Ravi Menon: FinTech for an inclusive society and a sustainable planet
Central bank: mas | Type: speech | Date: 2020-12-08

## Ravi

Menon:

FinTech

for

an

inclusive

society

and

a

sustainable planetRemarks by Mr Ravi Menon, Managing Director of the Monetary Authority of Singapore, at the Singapore FinTech Festival 2020, Singapore, 8 December 2020.*

*

*Welcome to the fifth edition of Singapore FinTech Festival and SWITCH.- More than 60,000 participants from over 130 countries have joined us in the world's first week-long-round-the-clock hybrid digital and physical event.- Let me also welcome participants of the Milken Institute Asia Summit joining us.

## FinTech as a Force for GoodWe are in the midst of three global crises - a pandemic; a recession; and climate change.- Covid-19 has infected 67 million people and taken the lives of 1.5 million across the world.- The global economy has plunged into its worst recession since the Second World War.- One in five people in the world were affected by climate disasters in the last decade.But as Albert Einstein said, 'In the midst of every crisis, lies great opportunity.'Two themes have consistently come up in discussions on how we can build back better as we emerge from the Covid-19 crisis:- creating an inclusive society;- ensuring a sustainable planet.

## The pandemic and economic crisis have laid bare the inequalities in our societies.- The digitally enabled are able to order food and buy things online, borrow or invest money, and largely carry on with their lives; for the digitally excluded, it was a lot more difficult.- The restrictions on mobility have affected small businesses more than large firms - which typically have recourse to digital platforms and are able to implement remote working.

## The pandemic has also sensitised us to how vulnerable we all are to the forces of Nature.- If we do not act decisively to limit the increase in global temperatures, we are putting at risk the future of our children and grandchildren.- It is perhaps this realisation that has helped to make 2020 a record year for climate pledges - despite being in the midst of the Covid-19 pandemic and economic crisis.- The

number

of

commitments

by

governments

and

businesses

to

reach

net

zero emissions has almost doubled in less than a year.

## The crisis has also demonstrated the power of technology to help find solutions to difficult problems .- From making vaccines to contact tracing, from online learning to telemedicine, technology has been at the forefront in the fight against Covid-19 and its effects.- Likewise, technology can play a potent role in shaping the post-Covid world.

## FinTech in particular has great potential to be a force for good.BIS central bankers' speeches- We can bring together the power of finance and technology, to help create a more inclusive society and a more sustainable planet.

## FINTECH FOR AN INCLUSIVE SOCIETY - INDIVIDUALSLet me begin with what FinTech can do for an inclusive society, using Singapore as an example.

## This

is

the

vision:

every

citizen

and

every

enterprise

digitally

enabled

and

financially included.I will highlight four ongoing initiatives for the financial and digital inclusion of individuals.- pervasive electronic payments- affordable cross-border remittances- timely health insurance claims- holistic financial planning

## Pervasive Electronic PaymentsFundamental to the digital inclusion of individuals and to the success of a digital economy is the ability to make an electronic payment.- By broadening access

to

a

common,

inter-operable

e-payment

infrastructure ,

we extend the benefits of a digital economy to a wider range of users.- Singapore's retail e-payment infrastructure - FAST - enables 24/7 real-time fund transfers through the banking system.- PayNow

-

which

rides

on

FAST

-

allows

us

to

send

money

to

the

bank

accounts

of individuals

using

just

their

mobile

phone

numbers

or

personal

ID

numbers,

and

to businesses using their unique entity numbers.This secure, inter-operable e-payment infrastructure has supported a boom in e-commerce and a variety of online services , especially after Covid-19.- Four

out

of

five

individuals

and

three

out

of

four

active

businesses

in

Singapore

have adopted PayNow.- PayNow monthly transaction values have crossed the US$3 billion mark - a four-fold jump from July 2019.From

February

next

year, our

e-payment

infrastructure

will

be

extended

to

non-bank

ewallet payment providers .- E-wallet users will be able to transfer funds in real-time between their e-wallets and their bank accounts, and across different e-wallets.- This completes the last mile in

Singapore's journey to create an open and accessible epayment ecosystem.

