Monetary Authority of Singapore Managing Director Ravi Menon said people should be wary of peer-to-peer lending platforms and cryptocurrencies such as Bitcoin whose value surged past US$7,000 for the first time in early November, according to a Bloomberg report.
"I do see some collapse of the bubble in the fintech space. Some business models, some applications of technology are clearly overstretched," Menon was quoted as saying in the report.
He compared the current fintech development with the dot-com bubble at the turn of the century. “At some point in the current euphoria about fintech, there will be some reckoning of that sort,” Menon was cited as saying in the report. “But I do hope that it does not sweep away everything as it did in 2001, sweep away the good as well as the hype.”
One area of the regulator’s concern is P2P lending platforms on which investors are connected to borrowers and charge both parties fees. While these platforms allow people with poor access to bank loans to borrow from investors, they can be used to defraud investors as well.
The MAS chief also observed that big data and the unprecedented access to customer data by organizations via social media and smartphone apps can be misused and create problems.
Having voiced its concerns, the regulator does not mean to be against Fintech. The MAS has set aside about US$165 million for a five-year plan to nurture fintech since 2015 and is spearheading Project Ubin, a blockchain-based project to facilitate cross-border payments. Menon is also a proponent of the cryptocurrency’s underlying distributed-ledger technology.