Officer, SIX
– Mark Adams, Senior Executive Leader, Australian Securities & Investments Commission (ASIC)
– Mathias Imbach, Co-Founder & Chief Executive Officer Singapore, Sygnum
Regulatory clarity, increased awareness and adoption by market incumbents have driven the maturity and uptake of digital assets. The most popular advantage of security tokens, as indicated by respondents to Greenwich Associates, was the ability to trace transaction history. Having the ability to identify the transaction history of an asset is key to many businesses. With the introduction of digital assets, risks of transaction history fraud and operational errors are expected to be significantly reduced.
Building Cyber Resilience: From Reactionary to Proactive Measures
– Moderator: Lijun Chui, Counsel, Clifford Chance Asia
– Alex Rice, Chief Technology Officer, HackerOne
– Karthik Ramanathan, Senior Vice President of Cyber & Intelligence Solutions, Asia Pacific, Mastercard
– Tobias Gondrom, Chief Information Security Officer, United Overseas Bank Limited
– Wendy Callaghan, Chief Innovation Legal Officer & Associate General Counsel, AIG
Cyber threats in the financial sector have become more prominent in recent years, as more organisations move into and expand in the digital world. Cyber threats are becoming increasingly sophisticated and targeted. The panel shed light on key learning of recent high-profile cyber breaches and also discussed emerging threats, proactive cyber defence strategies and talent development.
Rethinking of Financial Services business model to supercharge growth for stakeholders
– Moderator: Ridzuan Aziz, President, FinTech Association of Malaysia
– Andrew Watkins-Ball, Chief Executive Officer, JUMO
– Annerie Vreugdenhil, Chief Innovation Officer, ING Wholesale Banking, ING Bank NV
– Ben Goldin, Chief Technology Officer Chief Product Officer, Mambu
– John Stecher, Chief Technology & Innovation Officer, Barclays Group
Stakeholders’ expectations for financial services have changed significantly with various innovations via financial technology. One key aspect that both incumbents and start-ups are focusing on is structuring relevant business model to deliver value, viability and sustainability.
The financial services industry (FSI) has been undergoing significant changes following market developments. Most notably, the last global financial crisis, which prompted a major rethink. Consequently, the financial services landscape experienced stronger regulatory intervention from structural reforms to consumer protection and greater regional divergence among other factors. With heightened regulatory activity, banking and financial services companies across Asia are investing heavily in compliance, upgrading technologies, enhancing risk management, and implementing better governance. However, the Asian banking and financial industry are already feeling the pressure of talent shortages resulting from scarcities in critical skills, accelerating retirements, generational differences, and demographic trends.
So, given the changing business dynamics, and to completely secure an FS business that allows for stakeholder growth, treating the talent pool as a portfolio, building it, and leveraging their management skills to balance risk on the human resources side against technology is the need of the hour.
The Festival was a very insightful experience for the whole CFTE team. We are looking forward to what lessons we will learn during the Singapore Fintech Festival 2020.