one another. • as part of this evolution, a new wave of next - generation cyber security solutions is emerging, in areas such as trusted computing, security analytics, threat intelligence, active breach detection, and intrusion deception. • the financial industry needs to keep abreast of these developments. while seeking to ensure cyber security, mas ’ s regulatory approach towards fostering innovation and the adoption of new technologies will take three forms. first, innovation owned by fis. in matters of innovation, time to market is critical. fis are free to launch new ideas without first seeking mas ’ endorsement, as long as they are satisfied with their own due diligence. • a recent case that went on this approach was a mobile banking application that utilised fingerprint authentication for balance enquiries. • the bank went ahead, did not need mas approval. what does this approach entail? • fis ’ board and management should take the responsibility to ensure that the risks of new innovative offerings are well identified and managed. • the compliance people should ideally be involved early in the innovation process. however, they should avoid second - guessing mas by taking an overly conservative stance that might nip innovation in the bud. • if the fi encounters a specific issue on which it needs mas ’ guidance, we will be happy to help. • but the fi must offer its own assessment of the risks in what it proposes to do and take ownership for its decisions. • it cannot rely on mas to do its due diligence. second, innovation in a “ sandbox ”. sometimes, it is less clear whether a particular innovation complies with regulatory requirements. in such cases, fis could adopt a “ sandbox ” approach to launch their innovative products or services within controlled boundaries. • the intention is to create a safe space for innovation, within which the consequences of failure can be contained. • fis can seek mas ’ guidance and concurrence on the boundary conditions – for example, the time period, customer protection requirements, etc. third, innovation through co - creation. mas has a long tradition of active consultation with industry on proposed new rules or initiatives. more recently, we have engaged industry players more directly to co - create rules and guidance – in other words, to jointly come up with proposals. • an example is the private banking industry code – developed by industry practitioners but in close consultation with mas. • such co - creation is particularly relevant for developing rules or guidance on new technologies whose benefits and risks are

• they are increasingly turning towards innovation and technology for solutions. bis central bankers ’ speeches • in an ironic way, the fintech insurgency is forcing change among the incumbent fis. leveraging on their size and networks, fis are using technology much more intensely to enhance their product offerings and service delivery. • example : us insurance companies, progressive and allstate, are using telematics to develop usage - based motor insurance, also known as pay - as - you - drive ( or payhow - you - drive ). • instead of rewarding past good driving behaviour, these insurers are able to price premiums contemporaneously with current driving habits. what does all this mean? as a powerpoint slide used by a fintech company in silicon valley rather immodestly proclaims : “ the geeks shall inherit the earth! ”. it is no doubt an exaggeration. but the message is clear : • in the years ahead, countries, businesses, and people who know how to use technology and innovate will have a keen competitive advantage. why this time is different now, have we not heard this story before – that technology will transform banking and then nothing changed fundamentally? indeed there have been false starts in the past. • in the 1990s, we thought that electronic money would replace cash and cheques. that has not happened. – • in most parts of the world, including the us, japan, europe, and singapore, notes and coins in circulation outside banks has been increasing steadily every year. in 2000, some of us were quite sure that internet - only banks would eventually replace brick - and - mortar branches. this too has not happened. the most obvious evidence that both beliefs were manifestly wrong occurs year after year, when lines of singaporeans form at bank branches to obtain new notes for “ angpows ”, to be given out during the chinese new year celebrations. • but this year, however, we saw “ e - angpows ” being given out for the first time. • could this be a sign of things to come? technology takes time to proliferate. more importantly, it is the interaction among related technologies that often creates transformation – and that takes time. there is reason to believe that this time is different : that technology will indeed transform financial services in a way that has not happened before. it has much to do with the concept of mobility. first, mobility of technology. • mobile devices, such