Monday, 17 May 2021

SFA launches digital self-assessment framework to fast track fintechs’ partnerships with FIs

The Singapore Fintech Association (SFA) announced the launch of a digital self-assessment framework and toolkit for fintech firms to expedite the onboarding process for their partnership with financial institutions (FIs) and accelerate the digitalisation process across the financial industry.

Through its fintech certification scheme, SFA found that eight out of 10 fintech firms in Singapore provide technology solutions to financial institutions to enhance its services and product offerings. As such, there is a need for these fintech firms to adopt an efficient approach to demonstrate satisfactory compliance levels to provide assurance to the FIs while maintaining a baseline level of governance, rigour and consistency over their services.

To do so, the SFA has undertaken a phased approach to enhancing the compliance maturity of fintech firms by establishing the ‘Fintech Service Provider Compliance Readiness Framework’. The framework includes a set of minimum base requirements from the Outsourced Service Providers Audit Report (OSPAR) guidelines laid out by The Association of Banks in Singapore and the Technology Risk Management Consultation Paper and Cyber Hygiene Notice by the Monetary Authority of Singapore (MAS).

Fintech firms are expected to adhere to these requirements as a starting point for servicing financial institutions. The framework is advised by PwC. This initiative is part of the $90 million (SGD 125 million) support package announced by MAS on 8 April 2020 for the financial and fintech sectors to deal with the immediate challenges brought about by the COVID-19 pandemic and emerge stronger for recovery and future growth.

The primary objective of this framework is to promote a sustainable outsourcing relationship between the fintech firms and FIs. The framework will help fintech firms understand the minimum compliance requirements to operate safely in partnership with the FIs. The self-assessment toolkit featured in this framework will allow fintech firms to identify the maturity of their control environment and compare that against the minimum compliance requirements. This will also enhance the FIs’ confidence level when partnering with fintech firms. With PwC’s support, a series of workshops to address the compliance gaps identified in the self-assessment has been organised.

SFA’s president Chia Hock Lai stated, “With 80% of Singapore-based fintech firms offering technological solutions to financial institutions, it is a critical skill for them to be competent with the compliance requirements of working with financial institutions. This digital self-assessment framework will enable fintech firms to be more effective when collaborating with financial institutions, and giving financial institutions more confidence in the partnership as they accelerate their digitalisation efforts.”

On the other hand, MAS’ chief fintech officer Sopnendu Mohanty said, “With the launch of the digital toolkit for the Fintech Service Provider Compliance Readiness Framework, a mid-mile problem in the innovation process for fintech firms’ compliance with financial institutions’ outsourcing standards is addressed. The API Exchange (APIX) is a powerful collaboration platform for fintech firms and financial institutions to explore, experiment and adopt digital solutions. By leveraging APIX and the digital self-assessment framework on APIX, the fintech community can further accelerate the digital transformation of the financial sector with confidence and trust".

PwC Singapore’s fintech leader Wong Wanyi said, “Over the last few years, technology risk management is a key area that financial institutions look at when working with fintechs. However, many existing frameworks for technology evaluation are suited towards more mature service providers. This new self-assessment framework will provide an early indicator of where the fintechs' control environment stand when it comes to technology risk.”

Re-disseminated by The Asian Banker

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