What The FinTech : Weekly Update 31 Jan 2021

Happy Sunday and Welcome back to What The FinTech, your regular FinTech & Innovation Newsletter focusing on Hong Kong & Asia ! Here are the selection and the top headlines for this week.

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Crypto - Digital Assets

BIS Innovation Hub targets CBDCs and green finance in 2021

An investigation into the use of multiple wholesale CBDCs for cross-border payments and a DLT prototype for the distribution of tokenised green bonds to retail investors are among the projects on the agenda this year for the Bank for International Settlements Innovation Hub. For the year ahead, the hub has identified six key areas it will work on in an effort to foster collaboration among central banks on financial technology: suptech and regtech; next-generation financial market infrastructures; CBDCs; open finance; cyber security; and green finance. The hub will also work on a proof of concept for a regulatory reporting platform employing data analytics and visualisation to provide supervisors with deeper and more timely insights to address risks, and a research project and associated prototypes for tiered retail CBDC distribution architectures. 

Secure Messaging App Signal Reportedly Toying With Crypto Payments

Signal is actively developing payment features relating to a Stellar-based, privacy-focused cryptocurrency called MobileCoin. Like the Facebook-backed Diem (formerly Libra) project, MobileCoin has been touted internally as a way to make it easier for people in developing nations to move money around, per the report. The app is also said to be working on allowing customers to have unique usernames amid concerns about its current use of mobile phone numbers as the basis for accounts. However, employees at the firm fear the additions may open the app up to abusive behaviour and bring negative attention to the app and encryption technologies from regulators. 

HONG KONG

SAP Hong Kong, Deloitte Team On Cross-Border Trade Tool

Software giant SAP Hong Kong and consulting powerhouse Deloitte have partnered on an offering that provides substantial benefits to businesses engaged in cross-border trade. With the partnership, Deloitte offers one-stop end-to-end global trade services, including SAP GTS-enabled Smart GTS serving as a "direct train" to global trade and help enterprises achieve compliance, cost reduction, intelligence and synergy for global trade management in the increasingly complex international trade environment, and thus implement their global development strategies. 

SINGAPORE

SGX, Temasek enter JV to boost digital asset infrastructure in capital markets

Singapore Exchange (SGX) and Temasek have entered a joint venture (JV) to advance digital asset infrastructure in capital markets. In a press statement on Friday, SGX said the JV is set to be Asia-Pacific's first exchange-led digital asset venture focused on capital markets workflows through smart contracts, ledger and tokenisation technologies. According to SGX, the JV will look to partner fixed income issuance platforms to connect to its post-trade and asset servicing infrastructure. This will provide issuers, arranger banks, lawyers, investors and paying agents with a comprehensive, issuance-to-settlement network for Asia bonds. Concurrently, the JV will focus on other existing and emerging asset classes that have seen growing market demand, including funds and sustainable finance. 

Innovation crucial to Singapore's economic recovery, says DPM Heng Swee Keat

Innovative ventures sprouting across the corporate landscape will provide crucial support to Singapore's economic recovery, said Deputy Prime Minister Heng Swee Keat. Mr Heng said corporate venturing is one of the few ways to drive innovation, the pursuit of which will become even more indispensable as the economy navigates the current crisis and the post-Covid-19 world. "Investment in innovation has, and will always be, a cornerstone of our economic policy, and a focus of our budgets," he said, pointing out that the Government had already committed to invest $25 billion over the next five years in research, innovation and enterprise. 

Singapore faces talent crunch as tech giants scale up

Singapore is aiming to become a regional tech hub but faces a severe talent crunch as more firms move in, interviews with more than a dozen recruiters, companies and workers show. China's Tencent, Bytedance, US-based Zoom Video Communications and unicorn Grab and Sea Ltd are among companies expanding in Singapore, fuelling a war for tech talent in the city-state, where the jobless rate had reached a 16-year high due to a coronavirus-induced recession. Up to 500 new tech vacancies are posted each week on job sites, according to NodeFlair, which is helping hire for Bytedance and Sea's e-commerce business Shopee. 

Singapore moves to guide companies through 'green' transition

In a move to guide companies through a green transition, the Green Finance Industry Taskforce (GFIT), convened by the Monetary Authority of Singapore (MAS), issued a proposed taxonomy to help Singapore-based financial institutions identify green activities. Compared to other taxonomies, a key feature of the proposed taxonomy is that it encompasses transition activities that allow for a progressive shift towards greater sustainability while considering starting positions and supporting inclusive economic and social development. A "traffic-light" system was suggested to help classify activities as green, yellow (transition), or red according to their level of alignment with environmental objectives. A handbook on implementing environmental risk management for asset managers, banks, and insurers was also launched. GFIT invites interested parties to submit their comments by 11 March 2021.

