Asia Pacific’s financial centers are in a unique position to be leading innovators and adopters of FinTech solutions – particularly so-called RegTech (regulatory compliance technology) – that could reshape the financial services landscape.
So said Brad Levy, CEO of MarkitSERV and global head of loans at IHS Markit, at last week’s Singapore FinTech Festival on the future of FinTech. Levy said the very diverse nature of Asia Pacific markets presents enormous opportunities for development of FinTech solutions.
“Improving access to capital markets and banks, regulatory changes, and extra-territorial data requirements are three major driving forces that make FinTech solutions a must for many financial institutions operating in multiple markets,” he said.
“Fintech also gains impetus from Asian regulators that recognize the potential of FinTech, and are actively promoting the sector’s development, in particular Singapore, where the Monetary Authority of Singapore (MAS) is actively guiding the development of the ecosystem,” he added.
Levy observed that Singapore is a natural incubator for FinTech, and more specifically RegTech, given its unique position to serve as regional headquarters for many financial institutions that require a higher degree of technology to run efficiently their multiple operations across many of Asia Pacific’s regulatory jurisdiction.
“On top of local regulatory rules, MiFID II, FATCA, Dodd Frank and the Common Reporting Standard (CRS), are other regulatory mandates that local technology firms are grappling with, together with the help of innovation hubs and industry partnerships,” Levy said. “RegTech offers innovative solutions in a cost efficient, scalable and risk appropriate manner.”
Levy said that IHS Markit expects RegTech to increasingly automate compliance. “The industry is excited about predictive analytics, artificial intelligence and blockchain because they are technologies that will enable a real-time, autonomous compliance framework. The goal is to reduce costs while achieving higher standards of regulatory compliance.”
However, Levy advised, collaboration between emerging and established players is going to be key factor towards developing the next generation of compliance technology. As an example, he cited a collaboration between Identitii and KYC.com, an IHS Markit joint venture utility that manages “know your customer” (KYC) data. The collaboration led to the submission of a proposal that was selected as one of twenty entrants that were presented at the Singapore FinTech Festival via its Global FinTech Hackcelerator initiative.
David Williams, director of Regulatory & Compliance Services at IHS Markit said, “We partnered with Identitii to propose a solution using distributed ledger technology. We brought our ability to manage ‘know your customer’ data to the table. The verified data from KYC.com will enrich Identitii’s payment instructions with identification information. The resulting integrated solution will enact payments while simultaneously allowing for greater anti-money laundering [AML] oversight through the process lifecycle. We believe this is the type of timely and much needed innovation that industry leaders could encourage via collaboration.”