Singapore Government invites applications for green fintechs
Called “Harnessing Technology to Power Green Finance” the competitive initiative which is supported by the US management consultancy, Oliver Wyman, seeks to unlock the potential of the fintech sector in advancing the development of green finance in Singapore and the wider region.
Innovation in green fintech
The Global FinTech Hackcelerator invites fintech companies and service providers worldwide to submit innovative solutions that address more than 50 ‘problem statements’ that have been gathered from financial institutions and green industry finance players.
According to a statement from the MAS, the problem statements focus on three critical challenges: (i) Mobilising Capital; (ii) Monitoring Commitment; and (iii) Measuring Impact.
Fifteen finalists will be shortlisted for a virtual programme where they will be paired with a Corporate Champion to develop customised prototypes on the API Exchange (APIX)  .
Finalists will also be given a S$20,000 cash stipend and be eligible for a fast-tracked application for the MAS Financial Sector Technology and Innovation Scheme Proof-of-Concept Grant of up to S$200,000.
The final pitch of the solutions will happen on the event’s Demo Day, which is scheduled to take place at the 2021 Singapore FinTech Festival. Three winners will be selected from the competition, each one receiving a $50,000 cash prize.
Finalists will pitch their solutions at the Demo Day held at this year’s Singapore FinTech Festival.
Encouraging sustainable finance
Environmental, Social, and Corporate Governance (ESG) has become a hot topic with governments globally as world powers attempt to reduce carbon emissions through advances in technology and new regulations.
Industry leaders have called for a global framework for ESG investing as the sector faces a massive increase of opportunities but is currently inconsistent in their approach to sustainable investments.
According to reports, a major focus is on healthy ecosystems and sustainability of supply chains, a trend which is unlikely to slow down in the wake of he COVID-19 pandemic.
Experts argue that a global regulatory framework for ESG investing would provide greater protections for those investors who are looking for profits with purpose and will also help to reduce ‘greenwashing’ – when an investment or company gives an inaccurate impression over its green, socially responsible, or corporate credentials.
Singapore and green fintechs
Singapore has long since delcared its aim to become one of the world's most developed fintech markets, and a leader in green fintech as part of the APAC nation's movement to become more sustainable.
Currently, Singapore represents more than 40% of all fintech companies in the Southeast Asia region. It is also the ASEAN's biggest green finance hub, with an estimated 50% of all cumulative green bond and loan issuances.
Earlier this year, Grace Fu, Minister for Sustainability and the Environment of Singapore said, “Our vision is for Singapore to be a leading center for green finance in Asia and globally. Technology can play an instrumental role in greening finance, and supporting the development of trusted, efficient green finance markets. For instance, good, strong data, and the use of fintech, including artificial intelligence (AI) and machine learning, to process, collect and analyze data, can inform decision making, and risk management practices.”
Singapore's 2021 Budget also outlined the Singapore Green Plan, while the nations sustainability drive has several ambitious aims regarding cleaner energy, green living, waste and consumption, green finance, and more.
Speaking about the initiative, Sopnendu Mohanty, Chief FinTech Officer of MAS said that green fintech was an important enabler to accelerate Asia’s transition to a low carbon future. “It can provide much needed innovative solutions, and develop the crucial technology stack, which can help promote green financial services, catalyse efficient allocation of green capital, and facilitate trust in the green data value chain.”
He added, “I encourage all innovators to make use of this platform and showcase their Green FinTech solutions to the world.”
Fintech companies and solution providers globally must submit their applications for the MAS Global FinTech Hackcelerator by 11 June 2021 to qualify.
AI and the future of global trade
Artificial intelligence (AI) is becoming entrenched in our daily lives, but the technology is still surrounded by misconceptions and skepticism. Ask the public and they may jump to dystopian scenarios where robots have taken over the world.
While this makes for a good sci-fi blockbuster plot, the reality is different and more benign. Those products that Amazon suggested you buy? AI. That TV series you were recommended to watch on Netflix? AI. That self-driving Tesla car you crave to take for a spin? You guessed it: AI.
There is no single industry that is not being re-shaped by technology. Until recently, however, there was one noteworthy exception: global trade. Fortunately, that is slowly changing.
The mechanism that underpins global trade – trade finance – is an industry that remains largely paper-based and reliant on manual processes. This US$18tn a year industry is now being influenced by a new wave of technological innovation, including AI.
Exploring the potential of AI in Trade Finance
AI refers to the use of computer-aided systems to help people make decisions or make decisions for them. It relies on large volumes of data and models to make sense of information and draw intelligence.
In trade finance, AI is helpful in analysing quantitative data, and the repetitive nature of trade finance means that there is a lot of non-traditional data at our disposal.
This means that when trade finance providers need to assess the risks of funding a transaction, AI models can be a very efficient tool for data analysis and reveal intelligence and risks relating to small companies.
AI helps the industry move beyond traditional credit scoring processes, which are often outdated and remain reliant on historical accounting entries – a barrier that prevents small companies from accessing trade finance and has resulted in a $1.5tn global shortfall.
Overcoming the barriers
AI can tackle this shortfall by creating accurate credit scoring models. This can include a company’s payment history, measure the risks of funding a transaction, identify supply chain risks, and benchmark them against their peer group.
Trade finance providers can use this information to communicate effectively with their SME clients, ultimately helping establish better business relationships.
Towards a technological utopia?
The adoption of AI has the potential to do a lot of good in the industry, and the industry is in the early stages of radical transformation.
Advances are driven by fintechs as well as a willingness to change. The industry is working together to create new infrastructure for distributing trade finance assets to other investors in a transparent, standardised format.
The creation of infrastructure is possible due to improvements in technology and integrated across the trade ecosystem in cooperation with banks, insurers, and other industry participants.
It’s collaboration at its best: together, the industry is using technology to re-shape global trade as we know it.