Out-Law News | 01 Apr 2016 | 4:36 pm | 3 min. read
The Monetary Authority of Singapore (MAS) promoted the use of APIs at an industry conference earlier this week where it announced its own plans to make its data available to financial firms to exploit through APIs. APIs allow software applications to interoperate with each other.
"APIs reduce the time to market, lower the cost of implementing projects and changing business rules,” Lawrence Ang, MAS chief information officer, said, according to a report by Channel News Asia. "I believe that someone will make good use of that data and create something that customers will benefit [from]," he said.
APIs can help banks meet their reporting obligations to regulators but also help deliver innovative new services to consumers through collaborations with financial technology companies, Ang said, according to the report.
Sopnendu Mohanty, chief fintech officer at MAS, said: "In today’s fast changing world of technology, consumers expect our financial institutions to keep up with customer lifestyles and meet business demands. Hence, it is timely for the push towards customer-focused initiatives which allow systems to be developed in a quicker and more efficient manner, especially in the area of application development."
"Furthermore, APIs allow FIs (financial firms) to leverage on external talent by enabling seamless and secure third party software integration. MAS encourages FIs to tap on emerging and innovative financial technology," he said.
Technology law expert Bryan Tan of Pinsent Masons MPillay, the Singapore joint law venture partner of Pinsent Masons, the law firm behind Out-Law.com, said: "This move by Singapore's de facto central bank is an affirmation for the banks and fintechs who have already begun to open their APIs and an encouragement to those who have yet to do so."
Ang said that there is no specific timeframe for the introduction of APIs in Singapore financial services, but said that the development of a common standard, agreed on by industry and regulators, will help enable new uses of data in the sector, the Channel News Asia report said.
Open APIs in banking is something the UK government has called for. The UK Treasury is keen for banks to open up access to the data they hold on customers to other businesses to encourage innovation and boost competition in the sector. It tasked an industry-led Open Banking Working Group (OBWG) with developing a new framework for underpinning an open banking standard to facilitate its plans and has said it will legislate to deliver better access to bank data through APIs "if necessary" if industry does not embrace the changes.
In February the OBWG published a new framework for supporting the use of open APIs in the banking sector. It set out a raft of recommendations, including that third parties should be able to access both customer and aggregated data banks hold using APIs through technical "protocols" still to be agreed. Access should be only be facilitated where bank account holders have given their "informed consent", it said.
In addition, access, where consent has been obtained, would be "subject to constraints", such as time limits or transaction size caps, it said. The OBWG made further recommendations on oversight of complaint-handling and data security, and suggested a system of accreditation should exist so that third party APIs go through appropriate vetting before they can link into bank systems.
In a separate announcement MAS said that a new FinTech Office is to be set up in Singapore on 3 May.
The FinTech Office will provide guidance to financial technology companies looking to set up in Singapore on the availability of government grants and help promote Singapore as a financial technology hub.
"The FinTech Office will: review, align and enhance FinTech-related funding schemes across government agencies; identify gaps and propose strategies, policies, and schemes in industry infrastructure, talent development and manpower requirements, and business competitiveness; and manage the branding and marketing of Singapore as a FinTech hub through FinTech events and initiatives," a statement issued by MAS said.
Chief fintech officer at MAS, Sopnendu Mohanty, will co-lead the FinTech Office with Steve Leonard, chief executive of SG-Innovate, a new body that has also been set up to support start-ups.
Finance minister Heng Swee Keat outlined the role that SG-Innovate will have in his recent 2016 budget announcement.
"SG-Innovate will match budding entrepreneurs with mentors, introduce them to venture capital firms, help them to access talent in research institutes, and open up new markets," he said. "SG-Innovate will build on what has been done by the Infocomm Investments Private Limited (IIPL), and work with SPRING and EDB to expand the accelerator programmes to new and emerging sectors such as smart energy, digital manufacturing, fintech, digital health, and internet of things."
Mohanty said: “The FinTech Office will enable a whole-of-government approach to develop the fintech ecosystem in Singapore and support MAS’ vision of fostering a Smart Financial Centre. Through the FinTech Office, MAS will be able to go beyond the financial industry to help nurture a wider fintech ecosystem and engage the fintech community more actively.”