Regional Focus

Singapore powers ahead with treasury innovation

Published: Mar 2022

Singapore has been focused on spurring fintech innovation and building an ecosystem of players – a ‘cluster effect’ – to support it. As a top location for regional treasury centres, many of the latest fintech projects in the city state will have an impact on how corporate treasuries in the future will be run.

City skyline, can see clear through the glasses

If you are lucky enough to have a good office view in Singapore, you can see the container ships approaching and leaving the port. The locals say you can judge the state of the global economy by how many ships there are; if it looks busy, business is booming.

Singapore has long been a trading hub and in recent years has been building the infrastructure to match it. Multinationals and international banks have set up regional offices there to support the financial transactions for the physical trade that can be seen from their windows.

Singapore has been able to reinvent itself throughout its history, says Zennon Kapron, Founder and Director of Kapronasia, a consulting firm that focuses on the fintech industry. “It is a small country with very few natural resources. It has always had a story to drive growth: 15 to 20 years ago it was biotech; ten years ago it was tech, and now it is fintech,” he says.

And the focus on fintech is creating an incredible amount of economic growth, he says, and a number of the Southeast Asian unicorn companies – high growth tech companies with a valuation of more than US$1bn – have a presence in Singapore.

It is an attractive place to do business because of its infrastructure, tax regime, and the ‘cluster effect’ that has been created by having start-ups, multinational corporations and international banks all in such close proximity.

This has been proactively managed by the government and the Monetary Authority of Singapore (MAS) has pushed for Singapore to be a fintech hub – both in terms of the innovation and building an ecosystem. The city state currently has more than 40 innovation labs and more than 1,000 fintech companies. MAS sees the financial sector as an integral part of Singapore’s ambition to be a smart nation, and it’s not just about fostering innovation – it’s about having a purpose as well.

At the Singapore Fintech Festival in November 2021, MAS Managing Director Ravi Menon said, “The future of money, finance, and the internet will have far-reaching effects on economies and societies. It is important that public authorities and the financial and technology communities work together to shape that future, so that money, finance, and the internet can be forces for good, helping to expand economic opportunity, enhance social inclusion, foster stability, and protect our planet. Ultimately, money, finance and the internet must serve the people who use them.”

Premdeep Shah, Deutsche Bank’s Corporate Bank Head of Fintech and Platform Coverage for ASEAN, comments how Singapore is a vibrant place when it comes to fintech, which has been supported by the government and the policies of MAS. “Singapore is a powerhouse of innovation,” says Shah, adding that its small population means that it is a testbed of the latest consumer trends, which can then get rolled out to ASEAN and beyond. “The adoption of technology is very strong in Singapore,” he says.

With the latest fintech trends, Shah says, “corporate treasurers may think that innovation and disruption primarily affects start-ups – or fintech themselves – they might not think it is relevant to them, but that is not entirely true,” says Shah. There are companies that are at the forefront of this innovation, he says, and “these companies do not have to be in the fintech space”.

Kapron comments that he has observed a shift in the habits of treasurers and their approach to fintech. Only a few years ago, he says, the idea of approving a US$2m transaction from their phone seemed foreign, for example. “Now they are comfortable with this and high-value transactions have come to the mobile phone – they can sit at lunch, approve payment. There has been a change in mindset,” he says.

Now the major trend around innovation is about insight, says Kapron. Treasurers want these high value transactions to go through at relatively high speed – real-time payments, the infrastructure of which is already in place – but the speed is not so sensitive in high-value transactions, says Kapron. “The change is in the opportunity to better analyse the data around treasury and cash management and to be able to act on that in an automated way,” he says.

There are a number of innovations coming out of Singapore that are relevant to treasurers. Shah notes that one is using blockchain for supply chain financing. An automaker that purchases headlights from a supplier, for example, is now able to use supply chain financing – through the use of distributed ledger technology (DLT) – for its supplier, and its supplier’s supplier, or even one level below that, comments Shah.

We see ourselves as the bank of the metaverse.

Harald Eltvedt, Incubation Lead,Standard Chartered’s SC Ventures

Rahul O’Verma, Asia Pacific Head of Innovation for Treasury and Trade Solutions, Citi, comments on the other items that belong on the list of treasury innovations. These include the rise of digital assets; embedded finance and how it is driving direct-to-consumer growth; the coming age of healthtech; and using fintech to make better decisions around environmental, social and governance (ESG).

Citi has set up a new digital assets unit and is ramping up hiring to boost expertise in blockchain, digital assets and digital currencies. Those hired will be based in Singapore, as well as other cities, explains Deven Somaya, Singapore Product Head, Treasury and Trade Solutions, Citi. The bank has also boosted its capabilities for instant payments, and been involved in hackathons and accelerator programmes. It has also partnered with API Exchange to tap into the ecosystem of fintech firms and be able to deliver a range of solutions – via APIs [application programming interfaces] – more quickly, he adds.

