3 themes reshaping the future of finance from Singapore FinTech Festival 2023

The eighth edition of the Singapore FinTech Festival (SFF) drew a record 66,000 participants from 150 nations. Organised by the Monetary Authority of Singapore, Elevandi, and Constellar in collaboration with the Association of Banks in Singapore, SFF 2023 offered a platform for vibrant discussions on the future of financial innovation.

Highlights from SFF 2023

AI’s potential – as well as its pitfalls – have been making waves in many industries, including financial services. SFF 2023 brought this hot-button topic to the forefront with the central theme “AI for good. AI for good?”

Running from 15 to 17 November at the Singapore EXPO, the SFF Conference also featured keynotes and discussions on other fast-evolving trends, such as responsible tokenisation and efficient payments.

As an official partner of Elevandi Insights, the by-invite-only curtain raiser to SFF, and SFF exhibitor in 2023, Zühlke had the opportunity to connect with participants in reimagining the future of financial systems. Here are three broad themes coming from 2023:
 

AI: Reshaping financial operations

This year's SFF showcased a slew of AI-driven solutions to pressing problems faced by the finance industry. "For me, one interesting trend has been the adoption of generative AI use cases that we've seen across multiple stands in SFF 2023," shares Ruchi Singhal, Head Market Unit FSI, Zühlke. "It's been really interesting to see these use cases coming into fruition, not just in a pilot." 

As generative AI evolves, it is fast reshaping financial institutions' operations. In terms of customer experience, AI is enhancing data analysis capabilities and equipping banks to offer tailored financial services. AI-powered avatars, for example, can serve as digital relationship managers for corporate clients, learning their needs and analysing industry trends to provide personalised insights. 

Fraud protection represents another key use case for generative AI. Machine learning models can calculate transaction risk scores based on certain factors, while biometric AI tools can detect synthetic voices used in identity fraud. 

AI-powered sentiment analysis is also a promising area – it allows institutions to gauge customer sentiments and preferences, thus developing more responsive and customer-centric financial services.

Meet Asia's AI innovators in the banking industry

SFF 2023 saw financial players demonstrating various innovations in generative AI. 

Banking leader HSBC unveiled its AI Markets tool for institutional investors, which uses Natural Language Processing (NLP) to streamline customer access to its proprietary market data. Acting as a digital assistant, AI markets can efficiently perform client requests such as pricing and executing transactions, as well as provide real-time market insights. 

Other global banks like Bank Julius Baer, were honoured in the SFF Global FinTech awards for innovative solutions that have been instrumental in transforming the FinTech industry. 

Julius Baer's Large Language Model (LLM) solution suite empowers the bank to harness new advancements in LLMs, such as those developed by OpenAI. Their proprietary models are tailored to the bank's specific needs, allowing for rapid development and utilisation across various divisions, including risk management. 

Meanwhile, global financial services provider Sumitomo Mitsui Banking Corporation (SMBC) shared their use of generative AI to accelerate internal decision-making. Their AI system offers CFOs with easy-to-understand analytics insights and tailored recommendations, enabling leaders to make more informed decisions. 

In the fraud space, payments processing giant Mastercard highlighted its work on AI-powered anti-fraud products to address rising concerns around fraud detection. The company is developing tools that can evaluate weaknesses in financial institutions’ systems and tap generative AI to create synthetic transaction data for training its fraud detection models. 

These innovations promise to revolutionise financial operations – fundamentally reshaping how institutions make decisions, serve customers, and safeguard assets.

Payments without borders: Breakthroughs in interoperability

Singapore’s payments infrastructure has advanced by leaps and bounds, paving the way for ever more seamless and convenient transactions. Increasing interoperability between payment platforms brings us closer to a future where users can transact anytime, anywhere, and with anyone.

