Banking practices an obstacle for Singapore Fintechs

A recent study by Fintech Nation blames unhealthy banking practices in allowing access to APIs in the growth of small fintechs in Singapore:

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While Singapore is considered as a global fintech powerhouse, the country's small fintechs are at a severe disadvantage in that they are being prevented from making use of the very systems they would need to flourish - 'blocked by opaque banking practices and restricted access to critical APIs'. This is the finding by Fintech Nation, Singapore's not-for-profit grassroot initiative, to bring together fintech community, regulators, investors, startups and corporates.

There is a staggering 85% of fintech companies that have faced delays or outright denial of access to essential banking APIs, and for startups that rely on these APIs to provide seamless services such as SME lending or embedded finance, this is not just a hurdle but a wall, says the study.

More worrying, according to the study, is that only 10% have access to real-time banking data, which is vital for credit scoring and dynamic financial products. "Without it, fintechs are flying blind, unable to deliver the fast, personalized solutions that SMEs increasingly expect," the study concludes.

COMMUNICATION BLOCKS

The study avers that beyond the technical lockout, fintechs also face inconsistent and unstructured communication with financial institutions and the lack of transparent engagement protocols makes integration harder and slows down time-to-market, a critical disadvantage in the fast-moving digital economy.

"This fragmented approach runs counter to Singapore's ambition of becoming a digital finance hub," warns the study, maintaining that "Instead of enabling healthy competition, it allows incumbent banks to dictate the terms of participation or exclude players altogether."

Even as it diagnoses the problem, it has suggested a way ahead, which includes collaborative API sandboxes where fintechs can test integrations in safe environments, and a centralized API directory to clarify access protocols across major banks.