Ravi Menon: Basics for smart finance – common standards and seamless data Closing remarks by Mr Ravi Menon, Managing Director of the Monetary Authority of Singapore, at the SIBOS Conference, Singapore, 15 October 2015. *  *  *  Mr Yawar Shah, Chairman, SWIFT Mr Gottfried Leibbrandt, CEO, SWIFT Ladies and gentlemen, good afternoon. A. Revolution in communications  “What hath God wrought?” read the first telegraphic message sent by Samuel Morse on 24th May, 1844. The telegraph marked a revolution in communications at the time. •  Transatlantic telegraph cables cut communications between America and Europe from about 10 days – the time it took for steam ships to sail across the Atlantic – to a matter of minutes. •  In fact, the mid-19th century leaps in transport and communications technologies ushered in the first phase of economic and financial globalisation. Ground-breaking as the telegraph was, a text message that takes minutes to arrive will be considered glacial by today’s standards. It will certainly not be able to support the frenetic pace of communications in the global financial system. Thankfully, we have SWIFT. Last year, there were 5.6 billion messages carried globally on SWIFT’s network. •  Close to half the messages related to international payments, which lies at the heart of global banking. •  Technology has transformed cross-border finance. Smart Financial Centre It is MAS’s conviction that innovation and technology will be critical to the future growth and success of Singapore’s financial sector.
In particular, mashing together diverse data sets offers the possibility of new types of insights. New software algorithms crunch the enlarged Big Data sets to make more reliable predictions on repayment and hence improve performance of loan portfolios. •  For example, a lender to small businesses requires access to the company’s bank and credit card accounts, to constantly monitor the company’s cash flow and hence ability to repay the loan. Application programming interfaces Despite the greater availability of data and the possibilities for harnessing this data opened by technology, financial institutions continue to face challenges on the data front. •  More data means more cost. •  While technology has significantly reduced the unit costs of data gathering, it has ironically also raised the potential total cost of data by opening more possibilities for data mining and analysis. One way to improve access to data without raising costs significantly would be for the industry to pool relevant data together. •  The benefits of aggregating data across the industry can be seen from our experience with the credit bureau, which has allowed banks to make better credit underwriting decisions. •  However, concerns over confidentiality and market sensitivity have held back data sharing among financial institutions and restricted public access to data. One effective way to achieve seamless data sharing is through the publication of open Application Programming Interfaces, or APIs, by financial institutions for data submission.