Open Banking is Broken in Singapore
When rhetoric fails to translate into reality
You do not own your own financial data.
In Singapore, banks, and other financial institutions own your data: what you have, how much, what you spend it on, or how you invest it. If you want to retrieve it, you’d be lucky if you could even pay for it.
What’s wrong with that, you ask?
Good question, read on.
What is Open Banking?
In places like the US and even India, people can use apps that allow them to manage all their bank accounts, investments, insurance policies, and more from a single app. These include apps like Monarch Money and previously Mint.com in the US, and Finary - the most popular French language personal finance app in the world.
Better yet, anyone can build apps to offer you innovative financial services that existing banks do not.
That’s because regulators in those countries make it mandatory for banks and financial institutions to allow their customers to give third-party providers access to their financial data securely, typically through APIs (Application Programming Interfaces).
But in Singapore, that isn’t the case. Here’s why open banking isn’t a reality here, why that’s a problem, and what we can do about it.
Why Should I Care About Open Banking?
Open banking allows for more innovation in the financial services available to you.
For instance, I could say, design an app that automatically scans your purchasing history, and automatically matches you with the best credit cards to maximize your rewards like air miles. Better still, it could maximize your miles for the specific airlines that you regularly fly with.
Or someone else could create an app that can help you automatically move your money across different savings accounts, or fixed deposits to maximize the total interest you can earn on your savings.
Perhaps another company could develop an app that identifies investors whose portfolio outperforms yours, and automatically allows you to copy their investing strategies.
Beloved apps like Wealthfront and Betterment in the US are indispensable to users' lives because they can aggregate wealth information and help users make more informed financial decisions.
The possibilities are endless. But none of this is possible without open banking regulations.
False Doors: Singapore’s Open Banking Illusion
In Singapore, regulators encourage, but do not mandate open banking. The Monetary Authority of Singapore (MAS) believes that financial institutions and fintech firms should voluntarily collaborate to develop solutions that benefit consumers and businesses.
However, this collaboration is largely absent in reality. While Singapore touts open banking, the system remains closed and siloed in practice.
In a market-driven model, the most powerful players like the banks hold significant control and may be hesitant to fully embrace collaborations with fintechs. As data sharing is not mandatory, banks can choose to keep your data closed from other players who might offer you better services - and as I will show, that’s exactly what they do.
This contrasts sharply with the US, where regulations prevent banks from denying customer requests to share their data with third-party apps.
Government initiatives like SGFinDex, while commendable in principle, fall short in practice. SGFinDex aims to provide individuals with access to their financial information across various government agencies and financial institutions.
However, it notably excludes brokerages, robo-advisors, fintechs, and other investment platforms like Interactive Brokers, MooMoo, and Endowus. Despite the presence of over 1,600 fintech companies in Singapore, only 16 companies are listed in the SGFinDex documentation as participants.
Can we really say that banking in Singapore is truly open?
Our Experience
We’re building Peek, an AI-powered app to be your personal finance CFO. But to do that, we need you to be able to aggregate your financial data to guide you on how to grow your wealth.
Soon, we will have coverage of 80-90% of Singapore accounts from brokerages to robo-advisors. This means users can soon access real-time portfolio information across accounts like IBKR, Tiger, Moomoo, Endowus, and many more, reducing the process of copy-pasting and analyzing your data from hours to minutes.
The only missing piece is your data - that the banks continue to keep behind very heavy, expensive doors.
Nearly 50% of Peek’s users have asked for an API connection to their Singapore bank accounts. This is not a surprise, as in 2022, 99% of customers in Singapore considered open banking either a ‘must have’ or ‘important’.
Yet, despite this demand, we along with other fintech payers in Singapore were denied from access to SGFinDex.
What You Can Do
In the final analysis, open banking is a question of how competitive and innovative we want Singapore’s financial services sector to be. When large companies are protected from competition, everyone else loses - including the incumbents in the long run.
At Peek, our mission is to champion a more open and inclusive financial system that empowers consumers like you.
As consumers, we hold the power to make a difference through voting with our dollars.
You can choose to keep more of your money outside of banks. Keep your savings in a money market fund, or US T-Bills on a brokerage. Invest with fintech platforms that support Open APIs - like brokerages and exchanges such as Interactive Brokers, Saxo, and Coinbase.
If you share our vision of a more transparent and user-centric financial system, we invite you to try out Peek, and join us on our journey.