## Affordable Cross-Border RemittancesBut making payments abroad continues to be slow, costly, and inefficient.- Singapore is home to many foreign nationals and migrant workers who send money back to their home countries frequently.- If we can make cross-border remittances cheaper and faster , our migrant workers can provide better and more timely support for their families.BIS central bankers' speechesThree years ago, the Monetary Authority of Singapore (MAS) embarked on a pioneering journey with the Bank of Thailand: to link our respective national faster payment systems - PayNow in Singapore, and PromptPay in Thailand.I am happy to say that the PayNow-PromptPay linkage will go live by mid-2021 .- Anyone who registers for PayNow or PromptPay will be able to send money directly from Singapore

to

Thailand,

or

vice

versa,

using

just

their

mobile

phone

numbers

-

instantly, securely, at competitive rates, and at any time of the day.- This linkage between two countries' national faster payment systems will be the first-of-itskind in the world .- We will start off with a small group of banks on both sides, and scale up participation to include more banks and non-bank providers over time.MAS is keen to partner other central banks in the region to expand the linkage, so that more people across Southeast Asia can benefit.

## Timely Health Insurance ClaimsNext, pain points relating to making an insurance claim for hospitalisation .- Today, an individual being hospitalised may face uncertainty over his claimable insurance amount.- Hospitals have to access multiple systems to request for or provide information to different insurers; and some of these processes are still paper-based.To enable more

efficient

claims

processing ,

we

are

building

a technology

platform

to securely share data with patient consent .- MAS, the Ministry of Health, and the Integrated Health Information Systems are collaborating with the insurance and healthcare sectors to build this platform.- It will help to reduce duplicate claims, manual errors, and processing time.- We will conduct a live pilot next year.

## Holistic Financial PlanningFinancial inclusion is not just about having access to financial services.

It is also about empowering individuals with information and tools to make best use of financial services .Today, our personal financial information - our deposit accounts, investment holdings, pension statements, insurance coverage, and so on - is fragmented across multiple entities.- Putting together this information is not easy.- But if we don't have a consolidated view of our financial portfolio, how can we do holistic financial planning?Yesterday,

Deputy

Prime

Minister

Heng

Swee

Keat

announced

the

launch

of

the

Singapore Financial Data Exchange, or SGFinDex for short.- SGFinDex is jointly developed by MAS and the Smart Nation and Digital Government Group, together with the key retail banks in Singapore.- It will enable individuals to consolidate their financial information residing in different banks and government agencies .BIS central bankers' speeches- This is only the first step.

We are working to expand SGFinDex to include data from the Central Depository as well as data from insurance companies to enable individuals to have a more complete view of their financial status.SGFinDex underscores an important principle: your personal financial information belongs to you, and you should be able to have a consolidated view of that information .

## SGFinDex could well transform financial planning in Singapore .- By breaking down information silos, it will enable more holistic financial planning.- Authorised financial institutions will have to compete harder among themselves to provide quality financial planning services to their customers.- It will empower and enable Singaporeans to enhance their financial well-being .

## FINTECH FOR AN INCLUSIVE SOCIETY - SMALL AND MEDIUM ENTERPRISESBesides individuals, small and medium enterprises are the other focus of Singapore's FinTech agenda for a more inclusive society.- An

effective

way

to

enhance

the

digital

inclusion

of

SMEs

is

to

get

them

plugged

into common

digital

platforms

that

will

enable

them

to

enhance

efficiency

and

expand

their business opportunities.I will highlight how digital platforms are helping Singapore SMEs in three areas:- seamless cross border trade- enhanced access to global opportunities- efficient multi-currency payments and settlements

## Seamless Cross Border Trade Networked Trade PlatformIn a small market like Singapore, to achieve scale, SMEs will have to sell their goods or services overseas.- But cross-border trade can be painfully complicated.- It

involves

multiple parties: from government agencies, logistics and services providers to trade financiers and insurers, and countless documents often with duplicative data.Singapore Customs has developed the Networked Trade Platform, or NTP for short.- NTP is a one-stop trade and logistics ecosystem which digitally connects players across the trade value chain - in Singapore and abroad.- All documents are digitised and the process is digitalised end-to-end.- NTP

enables

SMEs

to share

information

quickly

and

securely with

multiple

parties connected within the platform.- It also enables SMEs to apply for trade financing with multiple banks through a single application portal .

