Singapore Favors `Organic' Policy in Move Toward Open Banking
(Bloomberg) -- Singapore wants its lenders to share data with financial technology and other non-bank firms, but doesn’t plan to force the issue, according to a central bank official.
The transition towards “open banking” can be more successful if it takes place without the regulator mandating action, said David Hardoon, Chief Data Officer at the Monetary Authority of Singapore. “You can come and say ‘thou shall do it’ but then nothing happens effectively,” Hardoon said in a Wednesday interview.
The MAS’s policy differs from the approach taken in Europe and Japan, where regulators have set deadlines for banks to give access to their client data to rivals and to fintech firms. In Europe, banks have until 2019 to comply with the revised Payment Services Directive (PSD2), which obliges them to share client account data.
Read how European banks are adopting data-sharing practices under new EU regulations
Singapore’s banks already see the advantages of open banking and are taking action to share their data, Hardoon said. “The point being, we are heading there in an organic fashion,” he added. “I believe the open banking approach is a good thing and definitely can benefit Singapore.”
DBS Group Holdings Ltd., Singapore’s largest bank, launched a platform in November which allows third-party developers to access 155 of its application programming interfaces for functions such as real-time payments. Oversea-Chinese Banking Corp., which introduced its API platform in May 2016, has announced a data-sharing partnership with telecom-services provider StarHub Ltd. that allows cross-selling to their respective customers.
The MAS plans to come up with guidelines for ethical usage of data analytics and artificial intelligence that could work with both regulated and unregulated industry participants, Hardoon said. Banks and fintech firms need to not just focus on getting the initial permission for data use, but also to understand how to use that data once they have the permission, he said.
The importance of safeguarding customer data has been highlighted by the leak from Facebook Inc. of information from as many as 87 million users, siphoned to Cambridge Analytica, a British firm with ties to the 2016 campaign of President Donald Trump.
One of the key takeaways from Facebook is it further reinforces the point that this is a "very new area," Hardoon said in an interview with Bloomberg Television. Companies and regulators are "still figuring it out" and along the way, mistakes happen, which underlines the need for regulators to be proactive in guarding against them, he said.
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