The Monetary Authority of Singapore (MAS) announced today that it has issued a proposal for a regulatory sandbox for fintech startups and pilot schemes.
Companies will be able to test new financial services in a more relaxed regulatory environment.
The aim of the proposal is to make it easier for financial institutions and other companies to experiment with fintech offerings in the future.
In June 2015, Head of MAS, Ravi Menon, first suggested “innovation in a sandbox” as an approach for innovation in financial services. Today’s announcement is a further step towards implementing this plan.
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Although the fast-evolving fintech landscape encourages financial institutions to test out new innovations, there are occasions where it is not particularly clear if the fintech offering complies with regulatory requirements or poses unacceptable risks. The MAS said that this uncertainty may hinder promising innovations and could result in missed opportunities.
With the regulatory sandbox, companies will be able to test new financial services in a more relaxed regulatory environment but within a well-defined space and duration.
Fintech services will then be able to be assessed on criteria such as its innovation, if the company intends to deploy the solution on a broader scale and if the service brings benefits to consumers and the industry, according to the MAS.
MAS deputy managing director Jacqueline Loh commented: “MAS aims to provide a responsive and forward-looking regulatory approach that will enable promising fintech innovatons to develop and flourish. The sandbox will help reduce regulatory friction and provide a safer environment for fintech experiments. We believe this will give innovations a better chance to take root.”
MAS hopes that the sandbox will help to boost innovation in Singapore’s banking sector. It follows the establishment of SG-Innovate by the Singapore government in April this year which is similarly designed to bolster Singapore’s ambition to be the fintech hub for Asia-Pacific.