## Enhanced Access to Global Opportunities Business sans BordersIt's not just cross-border trade that SMEs have to contend with.- They have to look abroad for business opportunities, for suppliers and customers.- They have to manage procurement, logistics, and supply chains, also across borders.To

address

these

pain

points,

MAS

and

the

Infocomm

Media

Development

Authority

have together developed Business Sans Borders, or BSB for short.- BSB

is

designed

to connect

different

platforms

globally

to

help

SMEs

seamlessly access a much larger ecosystem of buyers and sellers .- It

uses

Artificial

Intelligence

(AI)

to

introduce

to

SMEs

essential

financing

and

business solutions from service providers across the BSB network.- For example, a Singaporean SME seller of kueh lapis, a type of traditional cake, was able to use the pilot BSB platform to connect and trade seamlessly with SME buyers on platforms in India and the Philippines.- BSB also intuitively matched the seller with a local

FinTech firm which provided preshipment financing support for the trade.I am happy to announce that BSB has been operationalised by a private entity Proxtera and is starting its live beta during this Singapore FinTech Festival .

## Efficient Multi Currency Payments and Settlements Project UbinNext, making cross-border payments and settlements cheaper and faster for SMEs.- This has been MAS' clarion call since five years ago, when we embarked on Project Ubin to explore the use of blockchain technology to solve one of the biggest pain points for SMEs.- The industry consortium and MAS completed the final phase of experimentation in July this year,

when

we successfully

tested

a

blockchain-based

prototype

for

multi-currency settlement .- We

have

also integrated

commercial

applications ,

such

as

trade

and

supply

chain financing, with blockchain-based payment functionalities .Industry players are now moving from experimentation towards commercialisation .- DBS Bank, JP Morgan, and Temasek are leading the development of a digital multi-currency payments network aimed at enhancing commercial cross-border clearing and settlements globally.

Pilot trials will commence next year.- The

goal

of cheaper cross-border payments that settle round-the-clock and in realtime is drawing closer.

SMEs will greatly benefit when this becomes a reality.

## FINTECH FOR A SUSTAINABLE PLANETLet me move on to my second big theme: ensuring a sustainable planet- FinTech can play an influential role in helping to advance the sustainability agenda.- Finance fuels the economy, shapes investment decisions, and drives action.- Technology provides solutions to channel finance towards the cause of sustainability.Singapore is deeply committed to global efforts to mitigate climate risk .

We contribute in two ways:- making Singapore more sustainable; and- helping Asia become more sustainable.

## Sustainable SingaporeBIS central bankers' speechesFor a sustainable Singapore, we are gradually changing the way we live and work, often with the help of technology.

## We are making our residential precincts more energy efficient .- In

the

upcoming

Punggol

Digital

District,

businesses

will

be

connected

to

a

network

of sensors

collecting

real-time

data

on

solar

generation,

building

occupancy,

rainfall

and humidity.- They can use this information to optimise their energy usage.

## We are shifting towards cleaner energy .- Despite its small size, Singapore is determined to harness more solar energy.- We are innovating with applied photovoltaics on building facades and floating solar panels on offshore waters.- Singapore is accelerating the deployment of electric vehicles and aims to phase out by 2040 all internal combustion engine vehicles.

## We are building a Circular Economy where resources are re-cycled .- Singapore collects every drop of used water, treats and purifies it, and turns much of it into clean water again.- We are beginning to recycle food waste into sustainable animal feed, and waste plastic into alternative fuels.

## Asia's Transition to Deeper Shades of GreenAs

a

champion

of

sustainable

development,

an

international

financial

centre,

and

a

leading technology hub, Singapore is well-placed to support Asia's journey towards sustainability .Why Asia?