Property SMEs can get instant collateral-free loans under proptech, Validus tie-up

Small and medium enterprises (SMEs) in Singapore's real estate and construction industries will be able to obtain upfront, collateral-free financing, under a new offering named Really eZFunds. Proptech startup Really Singapore has partnered peer-to-peer financing platform Validus to enable pre-approved working capital for SMEs that provide products and services to property owners and managers. The startup, which offers a property management solution that is cloud-based and data-driven, said that its vendor marketplace comprises more than 3,800 suppliers in over 80 categories of services. Really eZFunds will give these SME suppliers access to Validus' pre-approved instant financing for up to S$50,000 at "competitive, bank-like rates", according to the startup. 

CHINA

Chinese bank's first overseas innovation centre opens in Singapore

Shanghai Pudong Development Bank (SPD Bank) has opened its first overseas innovation centre here, making Singapore its fintech beachhead to South-east Asia. The SPD Bank Singapore Innovation Centre is said to be committed to leveraging Singapore's strategic development in fintech to identify and partner high-potential technology companies. The innovation centre will also aim to promote fintech adoption and add value to Singapore’s Smart Nation drive. As a global financial centre and a key financial player in China's Belt and Road Initiative, Singapore is the ideal location for SPD Bank's first innovation centre because of its strong fintech ecosystem, said the bank's president Pan Weidong. 

China wants to work with foreign peers on antitrust issues

China's regulators want to step up exchanges with international counterparts and strengthen co-operation on anti-trust issues, data treatment and consumer protection, China's central bank vice-governor said in a Financial Times opinion piece. Pan Gongsheng said authorities wanted to ensure fintech regulation was effective, measured and would guard against cross-border regulatory arbitrage and contagion. His comments come as China has tightened scrutiny over its tech giants in recent months, particularly those that have expanded into financial services, by drafting new anti-monopoly rules and guidelines and reversing a once laissez-faire approach. Mr Pan said that Chinese regulators were addressing regulatory gaps and trying to mitigate financial risks posed by internet businesses, noting that a practice by some big companies to use profits from their other businesses to unfairly grab fintech market share was a global issue. 

ASIA

India proposes stricter regulations for large shadow banks

The Reserve Bank of India has proposed tighter, bank-like regulation of the so-called shadow lending sector to prevent the turmoil caused by the collapse of an infrastructure financing firm in 2018. The RBI has proposed introducing a four-tiered structure for better regulation of NBFCs with about 25-30 of the nine thousand plus firms falling under the upper or second layer of the strictest regulations. The top layer will remain empty for now, RBI said. The proposed regulatory and compliance guidelines will bring these 25-30 large shadow banks almost to parity with the state-owned and other private commercial banks in the country. New regulations have been proposed for mid to smaller NBFCs, but they are likely to be less stringent. 

Shopee ramps up initiatives to adapt platform to changing consumer base

A wave of digitalisation last year during the pandemic widened Shopee's access to consumer segments that have typically been hard to penetrate. Now, the South-east Asian e-commerce player wants to double down on adapting its platform to aggressively engage a diverse customer base. Shopee observed that older, less digitally savvy users in their 40s and 50s began to transact more online, as did consumers outside tier one cities and affluent users with a taste for premium brands. The company is tackling this on several fronts. For instance, it has created a platform dedicated to high-end brands and has plans to ramp up its grocery delivery service and expand the geographical coverage of its logistics network.  

CBA ups tech spending budget by a further $1 billion

Commonwealth Bank of Australia is to add a further $1 billion to its five-year $5 billion tech spending commitment in order to provide personalised digital services to customers and fend off competition from insurgent fintechs. Chief executive Matt Comyn said the global pandemic had driven more customers to remote banking, revealing a 10% uplift in active digital customers over the past two years to 7.5 million. With the investment, the bank wants to use advances in machine learning and artificial intelligence to provide a more personalised experiences to customers using its mobile banking app. CBA is also scouring the market for fintech investment opportunities via its x15ventures unit, which announced the addition of a fifth business to its portfolio in the form of hospitality startup Doshii.

McKinsey: Joining the next generation of digital banks in Asia

Digital banking in Asia is primed for growth. Amid soaring demand for online and mobile alternatives, new digital players are shaking up the market and transforming banking for individuals and companies. As regulators increase license allocations and set standards for a new generation of banking, there is a unique opportunity for both incumbents and new entrants to get involved. Just five years after launch, Tencent-backed WeBank serves some 200 million people, and Alibaba-supported MYbank has more than 20 million SME customers. Over a short period, China’s digital banks now have a roughly 5 percent share of the country’s RMB 5 trillion (~$700 billion) unsecured consumer loan market and more than 7 percent of online SME loans.  

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