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Singapore regulators apply 'sandbox' to support local fintech start-up

Monetary authority suspends rules to allow PolicyPal to grow

Most of the staff at Singapore fintech start-up PolicyPal, including CEO Val Yap, right, are young.

SINGAPORE -- The "regulatory sandbox" system, which suspends regulations on a trial basis at the request of businesses, is a key part of the growth strategy the Japanese government worked out this year. Similar systems are already in use elsewhere in the world.

One example of a fintech start-up in Singapore that is taking advantage of the system to help accelerate its growth is PolicyPal, which provides a smartphone app that helps the user manage all of his or her insurance policies easily.

Personal experience led PolicyPal CEO Val Yap to start the company. When a close relative died or received hospital treatment, she helped them by locating their insurance policies and applying for insurance payments. But she became fed up with the complexity of the coverage details and having to pore over page after page of forms.

She quickly realized there was a business opportunity there, and soon the PolicyPal app, specifically designed to address the problem, was born. Using the app, the user takes a snapshot of a policy summary page with a smartphone. Then the coverage details are organized for viewing on the screen.

The "sandbox" treatment was applied to PolicyPal in March, nearly a year after the company started operations. It is now exempted from a regulation applicable to insurance brokers, so it does not have to meet regulatory requirements in selling insurance policies. Before purchasing a policy, PolicyPal customers are required to read a disclaimer saying the company is outside the scope of regulatory stipulations.

When Yap revealed her plan to apply for the sandbox, her staff worried that negotiations with the authorities might drag on, slowing the company's growth. As it turned out, the Monetary Authority of Singapore officials, who are tasked with supporting financial start-ups in the country in their efforts to expand into broader Asia, were helpful, not only advising her about regulations but also making constructive proposals about PolicyPal's business.

Yap said conversations with MAS officials were especially helpful in filling gaps in her knowledge about compliance with the law and regulations, and they taught her to work with the authorities.

As its sandbox treatment expires at the end of August, PolicyPal is making preparations to obtain necessary license to continue operating. It plans to raise capital and hire individuals with industry experience of 10 years or longer for its senior positions.

Yap's experience with MAS shows that a financial watchdog can play a great role in supporting business. It can not only provide the sandbox itself, but also teach start-ups how they can play by the rules -- just as parents tell kids to play by the rules in the sandbox.

Doing that may be a challenge for Japan's authorities, where bureaucrats' conservative, condescending outlook is still very much the norm and they have a strong inclination to remain neutral.

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