Because Asia accounts for about half of global greenhouse gas emissions.But Asia's transition to a low carbon future has to be consistent with its economic and social development .- Asia is at a different starting point from Europe - millions of people still do not have access to electricity.- Fossil fuels are still the cheapest way to generate energy in many parts of Asia.- Yet, there is scope for energy-efficient technologies and renewable energy solutions.- Asia's transition to sustainability will be progressive - through deeper shades of green.Let me describe three ways in which Singapore aims to support Asia's transition towards greater sustainability:- Asian Carbon Credit Market- Green Finance Action Plan- Green FinTech

## Asian Carbon Credit MarketGiven Asia's continued dependence on fossil fuels, an Asian carbon credit market must be part of the strategy to achieve both development and sustainability in Asia.Carbon credits are increasingly seen as a complement to firms' de-carbonisation efforts.BIS central bankers' speeches- Global demand for voluntary carbon credits is expected to grow 10 times over the next 10 years , from 100 million tonnes of CO2 equivalent in 2019 to over 1 billion tonnes in 2030.- But today, carbon credit markets are fragmented, liquidity is thin, and carbon prices vary across markets.We need global coordination to scale up the voluntary carbon credits markets .- We need more high-quality carbon credits and more trading of such credits across borders to drive convergence towards a global price on carbon.- We need to put in place infrastructure and data connectivity to ensure environmental integrity and avoid double counting of credits.A private sector led coalition in Singapore has identified an opportunity to develop an Asian voluntary carbon credit market at large scale .- The

Sustainability

Alliance

for

Action,

set

up

under

the

Ministry

of

Trade

and

Industry's Emerging Stronger Taskforce, has proposed developing a market ecosystem for voluntary carbon credits.- Such an ecosystem can facilitate price discovery, improve liquidity, and verify the integrity of carbon credits.The

Sustainability

Alliance

has

proposed focusing

on

carbon

credits

generated

through nature-based solutions .- Nature-based

solutions

are

measures

taken

to

protect,

sustainably

manage,

and

restore ecosystems ….- … measures such as re-forestation and restoring peatlands and mangroves, to sequester carbon and improve biodiversity.Nature-based solutions are an attractive proposition.- They can contribute significantly to climate change mitigation and adaptation .- Studies

show

they

can

potentially

provide

more

than

30%

of

the

carbon

mitigation needed globally between now and 2030.- Nature-based solutions also contribute to positive

social

outcomes such as biodiversity, job creation, and improved public health.There

is potential in Southeast Asia to generate a large volume of good quality carbon credits through nature-based solutions .- According to a study by the National University of Singapore, Southeast Asia has about 120 million hectares of land suitable for re-forestation.The

Sustainability

Alliance

has

also prototyped technology solutions to address problem statements in the voluntary carbon credit market.

Some examples:- Testing the use

of

artificial

intelligence

to

extract

key

data

from

lengthy

project documents into more accessible and comparable formats.- Market participants can then use this standardised information to assess the value of projects and price them better.- Testing the use

of

remote

sensing

technology

combined

with

satellites

to

moreBIS central bankers' speeches

## accurately verify carbon sequestration .- This

is

important

to

ensure

that

credits

issued

from

a

project

represent

real

and measurable reductions in emissions.Complementing

the

Sustainability

Alliance,

DBS

Bank,

Temasek,

the

National

University

of Singapore,

and

Conservation

International

have

come

together

to research

nature-based solutions .- I

am

pleased

to

share

that

they

launched

just

this

morning

a joint

report

studying

the commercial viability of nature-based solutions .Temasek

and

DBS

Bank

are

leading

a

six-month Technology

Accelerator

for

start-ups interested to use technology to scale nature-based solutions .- The National University of Singapore, the World Bank, and Google have come on board as partners to the Accelerator.International co-operation remains key to growing the Asian carbon credits market.- The Task

Force

for

Scaling

Voluntary

Carbon

Markets ,

sponsored

by

the

Institute

of International Finance,

has

launched

a

consultation

paper

outlining

17

very

sensible recommendations.- Singapore

is

keen

to

work

with

like-minded

countries

and

businesses

to test-bed

the recommendations of the Task Force …- … and to start laying the foundations for a viable carbon credits market in Asia.

## Green Finance Action PlanThe second way in which Singapore seeks to facilitate Asia's transition to a sustainable future is through the Green Finance Action Plan, which MAS launched at the FinTech Festival last year.The Green Finance Action Plan comprises four strategies:- strengthen the financial sector's resilience to environmental risks;- develop green financial solutions and markets for a sustainable economy;- build knowledge and capabilities in sustainable finance; and- harness technology to enable trusted and efficient sustainable finance flows.Let me briefly outline the progress we have made under the first three strategies and spend a bit more time on the last - on harnessing technology.First, strengthening the financial sector's resilience to environmental risks .- Later today, MAS will issue finalised guidelines for financial institutions to manage their environmental risks .- The Guidelines are among the first of its kind in the Asia-Pacific to apply to all financial institutions , across banking, insurance, and asset management.- The Guidelines are comprehensive, covering

environmental

risks

besides

climate change - such as pollution, loss of biodiversity, and changes in land use.- MAS will assess environmental risk in our supervision of financial institutions and conduct by end-2022 industry-wide stress tests on the impact of climate risks.Second, encouraging the development of green financial products and solutions .

