The International Finance Corporation (IFC), a World Bank Group member, has signed a memorandum of understanding this week with the Monetary Authority of Singapore (MAS) in order to encourage fintech innovation in Asia via the establishment of an Asean Financial Innovation Network (Afin).
The new Afin body, overseen by IFC and MAS, will set up a regional network this year to help financial institutions (FIs), financial technology (fintech) firms and regulators in the Association of Southeast Asian Nations (Asean) trading bloc address issues of cross-border compatibility in the region.
The Asean Bankers Association (ABA) was involved in the early discussions about the formation of Afin and it is hoped they will support the initiative in future as it attempts to roll out branches across Southeast Asia.
The key focus will be on:
- Standardizing compliance duties and cross-border connectivity in order to ease customer end use journeys and improve competition.
- Increasing financial inclusion and access for the poor.
- Removing inappropriate national restrictions.
An Afin industry 'sandbox', which enables FIs and fintechs to develop, test and refine digital finance and inclusion software, apps and tools, may also follow later this year, but the initial focus is on enhancing economic integration, inclusion and the advancement of technology within the Asean region.
If a sandbox is introduced it would operate on a cloud computing platform that allowed participants to run their test scenarios on a shared, protected computer system that could aid collaboration and experimentation in a non-live environment.
Commenting on the establishment of Afin in a statement, Vivek Pathak, director of the East Asia and Pacific area at IFC, said: "The initiative builds on IFC's efforts to deepen access to finance for underserved segments of the population. In today's world it is feasible to reach these segments of the population at a fraction of the cost and at a speed that was not feasible earlier."
"New business models resulting from the digital transformation of financial services and fintech adoption in the region can create new markets that will lead to a higher level of prosperity," he added.
"The end desired state is for financial institutions to be able to embrace innovation and collaboration more easily, and for innovations to spread more easily across the region."
Other MAS collaboration deals
• The Monetary Authority of Singapore (MAS) already has numerous fintech cooperation deals with other bodies around the world, including with the Financial Services Agency of Japan (JFSA) and Abu Dhabi Global Market (ADGB).
It recently established a co-operation framework with France's respective banking / insurance and savings protection regulators – the Autorité de Contrôle Prudentiel et de Résolution (ACPR) and Autorité des Marchés Financiers (AMF) – in March of this year.
The Singaporean regulator also has its own fintech innovation lab called Looking Glass @ MAS as part of its efforts to encourage fintech co-operation and innovation.