Singapore is making a big noise about the importance of setting appropriate rules to govern the rapid growth of fintech.

Singapore’s financial regulator is consulting with the industry on how regulation around the exploding world of fintech can be best crafted. 

The Monetary Authority of Singapore has issued a paper on proposed guidelines for a regulatory "sandbox” to enable financial and non-financial institutions to experiment with fintech ideas.

In recent years, technologies around areas such as machine learning, robotics, artificial intelligence, cloud computing and digital currencies have roiled the world’s banking and investment sectors. With compliance and regulatory costs rising, fintech is seen as offering some solutions such as cost-effective advice and asset management capabilities. A number of banks in Asia and elsewhere are also setting up fintech “innovation labs” so that they are not overtaken by upstart businesses. (For more on this area, click here.)

MAS said its regulatory sandbox will enable financial institutions or any interested firms to experiment with innovative fintech solutions in an “environment where actual products or services are provided to the customers but within a well-defined space and duration”. 

In terms of duration, MAS will relax specific regulatory requirements which an applicant would otherwise be subject to, MAS said in a statement yesterday.

“MAS recognises that failure is often a feature of such experiments and the purpose of the regulatory sandbox is to provide appropriate safeguards to contain the consequences of failure for customers rather than to prevent failure altogether,” it said.

The public consultation will be open from 6 June 2016 to 8 July.