MAS is:BIS central bankers' speeches- providing

grants

to

offset

the

certification

costs

of

issuing

green

and

sustainability-linked bonds and loans;- promoting insurance solutions for climate risks;- attracting green funds and asset managers with a sustainability focus; and- anchoring providers of sustainability rating and verification services.

## Third, building knowledge and capabilities in sustainable finance .- We are working to anchor in Singapore centres of excellence to undertake Asia-centric research on green finance and build a talent pipeline .- In October, we announced the launch of the first research and talent development institute focused on green finance - the Singapore Green Finance Centre - a collaboration between Singapore Management University and Imperial College Business School.

## Green FinTechFinally,

let

me

focus

on

the role

of

FinTech

in

enabling

trusted

and

efficient

sustainable finance flows .

We call it Green FinTech.For

this

year's

Singapore

FinTech

Festival,

the FinTech

Innovation

Challenge focuses

on challenges faced by financial institutions with respect to sustainability and climate risks.- The enthusiasm for applying FinTech to sustainable finance has been overwhelming.- We received more than 600 submissions from over 50 countries - the highest number of submissions since the Innovation Challenge began in 2016.MAS

is

pleased

to

announce

we

will

be

embarking

on Project

Greenprint

-

a

technology platform aimed at promoting a green financial ecosystem .- Project Greenprint aims to strengthen three key elements in that ecosystem:- mobilise capital; monitor commitment; measure impact.

## First, mobilise capital .- SMEs and

FinTech

firms

working

on

green

and

sustainable

projects

often

face

difficulty accessing capital in an efficient manner.- Project Greenprint provides a platform for these firms to connect with financial institutions and investors to access a wider pool of capital and green solutions.

## Second, monitor commitment .- Investors

and

financial

institutions

supporting

green

projects

must

be

able

to

monitor whether the projects are indeed meeting their sustainability commitments.- Project Greenprint aims to deploy technology at different stages of the supply chain to better monitor commitment to the relevant green standards and requirements .- For example, Internet-of-Things (IoT) devices could be deployed on-site to directly capture and assess relevant real-time data, such as energy and water consumption, by borrowers, portfolio companies, and suppliers.

## Third, measure impact .- Investors

and

financial

institutions

want

to

measure

the

impact

generated

from

their investment and loans against their sustainability targets or goals.BIS central bankers' speeches- Project

Greenprint

will explore the application of AI and other technologies on thirdparty data sources ,

such

as

ratings

services

and

crowd-sourcing,

to quantify the ESG impact of potential investments and loan portfolios.We will establish a consortium of financial institutions, FinTech firms, and industry players with expertise in Green FinTech to drive Project Greenprint.- The consortium will help to identify specific use cases where technology can play a role in addressing the three pillars of Project Greenprint.- We will be showcasing some of these use cases, as well as the potential solutions, during the Impact Summit tomorrow.MAS

will earmark

20%

of

the

Financial

Sector

Technology

and

Innovation

budget,

or US$37 million out of US$185, to support Green FinTech projects .- The

funding

can

be

used

to

support

proofs-of-concept,

innovation

labs,

industry-wide utilities, and technology platforms focused on Green FinTech.

## ConclusionLet me end where I began.Rising

inequality

is

the

major

fault

line

in

many

societies.

Climate

change

is

the

existential challenge facing our planet.The Covid-19 pandemic and economic crisis has, in a way, helped to focus our minds on these two issues.

There is a growing consciousness across the world that if we do not act now and act decisively, we will put our future at grave risk.This crisis presents us an opportunity to create a more inclusive society and a more sustainable planet.Finance, Technology, and FinTech can be powerful enablers in this endeavour.

Everything we do in Finance, Technology, and FinTech must have a larger purpose.What greater purpose can there be than making our societies more inclusive and our planet more sustainable?