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Is FinTech Going To Destroy Traditional Banks In Singapore?

Innovations in the technological space that deal with the financial sector, commonly known as FinTech, appears to be growing in importance in Singapore. And, the movement has the support of the Singapore government.

As one example, the Monetary Authority of Singapore (MAS) announced earlier this month that it will be partnering the National Research Foundation to start a FinTech Office in May. The FinTech Office will be a platform to promote Singapore as a FinTech hub in Asia.

But, with traditional banks such as DBS Group Holdings Ltd (SGX: D05)Oversea-Chinese Banking Corp Limited (SGX: O39), and United Overseas Bank Ltd (SGX: U11) all counting Singapore as their most important geographical market, will this emphasis on growing FinTech cause the business models of the banks to be under threat?

Thing is, there are signs that FinTech companies might actually help traditional banks rather than be a threat.

For example, DBS Group announced only a few days ago that it has inked cross-referral agreements with two peer-to-peer (P2P) lending sites – Funding Societies and MoolahSense.

From time to time, DBS Group will receive loan applications from smaller businesses that it can’t lend to. The partnership with the P2P lending sites allow DBS Group to refer these smaller businesses to said sites. Funding Societies or MoolahSense can then try to serve these businesses by connecting them directly with investors.

Meanwhile, the P2P lending sites can refer investors who have used their platforms in the past to DBS Group for larger commercial loans and other financial services such as cash management.

The agreement between DBS Group and Funding Societies and MoolahSense marks the first partnership deal between FinTech startups and a major commercial bank. It also highlights to investors the idea that FinTech companies may even be an interesting area of growth for traditional banks.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore writer Stanley Lim doesn’t own shares in any companies mentioned.