SFF 2023 marked the launch of the real-time payment systems linkage between Singapore’s PayNow and Malaysia’s DuitNow. This linkage will enable instant, secure, and cost-effective transfers and remittances between the two countries, improving cross-border payments' cost, speed, access, and transparency.

It also marked the launch of Singapore and Indonesia’s cross-border QR payment linkage, allowing travellers to make cross-border retail payments simply by scanning merchants’ QR codes on their mobiles. With greater payment convenience, this linkage can enable micro and small businesses to tap into a new pool of customers, while providing a more convenient and efficient payment method for users.

These bilateral payment linkages promise to be just the beginning of payments without borders. In a keynote speech, Ravi Menon, Managing Director of MAS, shared the progress made by the Bank for International Settlements (BIS) Innovation Hub on Project Nexus – a solution to build real-time payment linkages across multiple countries within and beyond ASEAN. This will lay the foundation for a multilateral payment network that allows users around the world to transact instantly and seamlessly, potentially opening up new growth opportunities for businesses.

Asia, with its myriad of countries, presents a diverse set of financial systems and regulations. Interoperability, in this context, means creating systems that can effectively communicate and exchange data across these varied environments. This involves adapting to different banking standards, payment gateways, and regulatory frameworks.

“Interoperability has long been a key challenge in the financial services sector,” reflects Ruchi Singhal, Head Market Unit FSI, Zühlke. “If we could change this, it would help us a lot with financial inclusion.”

Tokenisation: A leap forward in use cases

Tokenisation is gaining new momentum in the finance industry, as regulators and financial institutions collaborate to tokenise traditional infrastructure and create new efficiencies. At SFF 2023, speakers unveiled exciting steps forward in digital assets and digital money.

Project Guardian – an industry collaboration across financial institutions to explore the possibilities of asset tokenisation – announced five new pilots to trial promising use cases. The launch of digital infrastructure initiatives such as Global Layer One (GL1) and Interlinked Network Model (INM) by MAS are inspiring steps in the right direction for the next stage of infrastructure readiness, to help scale the tokenisation market. One application to watch is a blockchain-powered solution by banking group Citi, which can price and execute bilateral FX trades efficiently while providing real-time reporting of trade data.

The digital assets landscape is set to flourish with the rise of digital money, which will enable faster, safer payments using digital assets. MAS’ newly published Orchid Blueprint will provide greater clarity on the infrastructure building blocks needed to support digital money transactions. With pilots on central bank digital currencies (CBDCs) in the works, businesses can also look forward to leveraging CBDCs for interbank settlements in future.

“I’m impressed by how regulators on this side of the world are coping with innovation,” says Stefan Grasmann, Managing Director Technology & Partner, Zühlke. “They really try to work for the industry, not against it.”

During an invitation-only Elevandi Insights roundtable hosted by Zühlke, participants also discussed the need to find a harmonious balance between public and private blockchains. 

While public blockchains offer existing ecosystems with great transparency, cost-effectiveness, and network effects, many banks still consider jointly building their own infrastructure on top of private blockchains, which provide the core providers with higher levels of control over the runtime environment and network participants. As the financial industry navigates the evolving landscape of blockchain and tokenisation, leaders will have to consider their organisation’s unique resources and needs to develop the best-fit solutions.

SFF 2023 offered a glimpse into the vibrant future of FinTech - one where technology unlocks greater convenience, inclusion and efficiency in financial ecosystems. 

“At Zühlke, we’re proud to be a part of this new era of financial ecosystem innovation, where technology innovation partners like us are able to empower banks and fintechs with cutting-edge solutions that drive the evolution of financial services in the digital age,” commented Ruchi. “I am excited for the next phase of our journey and I look forward to connecting the dots to foster closer collaboration and synergies within the financial services ecosystem.”

“Looking ahead to 2024 and beyond, I’m looking forward to many innovations hitting this space – from AI to blockchain,” Stefan says. “Banks and financial players will need to adopt these technologies to stay competitive amidst disruption.”

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