Singapore Monetary Authority (MAS) has announced a commitment of up to S$150 million over three years to advance technology and innovation in the financial sector. Unveiled on August 7, 2023, this initiative, known as the Financial Sector Technology and Innovation Scheme (FSTI 3.0), aims to accelerate and strengthen innovation across the industry.
Main components of FSTI 3.0
Enhanced Center of Excellence track: Formerly known as the Innovation Labs track, this segment now includes corporate venture capital (CVC) entities. The funding support covers up to 50% of qualifying expenses, with a maximum of S$2 million per project. This allows CVCs to guide and support start-ups, enabling them to scale and develop resilient business models.
Innovation Acceleration Track: MAS recognizes the importance of emerging technologies such as Web 3.0 and will open calls for innovative technologies in industry use cases. Grant will be provided to support trials and commercialization.
Environmental, Social and Governance (ESG) FinTech Track: This track is designed to support the development and implementation of projects that address ESG data, reporting and analytics needs within the financial industry. Funding support will be a maximum of 50% of qualifying expenses, capped at S$500,000 per project.
Continued support for advanced capability development: FSTI 3.0 will also continue to support areas such as Artificial Intelligence and Data Analytics (AIDA) and Regulatory Technology (RegTech), with a focus on driving AIDA adoption in smaller financial firms and supporting less digital mature companies in acquiring RegTech solutions.
Historical context
Since 2015, the Financial Sector Development Fund (FSDF) has awarded $340 million as part of the FSTI program to drive technology adoption and innovation in the financial sector. Projects MAS has implemented include SGFinDex, Purpose Bound Money from Project Orchid, Responsible AI from Project Veritas, green and sustainable finance through Project Greenprint, and major payment initiatives such as the cross-border payment link with Thailand.
The FSTI 3.0 scheme represents an important step in Singapore’s ongoing efforts to foster a vibrant technology ecosystem within the financial sector. By focusing on areas such as CVC mentorship, Web 3.0 innovation, ESG solutions, and AI and RegTech adoption, the initiative aligns with global trends and local needs. Like Mr. Ravi Menon, Managing Director, MAS, said: “With FSTI 3.0, we look forward to further working with the industry to drive targeted financial innovation.”
Global landscape of Web3
Hong Kong is emerging as a major rival to Singapore to become a hub for Web3. On June 26, 2023, Chief Executive John Lee Ka-chiu underlined Hong Kong’s ability to leverage its status as an international financial center to promote the growth of advanced technologies, with a particular focus on Web3.0.
To further emphasize this ambition, Finance Secretary Paul Chan, in a speech on July 9, 2023, articulated Hong Kong’s goal to become a global leader in two high-growth areas: green finance and Web 3.0.
However, recent data paint a contrasting picture. Crunchbase statistics show a significant drop in Web3 investment. Venture funding for Web3 startups, including cryptocurrency and blockchain ventures, plummeted in the second quarter of 2023. In total, just over $1.8 billion was raised through 322 deals, a 76% decline in fundraising compared to the same period last year. This represents a 51% decline in transaction flow and a decline of more than three-quarters from the second quarter of 2022, when industry entrepreneurs raised more than $7.5 billion.
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