Chia Hock Lai has nearly two decades of experience in the financial and technology sector. He is the former and founding president of the Singapore FinTech Association, former chairman of the Blockchain Association Singapore, and co-founder of the Global FinTech Institute.
At the Asia FinTech Awards 2023 in Singapore, FinTech Intel’s editor, Josh Poyser, sat down with Hock Lai. They discussed the strength of Singapore’s fintech sector, exciting trends to watch out for, and the future of web3.
Can you talk about the start of your career working in real estate, a sector that seems far away from fintech?
While my degree is in real estate, I have always been interested in the digital space. I am a self-taught programmer. So, it became natural for me to work with things related to tech in the working world.
My first job was at an insurance company, handling commercial real estate investment, where I was also given the role as the information management executive. In this role I was handling big data and extracting reports.
Then about one and a half years later, during the dotcom boom, I requested to transfer to the ecommerce department, because I felt my passion was applying technology to business. After that all my roles involved tech.
How did you transition into fintech?
I would say it was accidental. In 2016 the headlines were dominated by fintech. At the time, people in the financial services industry—and other sectors—didn’t know what fintech was. This aroused my interest. So, I started to learn about the industry. At this time the Monetary Authority of Singapore was planning its fintech strategy. They wanted to create an association, and I, among others, appeared on the radar to help to set it up.
Then you moved into blockchain technology?
In 2020 I saw a gap and noticed that the blockchain sector was neglected. There is part of blockchain which comes under financial services, and there is a big part that is not, such as supply chains and verifiable records. As the sector was not getting much attention, this led me to set up the Blockchain Association of Singapore.
What have you learnt about the fintech sector in Singapore, working for these associations?
Singapore has been very successful in this area. It is quite state driven, but the association does a lot of groundwork activities. This was a special combination and made Singapore a leading fintech hub.
Singapore’s strength is that we have excellent soft and hard infrastructure. This attracts a lot of fintechs to base themselves here. ASEAN also has a big market with a significant size of internet savvy people, and Singapore is a perfect launchpad to access to those markets. It is also relatively easy to raise funds here, being one of the top financial centres. Singapore acts as a great hub for the region, similar to Dubai in the Middle East.
Looking wider, what about the ASEAN market?
It is a big market with a population of 670m. But it’s fragmented. So, it’s not easy for a company to come in and dominate, it has to do it one country at a time and localise its software stack. But this does allow for a vibrant and diversified market. If it was homogenous, it could be dominated by a few global fintech companies.
A lot of the ASEAN market is unbanked or underbanked. This is where fintech shines, by providing access to banking services. Whether it’s allowing people to get their salary paid into their accounts or to send remittances. And as countries develop, the range of fintech services will extend with it.
This year I visited Thailand and the Philippines. The markets have matured significantly, in part due to COVID, which sped up the digital transformation. This is where fintech can have the biggest impact.
And while these markets are big, the transaction values are small. A traditional financial institution would not be able to do it cost effectively because of the legacy systems and cost base. This in part explains why the banking penetration is so low, because many countries in this region are geographically sparse, making it is costly to build an extensive branch network.
Can you give a general overview of the fintech sector in Singapore?
Between 2015 to 2018, a lot of financial institutions underwent a digital transformation, led by the regulator and the MAS. This is when Singapore’s fintech journey started. Institutions started to put in a lot of resources. And the light touch of Singapore’s regulators, attracted innovative fintech companies to set up here.
On one hand we had financial institutions undergoing digital transformation. On the other hand, global fintechs started to sprout up in Singapore. Very often both are collaborating with one another. This is because traditionally financial institutions will spend more than 80% of their budget on things that keep the lights on and less on innovation. So often they have to collaborate with a startup if they want to touch on something related to emerging technology, like AI or blockchain. For this reason, there’s a lot of collaborations between banks and fintechs in Singapore.
The country also has a small home market, with a population of 5.5 m. But there is a big B2B market, with more than 200 institutions and more than 7,000 multinational corporations. Therefore, the composition of fintechs in Singapore are predominantly B2B or B2B2C. Overtime, companies realised if its market is B2C, it will have to market to ASEAN, using Singapore as a home base.
What area of fintech are you most excited about?
The interplay between web2 and web3 fintechs. I don’t think the transition is going to be binary, but more like an evolution than revolution. Web3 will be driven by the end consumers, especially the Gen Z’s. They will demand web3 solutions. This will drive a shift towards it.
The regulatory clarity that we are seeing now will also help to move the next adoption to this space.
Elsewhere, I recently went to Saudi Arabia and I was I impressed with what I saw. The country elevated fintech to a national strategy last year. They are putting in a lot of money into this space, which will attract a lot of interest and investors. Dubai is also doing well in this space.
In general, countries that balance regulation and innovation will do well.
How decentralised do you think web3 will be?
I think there will be a compromise between decentralisation and regulation. Because to bank the next generation you need regulation and trust that this is a safe place to handle your finances. What is exciting, is what the web3 tech stack will look like. There will be a lot of innovation and also regulation in this space.