Such initiatives reflect how transaction banks in Singapore are exploring a number of areas of innovation to support their treasury clients. Deutsche Bank’s Shah comments on how other fintech trends in Singapore have a bearing on what treasury innovation looks like. “Buy Now Pay Later is a trend that is particularly hot right now in Singapore,” says Shah, and is relevant to corporates that sell directly to consumers. Companies that do not have this firmly embedded into their payments and collections may face challenges in getting it off the ground, he says.

Also, embedded finance – a trend that O’Verma at Citi also identified – is becoming more relevant and enables non-financial companies to offer financial products. Shah gives the example of a ride-hailing app making it possible to book a journey and an insurance policy at the same time. The insurance lasts for the duration of the journey and could cost as little as 30 cents, for example.

Deutsche Bank has a number of large digitally-native companies among its clients. In developing solutions that support the needs of these innovative companies, the bank is able to feed the latest trends back into the product development for its clients in more traditional industries, such as manufacturing. This is a way of “bringing the new economy back to the old economy”, says Shah.

Linking new innovations and bringing it into traditional institutions is always a challenge, and Standard Chartered has developed a way to experiment with the latest technologies in a way that is unencumbered by the legacy processes, systems – and thinking – of the traditional bank.

SC Ventures, as the innovation unit of Standard Chartered, is run independently from the main bank and this means that it can innovate more efficiently, explains Harald Eltvedt, SC Ventures’ incubation lead. It develops solutions on its own and has also collaborated with corporate clients.

In a sense, SC Ventures is able to prototype some elements of what the transaction bank of the future might look like. Eltvedt comments that at SC Ventures they are experimenting with business models – sometimes by themselves, sometimes with partners – and the main bank benefits because they are able to innovate in a more agile way.

As it innovates, Standard Chartered has an eye on the potential future needs of its clients in both the physical and the virtual worlds: “We see ourselves as the bank of the metaverse,” he says. He explains that the bank is preparing itself so that it can be relevant in this future. Although no one knows what the metaverse will actually look like, SC Ventures has six principles – or high conviction themes – to guide it through its innovation. These are focused on being a digital bank; e-commerce; supporting SMEs; digital assets and tokenisation services; capability as a service; and sustainability and inclusion.

Eltvedt comments that the digital bank is about providing a digital banking platform – that enables others to plug in via APIs – that can support the “online, mobile-first, instant-gratification world that we’re now in”.

With the online commerce and payment solutions, Eltvedt says, “It might seem late in the game, but it is really needed. We actually saw during the pandemic the migration to online commerce accelerated – particularly in emerging markets where there was a transition to online banking and online payments at a much greater pace than other economies,” says Eltvedt.

One successful venture to come out of SC Ventures is Zodia Custody, which provides custody for crypto assets and enables institutional investors to securely invest in this new asset class. And on the trade side, SC Ventures invested in Linklogis, a Chinese supply chain finance technology company, which launched an initial public offering (IPO) in January 2020. They also formed a joint venture to create Olea, a digital trade finance origination and distribution platform. Eltvedt explains this platform puts suppliers, who are mostly in China and Southeast Asia, in touch with institutional investors anywhere in the world. “Blockchain can track the securities that are being created and where the investment is going,” he says. “It tracks everything in a visible and authenticated way, and creates more transparency between suppliers and potential investors.”

And when it comes to capability-as-a-service, SC Ventures has developed Standard Chartered nexus, a white label solution that allows other organisations – including corporates – to use its infrastructure. “We have an institution that has been around for a long time – there are certain things we know how to do well,” he says. Through open banking, and a ‘plug and play’ model, “We provide our capabilities to other players so they can manage their own system, their own lifecycle and they do not have to do the governance and all the security themselves,” he says.

SC Ventures is currently testing a use case for this in Indonesia, Eltvedt explains. When asked what kind of company would want to use Standard Chartered’s software-as-a-service in this way, he says that it could be a company that wants to transition to online commerce and manage the transactions itself and run its own loyalty programmes, for example.

With such a hotbed of innovation on its doorstep, treasurers in Singapore have a wealth of options to explore and apply, as well as the opportunity to explore what the treasury of the future will look like. And, if they are lucky, they might also have a nice view of the ships from their window.

All our content is free, just register below

As we move to a new and improved digital platform all users need to create a new account. This is very simple and should only take a moment.

Already have an account? Sign In

Already a member? Sign In

This website uses cookies and asks for your personal data to enhance your browsing experience. We are committed to protecting your privacy and ensuring your data is handled in compliance with the General Data Protection Regulation (GDPR).