MAS' chief fintech officer discussed the opportunities and risks of big tech in finance and explained how regulators can build a foundation that would allow digital banking to flourish.
Policymakers and regulators need to take a different approach towards digital banking and move away from the physical world if they want it to succeed, said Sopnendu Mohanty, chief fintech officer, Monetary Authority of Singapore.
«I think trying to solve making banks digital, and hoping this would solve such problems is the wrong way. Create the national infrastructure for a digital economy and let banks ride on it, and make sure it works,» Mohanty said at the Milken Institute Asia Summit in Singapore on Friday.
Mohanty explained the business model of big tech and the competitive advantage these firms have when venturing into financial services, citing issues including competition, data privacy and other negative externalities, especially as they build closed-loop systems and scale at ease.
«This is where policymakers should start looking because it's all cross-related,» he said.
National Infrastructure
Instead of allowing closed systems to thrive and solving issues within the context of the physical world, Mohanty said that putting in place a national infrastructure that manages core issues – trust, data privacy, seamless and interoperable payments – would make digital banking easier.
«I think countries that build this foundational infrastructure will find far superior ways to deal with these challenges and address the big tech companies,» adding that the cost of transactions would also go down.
«New technologies are coming to make things easier, but you must have a foundational infrastructure to run these ideas,» he said about blockchain and distributed ledger technology.
