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Guide to Starting a FinTech Business in Singapore
FinTech, the abbreviation for financial technology, is defined as technology incorporated in financial services. To be precise, FinTech refers to the innovation of technology in (the design and delivery of) financial services and financial products. PayPal is one of the FinTech pioneers that applied technology in money transfer – PayPal have successfully reduced the costs and time of international money transfer with the use of technology. The emerging FinTech application has cut across many different business segments in financial service industry, ranging from lending, investment management to payments, with the advance mobile technologies, big data and analytics. In fact, FinTech is reshaping the way financial service providers interact with their customers by putting technologies at the heart of the services.
Below are examples of FinTech:
- Artificial intelligence – analysis of user data that could track and understand users’ behavioural patterns, for future decision-making prediction;
- Cryptocurrencies – examples include Bitcoin and Ether;
- Insurtech – technology has been applied to enhance the efficiency of the insurance industry;
- Payment applications on mobile platforms, for example Android Pay;
- Robo-advisers – platforms that offer investments’ advice based on financial algorithms
FinTech in Singapore
FinTech is one of the thriving sectors in Singapore that has garnered strong support and growth recently. The Monetary Authority of Singapore (“MAS”), the central bank of Singapore, has recently announced robust incentives for FinTech companies that include investments of up to S$225 mil (US$158 mil) by end of 2020 as well as developing a FinTech Innovation Lab. FinTech companies can utilise the innovation hub for office space, experimentation and collaboration purposes. On top of that, the country’s financial sector (banks and financial service providers) welcomes where they see FinTech as supportive enablers that could help to increase the efficiency and accountability of financial services.
Aimed to help local and foreign FinTech companies to setup their companies here in Singapore, the Singaporean government has established the FinTech Office in May 2016. The FinTech Office is a virtual entity consists of many different government entities: the Monetary Authority of Singapore (MAS), Economic Development Board, Infocomm Media Development Authority and Enterprise Singapore. The FinTech Office acts as the one-stop office that advises FinTech companies on FinTech-related government grants and schemes as well as assists them to stay in compliance with the regulatory requirements.
How is FinTech Regulated in Singapore?
FinTech industry is regulated based on the business model and operations. In other words, you can identify the regulations that apply to your business according to the business model and operations.
Here is the list of potentially relevant laws:
- Banking Act – applicable to business that provides financial services online, for example accepts money transaction;
- Finance Companies Act – applicable business that accepts fixed and saving deposits and/or credit facilities;
- Financial Advisers Act – applicable to business that offers information on investment products, arranges life insurance products, and/or markets collective investment schemes;
- Insurance Act – applicable to business that leverages insurtech;
- Money-Changing and Remittance Businesses Act – applicable to business that trades foreign currency and/or handles outbound payments;
- Moneylenders Act – applicable to moneylending business;
- Payment Systems (Oversight) Act – applicable to business that offers stored value or prepaid wallet services;
- Securities and Futures Act – applicable to business that trades certain instruments, and/or deals in securities or manages funds of a certain amount, amongst others;
- Anti-money laundering and terrorism financing standards by the MAS, and
- Personal Data Protection Act – applicable to companies that collect, use, and/or disclose the personal data of individuals in its operations.
Company Incorporation of a FinTech Business
Unlike the daunting business registration process of traditional banking industry, the FinTech business registration is pretty straightforward and easy through ACRA BizFile Singapore. The company incorporation process for FinTech company is basically the same as other business and the Singapore company registration cost is similar. You need to register your business with the Accounting and Corporate Regulatory Authority (“ACRA”) which could be done online through the BizFile+ website.
FinTech Regulatory Sandbox Guidelines by MAS
In November 2016, MAS published its FinTech Regulatory Sandbox Guidelines to encourage innovation and experimentation of novel FinTech products within a defined space and duration. The regulatory sandbox relaxes the legal and regulatory requirements for FinTech companies (for a specific duration) so that FinTech companies can test their innovative FinTech products and services in the “product environment” ( here refers to actual environment where actual products or services are provided to the customers) where the regulator agrees to relax certain regulatory requirements. At the end of the sandbox period, your business will exit the sandbox where your business could launch its financial service on a larger scale.
You can reach out to us on the requirements and process related to starting a FinTech company in Singapore.