The Monetary Authority of Singapore (MAS) and the Abu Dhabi Global Market (ADGM) announced today that they’ve agreed to cooperate on projects designed to encourage the growth of fintech in both Singapore and Abu Dhabi.
Details about the arrangement are sparse at this point, but it’s clear that the focus will be to improve the regulatory environment for budding startups. Both government bodies will explore “joint innovation projects” in the fields of digital and mobile payments, blockchain, big data, and other technologies of the future.
In June, the MAS introduced the concept of a fintech sandbox, a live environment where financial institutions and fintech startups can test new products and services.
One of the goals of the sandbox is to build bridges between ambitious entrepreneurs and a potentially murky regulatory landscape. It’s apparent that the Singaporean government understands that smart founders may not go ahead with building products if they feel existing regulations will hurt them in the long run.
Hence the experimentation space, where existing legal requirements are relaxed for a specific duration of time. It’s designed to understand whether future products resonate with users while maintaining the overall health of the financial system.
Wealthy Gulf city-states such as Abu Dhabi seek a similar approach, reported the Financial Times in October. Such administrations have traditionally relied on oil as the main source of revenue. However, tanking global prices of the black gold have necessitated a change in approach and a shift towards greater economic diversification.
The local market and ecosystem in the United Arab Emirates is small – similar to Singapore – but the expectation is for startups to use the business-friendly policies as a launching pad to the rest of the wider Middle East.
“Asia and the MENA regions have immense growth potential and a large underserved financial sector. We hope that, through closer collaboration with like-minded fintech hubs, we are able to leverage the strengths and expertise of our markets,” added Richard Teng, CEO of ADGM, in an emailed statement.