Singapore as a hub for Fintech innovation

It’s never been more exciting to be working in banking in Asia Pacific. Exponential growth over the last three years has positioned Asia, and particularly Singapore, as a centre for Fintech innovation.

As local banks continue the fight against disruption, we’re excited for what 2017 will bring in this space. But will a lack of UX expertise slow things down?

Singapore has been described as the ideal test bed for fintech solutions with its unique conditions, including a mature financial market at the heart of Southeast Asia, government investment and access to a market of over 625 million people. Fintech has grown in Asia Pacific from around  $800 million in 2014 to $3.5 billion in the first nine months of 2015 (Accenture). Being a key financial hub in Asia, Singapore has big ambitions to position itself as a centre for innovation within the region.

With leadership from the Monetary Authority of Singapore (MAS), banks and start-ups are working together to establish a strong ecosystem to help protect against disruption brought about by new technologies. During the inaugural Singapore Fintech Festival in November, MAS announced regulatory support towards Fintech innovation and an overarching vision of positioning Singapore as a Smart Financial Center. MAS has set out its support for Fintech by ensuring regulation does not stand in the way of innovation and will be investing S$225m over five years to facilitate the development of infrastructure and adoption of new technology.

Bill Gates once said “we need banking but we don’t need banks anymore.” This has never been truer than as we enter 2017. With the threat from Fintech, it’s essential that financial organisations embrace new technology for the creation and provision of innovative financial products and services. Fintech is pushing existing financial players, who used to be relatively conservative, into recognising the immense potential of technological innovation, and also into collaborating with up-and-coming contenders.

Commitment to innovation

We’re seeing more local banks rolling out initiatives that embrace disruption caused by the rise of Fintech. Several major financial institutions have established labs as innovation incubators to keep pace with Fintech disruptors. OCBC Bank, DBS Bank, ANZ Bank, Citibank, HSBC Bank, Mastercard, Visa, Aviva, Allianz and Paypal have all set up innovation labs in Singapore. Facing disruption from Fintech start-ups, financial institutions are turning to faster, more agile processes to develop new product and service propositions.

DBS Bank demonstrated its commitment to shaping the future of banking with the opening of its 16,000 sq ft innovation facility – DBS Asia X (DAX) dedicated to “fostering greater collaboration with the Fintech ecosystem”. Piyush Gupta, CEO of DBS Bank, said at the opening: “DBS Asia X underscores DBS’ ongoing commitment to shaping the future of banking and embracing the future of work. It is a purpose-built facility for DBS employees from all over the region to come together, design and develop iconic customer journeys and work in close collaboration with start-ups and the broader Fintech community.” Neal Cross, Chief Innovation Officer of DBS Bank, also described how creating a “Fintech-like” workforce was important for embracing disruption.

Innovation in financial services is essential. It is the engine for improving efficiency, managing risk, creating new opportunities and ultimately for improving people’s lives. However, it is also an uncomfortable change for established financial institutions as they face the upheaval of practices and processes that have been embedded within the organisation over decades.

Fintech and UX

As we are seeing, the most successful breakthrough fintech disruptors across the world are those which place huge emphasis on the quality of the user experience. Very few successful fintech players make it without a dazzling user experience.

Very often, the aim of disruptors is to ‘break off’ a banking service (eg foreign exchange or payments), which is being delivered poorly by incumbent banks, and do it cheaper, quicker and simpler. The key to the ‘quick and simpler’ part relies on brilliant UX design. This in turn relies on a number of skill sets which are in short supply in Singapore such as user research and customer analytics, IA, Interaction design, UI and visual design.

So, whilst the banks are fighting back against Fintech disruptors their lack of a sophisticated approach to testing and deploying the user experience has the potential to slow innovation down. Banks that want to compete in the emerging landscape need to take this much more seriously than they have in the first 20 years of the commercial web.