Adrian Toynton, Head of Banking Solutions APAC at FIS, says a trilateral fintech bridge between the UK, Australia and Singapore will be a catalyst for change, with new and innovative ideas coming to the market.
Discussions around whether the fintech bridge between the UK and Australia should be extended to Singapore are now in full swing. If it comes to fruition, the alliance welcomes an established leader in financial innovation with the capability to navigate policy and regulation nuances as well as address barriers to international growth.
If it does not, Australia runs the risk of falling behind.
Just as in our personal lives, where we are seeing communities come together in a bid to weather the COVID storm collectively, so too should the corporate sector by pooling its resources and establishing a unified approach to overcoming some of the most complex technological challenges.
The purpose of the fintech bridge
The markets in Australia, the UK and Singapore are each distinct in terms of their population sizes and financial ecosystems. With the UK’s population now exceeding 60 million, it’s equally extensive landscape plays host to not only a large number of traditional banks but also a rapidly growing variety of neobank challengers.
Australia meanwhile is dominated by its big four banks, with over 80% of the population choosing to bank with them, leaving digital banks to enter the market with products in niche sectors. Singapore is similar to Australia in some regards as it has a much smaller population compared to the UK and there are fewer banks operating.
Singapore’s market, due to its geographical position, enables elements of innovation from across the Association of Southeast Asian Nations (ASEAN) region. There are a large number of Fintechs in Singapore concentrating on areas that are not mainstream in the more traditional markets. For example, new bank entrants in the Asian market could be telcos, digital disruptors or tech giants.
These different approaches highlight a huge benefit of the partnership, with each country learning from one another, sharing their approaches and modernizing their operations. Initially one market will have the opportunity to race ahead, but this will force the other markets to change and catch up.
What the bridge will mean for policy and regulation
Though regulation does differ from country to country, many core regulatory principles are replicated on a global scale. For example, if you look at the Australian Prudential Regulation Authority (APRA) in Australia, the Prudential Regulation Authority (PRA) in the UK, and the Monetary Authority of Singapore (MAS) in Singapore, their regulations are quite aligned.
The trilateral fintech bridge will force regulators to align even more closely, so that the services brought to market by Fintechs can be offered across the board.
This means the shared data economy across each of the three countries will become almost transparent, enabling a level playing field across the board, with a company that operates in Australia being able to also work in the UK and Singapore.
How the fintech bridge will affect traditional banks
If the alliance comes to fruition, traditional banks will be forced to modernise at a much faster speed. In every market, Fintechs will be driving change and traditional banks will have to sit up and take notice.
Existing Fintech technology will be easily transported across regions and operated in Australia, Singapore and the UK. This will be a catalyst for more change, with new and innovative ideas coming to the market in a way that will make traditional players review their processes, forcing them to make the back office of their banks digitised to provide the same level of straight through service.
Traditional banks will also see more competition from digital banks. While there are already many digital only banks in the UK, they are less prevalent in Australia and Singapore, and there will be continued expansion across the region.
Benefits of the trilateral fintech bridge
This alliance has the power to open a door for shared ideas and commercial innovation across Australia, Singapore and the UK. Not only will the bridge drive innovation in each of these markets, but it will also close the regulatory gap by allowing the easy transference of legislature.
For example, initiatives that have originated in Europe such as Open Banking and the associated regulations that have been adopted will be replicated more easily to the markets in Singapore and Australia if the alliance comes to fruition.
This will be an opportunity to learn from one another and modernise the way we operate. Driven by the consumer, Australian banks and Fintechs will have no option but to adapt, innovate and cement themselves as industry front-runners.
