Billdesk Payment Gateway: MAS FinTech Development Priorities: Borderless Payments, Tokenisation, Artificial Intelligence

At the Singapore Fintech Festival 2024, the new Managing Director of the Monetary Authority of Singapore (MAS), Mr Chua Teck Chun, shared his policy strategy and MAS's key mandates in the direction of fintech, covering a wide range of areas such as payment systems, tokenisation, artificial intelligence and sustainable finance.

**Vision of building community, collaboration and capacity**

Mr Chua began by highlighting the three pillars of MAS' strategic approach to fintech: community, collaboration and capability. He highlighted that the FinTech Festival itself is a vivid example of the continued growth of Singapore's FinTech community, bringing together startups and established companies. This evolving ecosystem is also supported by initiatives such as the Global Fintech Network (GFTN), which actively promotes international fintech connectivity and cross-border resource sharing.

Collaboration is at the heart of the MAS approach, moving from initial experiments to scalable solutions.MAS has implemented a co-driven strategy to bring industry players and policymakers together to address challenges, particularly in areas such as digital assets and AI.MAS's Guardian and MindForge programmes exemplify this new paradigm. The MAS Guardian Programme, which works with industry leaders to unlock the potential of digital assets, and the MindForge Programme, which focuses on addressing the specific challenges and governance needs posed by generative AI, exemplify this new paradigm.

**Payment system: without borders**

On the payments front, Mr Chua noted that Singapore has a robust digital payments infrastructure, with high adoption rates of digital ID, QR codes and PayNow systems in the country. However, he also acknowledged the challenges in achieving interoperability between different payment solutions.NETS Group and Liquid Group are developing an interoperable QR code payment solution to simplify the merchant access process and provide non-discriminatory access to the platform for all users.

While MAS has made significant progress in the area of cross-border payments, the process has not been easy.MAS has attempted to establish bilateral payment links with Thailand, Malaysia and India, but the process has been challenging. For this reason, the ASEAN countries are working with the Bank for International Settlements (BIS) on the Nexus programme, a centralised system to facilitate cross-border payments between multiple countries. The designation of Singapore as the headquarters of the Nexus programme demonstrates the country's intention to reshape the international payments landscape.

**Tokenisation: bridging assets and innovation**

On tokenisation, Mr Chua said that tokenised assets were economically efficient and could speed up financial transactions at a lower cost. Under the Guardian project, MAS had tested tokenisation across a number of asset classes, including fixed income, foreign exchange and funds, demonstrating the project's advantages in terms of cost and speed. One area for improvement is scalability, but MAS has developed a multi-tiered framework to address this. The framework includes standardising the representation of assets at the "token level", providing secure settlement options at the "settlement level" and meeting compliance infrastructure requirements at the "chain level".

MAS is also further structuring the regulatory framework for stablecoins to ensure the robustness of such digital assets used for settlement. This in turn enables issuers to comply with regulatory benchmarks and ensure stability and trust in the ecosystem. Mr. Cai mentioned that MAS is working with the global Layer One Alliance to meet the industry's need for interoperability and regulatory compatibility to ensure "tokenised assets are secure and widely available".

**Generative AI: Mapping Complex Terrain**

Mr Chua cautioned that generative AI is evolving at an alarming rate, presenting both opportunities and risks.MAS has chosen to engage with the technology cautiously but supportively.Rather than seeking immediate regulation, MAS is addressing the issue through the MindForge project, an industry consortium designed to look at the risks associated with AI. The consortium is developing a common taxonomy to understand the risks associated with data governance, model development and AI deployment in the financial industry. As the project progresses, MAS will provide governance guidance to address pressing risks to generative AI, such as data breach attacks and hint injection attacks, while driving responsible AI adoption in the industry.

**Sustainable finance: enhancing resilience to climate change**

Sustainable finance has become part of the global response to climate risk. Drawing on the background of Singapore's Ministry of Sustainable Development, Mr Chua highlighted the positive steps taken by MAS in this area. He further elaborated on how MAS provides regulatory support for carbon disclosure and encourages financial institutions to integrate sustainability into their operations, thereby reinforcing the positive trend of sustainable investment and lending. Mr. Cai stressed that continuous skills development is a requirement for sustainable finance, which MAS supports by identifying necessary competencies and promoting targeted training programmes.

He also mentioned another challenge: access to actual data, which is crucial to understand the environmental impact of different activities, especially for small businesses. To address this, MAS and GFTN have come up with the Gprnt platform, which not only helps companies easily access and report environmental data, but also streamlines the process through a reporting platform. This is a step towards greater transparency, but Mr Chua noted that the industry needs to do more to fill in the data gaps.

**Quantum computing and future innovation**

Finally, Mr Chua briefly mentioned quantum computing. Although quantum computing is not yet commercially available, it is expected to play an important role in a potential revolution in data security and computing.MAS recognises the need to prepare for the future security implications of quantum technology and has been working on post-quantum encryption and quantum key distribution to defend against future threats. Even though practical applications are just beginning to emerge, MAS's proactive approach to this cutting-edge technology reflects its forward-looking approach.

**Future built on learning and adaptability**

Reflecting on his experience at the event, Mr Chua expressed his passion for learning about the latest innovations and his willingness to adapt to the ever-changing landscape of the FinTech sector. This attitude is a good representation of the culture that MAS strives to foster in learning new ideas and facing the challenges that are often encountered in innovation. Based on community, collaboration and competence, Singapore will continue to be at the forefront of fintech, steadfast in its adaptability to change and always actively pursuing sustainable growth. Overall, Mr Chua's discussion highlighted how the MAS has struck a balance between regulatory foresight and industry engagement, laying the foundation for Singapore to continue to be a global fintech hub.