The Monetary Authority of Singapore (MAS) has announced a new grant program targeting Regulatory Technology or Regtech that is said to be an enhancement of the Digital Acceleration Grant (DAG) scheme to accelerate technology adoption. In a public statement, MAS said it will commit S$42 million for the Regtech grant scheme and enhanced DAG scheme.
Sopnendu Mohanty, Chief Fintech Officer at MAS, stated:
“MAS remains committed to the digital transformation of the Singapore financial sector. We expect the RegTech ecosystem to flourish with widespread use of innovative solutions to aid risk management and compliance. The Digital Acceleration Grant has enabled the smaller FIs and FinTech firms to adapt to the challenges in the past year and we will continue to support these firms as they accelerate their digital transformation journey. We encourage FIs to tap on these grants to embed technology into the firms’ DNA.”
The grant is being made available to Singapore-based financial institutions (FIs) and seeks to promote the adoption and integration of technology solutions in the risk management and compliance functions of financial services firms.
There will be two tracks for the grants including:
- The pilot track: FIs can seek funding to pilot potential RegTech solutions before embarking on full-scale integration of the product into its operating environment. Funding for this track will be capped at S$75,000.
- The production level project track: FIs can seek funding to develop larger-scale customised projects that can be fully integrated into the FI’s systems. Funding for such projects will be capped at S$300,000.
MAS states that both tracks can be used to support either in-house development or commercial partnerships with Regtech firms based in Singapore.
The DAG was launched in April 2020 to help smaller FIs and Fintech firms adopt digital solutions to better cope with the impact of COVID-19, and to position themselves for subsequent recovery and growth. As of 31 March 2021, MAS reports that it has received over 1,100 applications from both FIs and Fintech firms.
MAS said it will commit an additional S$30 million to the DAG until 31 December 2021 to encourage the industry to adopt digital solutions that enhance productivity, cybersecurity, and operational efficiency. This brings the total grants available under the DAG scheme to S$65 million.
Ian Lee, Vice President of Business Development at Merkle Science, a Singapore-based blockchain transaction risk monitoring and analytics platform, issued a comment on the new Regtech funding.
“Regtech solutions are having a difficult time gaining market share here in Singapore and abroad. Oftentimes, startups at their initial stages have to give away their solutions at a low cost — or sometimes even for free — in order to gain traction and receive feedback on their product. With startups’ limited resources, it is difficult for these innovative new startups to compete with larger legacy firms. With this new $42 million grant, the MAS is supporting the development of local Regtech startups and encouraging innovation in two ways. Firstly, the grant furthers the existing Digital Acceleration Grant (DAG) scheme, which is available to any startup that services financial institutions. Through the extension of the DAG, financial institutions can also use the grant to subsidize their cost of operation.”
Lee added that an interesting feature of the new Regtech grant is for providers to pilot their solutions and test for efficacy under a paid model.
“While the details on this feature have not been released yet, it sounds like there may be subsidies for established companies to use and test the solution before the startup moves the solution to full-scale production.”