“We will not frontrun innovation, we will not run behind innovation, but we will run together.”
The Fintech Beat podcast went in depth this month discussing the nitty-gritty of the first officially-sanctioned, blockchain-based, cross-border payment system with Singapore’s Fintech Chief, Sopnendu Mohanty. If Fintech Chief sounds like a government title you have never heard before, that’s to be expected—although more officers carry the title now, Mohanty was one of the first. For over a decade, Singapore has been at the forefront of innovation, spurred in part from its competition with Hong Kong as a leading financial center in Asia. Mohanty was tasked in 2015 with spearheading the FinTech and Innovation Group, or FTIG, a program responsible for coordinating for the Singaporean government “regulatory policies and development strategies to facilitate the use of technology and innovation to better manage risks, enhance efficiency, and strengthen competitiveness in the financial sector.” As such, he was critical in the partnership between Temasek, the Singaporean Sovereign Wealth Fund, DBS Bank (which is headquartered in Singapore) and JP Morgan in the launch of Partior, a new platform for trade being called a “watershed in the global financial system” for its ability to offer instantaneous cross-border trade.
Mohanty is the latest of a string of regulators from around the world who have offered their insights on financial technology on the program. This month, the program sets the stage by outlining the strategic importance of Singapore, which “was one of the first in the world to embrace new developments in financial technology and secured its place as one of the fastest moving countries in Asia in the deployment of Blockchain and digital payment innovations.” What began as the five-part pilot project called Project Ubin, and which was meant to explore the use of blockchain, has evolved into a commercial platform. The platform, called Partior, will, according to Mohanty, “allow you to settle different cross-border payments with different currencies efficiently, by removing the individual processes.”
One interesting question Dr. Brummer asked was whether Partior would rely on JPM Coin, the blockchain architecture and cryptocurrency developed by JPMorgan, and Mohanty was quick to dismiss the two projects as having any overlap. In contrast to JPM Coin, “Partior is designed to be an open, multi-bank network that will see participation from multiple commercial banks,” he said. The goal, he suggests, is to provide an initial architecture for eventually evolving into the go-to platform for cross-border payments and foreign exchange. Mohanty, again and again in the interview, returns to the core concept of the program: making international payments smoother, more viable, instantaneous, and extremely accessible. This concept and the problem solving it provides is what Mohanty believes will make for the push for building a customer base. The initial focus will be building a suite of services involving major currencies like the U.S. dollar.
As new as blockchain – and specifically an open-ledger platform – are, Singapore is moving fast to experiment with them and put them to practical use for international payments. Mohanty describes his core philosophy as not wanting to run behind or in front of technology, but alongside it. Partior isn’t available internationally yet, for now being used in Singapore, facilitating the movement in funds from USD to SGD. The “smart-contracts” experimented on in Project Ubin, without which Mohanty readily admits Partior would not be possible, allow for a financial freedom in cross-border transactions that was next-to-impossible beforehand.
Mohanty has one major piece of advice for financial advisors from abroad: innovation is built from the ground up. A three-click instantaneous bank transfer system was developed from the ground up in Singapore, partnered with another program in Thailand, and only then did it become viable to take a system that efficient and increase its scope. South East Asia, with its many interconnected countries separated by borders and languages, was uniquely situated to experiment with cross-border transactions and find efficient solutions for them in ways the continental United States simply isn’t. Now what started small could become a platform that’s eventually available through all major banks.
It’s worth noting that like his guests, Dr. Chris Brummer is also an expert in financial technology, and has been called on by government agencies to advise them on fintech. Besides serving on the CFTC’s subcommittee on virtual currencies, he also advised ESMA on topics involving the regulation and oversight of financial innovation in Europe. He also served on President Joe Biden’s transition team. And as a professor and faculty director of Georgetown’s Institute of International Economic Law, he’s not only worked on international finance, but also diversity, a point highlighted in his influential report “What Do the Data Reveal About (the absence of Black) Financial Regulators?” which was published by Brookings in September last year. The conversation is in many ways an outgrowth of Dr. Brummer’s many activities, including the DC Fintech Week Conference that he has organized for several years—a week of global, free-for-the-public panels and discussions in the nation’s capital with the goal of democratizing information about the future of financial technology. In every aspect of his work, Fintech Beatincluded, Dr. Chris Brummer carries a passion for the future of finance, a future in which more diverse voices are becoming increasingly more prominent and essential.
In his weekly observations after the conversation, Dr. Brummer emphasizes that “being first matters,” and he notes that “financial technology, like the greater digital economy, is one [that reflects] network externalities, and the more people or actors that opt onto a platform, the more that platform will usually, all things being equal, be either more efficient, or profitable, or both, when compared to competitors.” This is, he observes, one reason why announcements like that issued in Singapore are important. They point to a landscape where the race to build a next generation cross-border payments system is very much underway, and it’s one where Southeast Asia, with some participation by a leading US company, is announcing the first shot. But, he notes that ultimately, the story is far from over: “The response both in the region, and around the world, will be worth watching.”