ravi menon : fintech – harnessing its power, managing its risks panel remarks by mr ravi menon, managing director of the monetary authority of singapore, at the singapore forum, singapore, 2 april 2016. * * * fintech is fundamentally transforming the financial industry. • the smartphone is becoming our bank. • computer programmes are offering investment advice. • people can now lend directly to one another online. technology will replace many jobs in finance but will also create exciting new jobs. • calls for new and different skill sets – understanding technology and the ability to work with and harness the power of machines and algorithms • as someone in silicon valley put it, “ the geek shall inherit the earth ”. unregulated fintech companies are now providing many financial services. they will challenge traditional financial institutions ( fis ), disrupt and even displace some of them but will not replace them. • banks and insurance companies have something that unregulated entities do not have – trust. trust based on a track record of performance. • fis are not sitting still. – they are actively harnessing technology to enhance product offerings and improve efficiency. – they are setting up in - house fintech units to replicate the start - up mentality. many global banks have set up “ innovation labs ” in s ’ pore : citibank, stanchart, ubs, hsbc, to name a few. and insurance companies too : aviva, aon, axa, metlife. – they are also collaborating with or buying over fintech companies to tap their technologies. financial technology, or fintech, may well be the best hope for the future of finance. • the financial industry is facing many headwinds – • slower economic growth, narrower margins, tighter regulation, and greater competition from outside. fintech can potentially help the financial industry regain its dynamism and at the same time purposefully serve the economy and the people. but the fintech phenomenon is not without risk. • the rapid pace of innovation and adoption throw up many questions for the industry and financial regulators. • what should be the policy approach? will speak from the perspective of mas. first – take a differentiated approach to different technologies and their applications. fintech encompasses a wide range of technologies : we cannot take a “ one - size - fits - all ” approach. the nature of technologies, their benefits, and risks are very different. bis central bankers ’ speeches • digital payments, digital currencies –

see the ecb ’ s website at http : / / www. ecb. int / stats / finint / html / index. en. html. the ecb regularly produces statistics on yields and volumes in the step market and publishes them on its website. see http : / / www. ecb. int / stats / money / step / html / index. en. html # data. the data are published weekly on the first business day of each week, referring to each day of the previous week. with respect to bond markets, euro area cross - border holdings of long - term debt securities have increased strongly – from about 10 % at the end of the 1990s to nearly 60 % in 2005 – suggesting that investors are increasingly diversifying their portfolios across the euro area and, therefore, that the euro area government bond market has reached a very advanced stage of integration. finally, the quantity - based measure of euro area equity market integration also indicates a rising degree of integration in the equity markets. between 1997 and 2005, euro area residents doubled their holdings of equity issued in another euro area country to reach nearly 30 %. this implies that, following the introduction of the euro, euro area investors have significantly reallocated their equity portfolio from domestic holdings to holdings elsewhere within the euro area. as a remaining challenge to the integration of euro area securities markets, i note that the euro area securities clearing and settlement infrastructure is not yet sufficiently integrated, although several initiatives are underway. last november, for example, at the european commission ’ s request, the relevant european industry associations and their members signed a “ european code of conduct for clearing and settlement ”, which aims to foster competition and efficiency of clearing and settlement in the eu. the ecb welcomes this initiative and acknowledges the commitment by the industry. in this respect, let me also mention that the eurosystem considers developing a single platform for the settlement of securities in central bank money – the so - called target2 - securities. the scope of this project is restricted to the settlement layer of the post - trading activity regarding securities settled in central bank money. the next step will be the definition of user requirements which will benefit from a public consultation. last but not least, i would like to mention the retail banking markets, which are less integrated than the other euro area financial market segments. however, we also see progress in some fields. for example, the current fragmentation of the european retail payment infrastructures is being addressed by the so - called