Singapore has established itself as one of the regional fintech leaders in the Asia Pacific region, with millions of investment capital flowing into the city-state from a large number of international backers. One of the foreign players to step into that market is transaction data specialist Intix.
Andreas Rudorfer, the company’s Regional Director of APAC, spoke with Payment Expert about the region’s financial intricacies and what it’s like to be part of the largest fintech festival in Singapore.
Payment Expert: Firstly, can you tell us about fintech in Singapore and how the region competes with others?
Andreas Rudorfer: Singapore is one of the most important finance hubs in the Asia Pacific (APAC) region, which makes it attractive to a lot of fintech companies. It’s reached this point thanks in part to the support that companies receive from the Singaporean government.
The government supports companies who want to start their businesses in Asia through effective subsidisation and providing a world-class fintech hub and a solid regulatory environment. However, this is only one of the reasons why the region continues to grow as a fintech hub.
The increase in companies entering the region’s fintech community has also increased competition giving local banks a choice of best of breed solutions, which are helping to accelerate innovation. Other countries across Asia are now looking towards Singapore for inspiration and the country stands out as something of a role model.
Something else that makes Singapore stand-out amongst other APAC countries is that it has allowed foreign fintech companies to act equally with local companies in Singapore. In turn, this helps to make the region more inviting to foreign businesses, and differentiates Singapore from countries like Indonesia and India who have opted for a different approach that prioritises the performance of local companies.
PE: Fintech funding in the APAC region has slightly declined this year compared to previous periods. Why do you think that is, and are there any prospects that investment will climb back up soon?
AR: The COVID-19 pandemic has significantly impacted the IT strategies of financial institutions, necessitating a rapid shift towards digital solutions. This shift was essential to accommodate the new reality where in-person client interactions became unfeasible. For instance, prior to the pandemic, private banks heavily invested in tablet-based solutions to assist relationship managers in client meetings. However, the pandemic restrictions required a transition to web-based, self-service solutions.
These emergency investments, although critical, diverted funds from other important initiatives. A notable example is the delayed implementation of ISO20022 standards, which suffered due to the reallocation of resources. Moreover, recent geopolitical tensions have added to the market’s uncertainty. This has potentially led banks to adopt a cautious stance, postponing further investments until there is more clarity on the macro-economic front.
PE: Given that APAC countries have historically been a prominent target for fraud, how can data be utilised to maintain investor trust in the region’s payments sector?
AR: The shift towards instant payments, a trend increasingly evident in retail and now extending to wholesale payments, has introduced new avenues for fraudulent activities. In this environment, payments are rapidly transferred to beneficiaries, and once executed, retracting a fraudulent transaction becomes exceedingly difficult.
In light of these challenges, data assumes a pivotal role. Detailed transaction information, particularly regarding the end beneficiary, is essential for effective anti-money laundering (AML) and sanction screening processes. The aim is to intercept and prevent dubious payments before they are processed.
A key development in this area is the introduction of ISO20022 messages by SWIFT, which offer more comprehensive data. However, banks are still evolving their systems and processes to fully leverage this enriched data.
PE: How crucial do you think data management and cross border payments are when it comes to connecting the APAC region with the rest of the world?
AR: Asia’s robust global trade connections and the high volume of remittances necessitate the presence of efficient cross-border payment systems. Recognizing this need, governments and regulators across the APAC region are actively driving initiatives to enhance these systems.
Notable examples include: the integration of Singapore’s PayNow with Thailand’s PromptPay (which facilitates real-time retail transactions) and Australia’s New Payments Platform (NPP), which was originally designed for domestic payments but now also looks at cross-border payments. Additionally, Swift’s Global Payments Innovation (GPI) is playing a significant role in improving cross-border transactions within the correspondent banking network, particularly for payment instructions of corporates.
While these initiatives significantly accelerate payment processing, the importance of data management cannot be overstated. It is crucial to ensure that transactions conducted over these rapid networks are thoroughly scrutinized before leaving the bank. This vigilance is key to preventing potential financial crimes or fraud in the fast-paced world of modern banking.
PE: In what way do you see AI changing the financial sector and how impactful will it be for data management and cross-border payments?
AR: AI will definitely play an important role in the financial sector going forward. Right now, there are a lot of use cases for the ways that AI can improve AML systems. In addition, banks need to make sure that their internal systems are efficient and fast enough to process payments quickly and the transactions are not held up within the internal complex payment infrastructure. AI can help with all of this.
Drawing from my personal experience at Intix, we predict whether a payment will meet its Service Level Agreements (SLAs) and Key Performance Indicators (KPIs). This predictive capability allows us to identify and address potential delays in the payment process proactively, ensuring operations can intervene before any late payments impact the customer.
PE: What do you believe will be some of the big payment innovations to come out of Singapore?
AR: Due to its relationships with its neighbours throughout APAC, Singapore is on the cusp of perfecting real-time, cross-border payments, not only for retail but also for wholesale and high value payments. Moving forward, a bank that is unable to send a payment cross-border in close to real time will no longer be competitive. The time of waiting several days before it arrives on the beneficiary account will be over.
PE: Being one of the attendees at the Singapore Fintech Festival, what opportunities does this bring for companies like Intix?
AR: The Singapore Fintech Festival, attracting over 60,000 visitors, presents a significant opportunity for Intix to engage with a vast pool of potential clients and showcase our innovative solutions. Intix specialises in providing real-time visibility into payment transactions, a crucial tool for banks to identify and address bottlenecks in their internal payment flows. This capability is particularly vital in ensuring the efficiency of the new faster payment rail initiatives.
A major challenge in the financial sector is the delay in cross-border payments due to internal system inefficiencies, even with the advent of new, faster payment rails. Intix offers a solution to this problem by ensuring that payments do not get stuck within a ban’s internal systems. Given the critical importance of cross-border payments in the APAC region, the Singapore Fintech Festival serves as an ideal platform for Intix to demonstrate how our solutions can significantly benefit banks and financial institutions.
