Co-Creation vs Regulation in Governance of the Financial Sector: The Case of Monetary Authority of Singapore

Co-creation in the field of financial services is not a new topic. This has previously been the realm of private banks and insurance companies working together with customers to identify their needs and create better services... [ view full abstract ]

Co-creation in the field of financial services is not a new topic. This has previously been the realm of private banks and insurance companies working together with customers to identify their needs and create better services – e.g., electronic payment services etc. However, by now, co-creation discourse as part of collaborative governance has also reached the sphere of public finance.

Traditionally public finance units – public financial supervision authorities, central banks – have been rather rigid and relied on strict mechanisms and regulations to control the sector. Nevertheless, the benefits of more collaborative governance methods seem to have – to a degree – been accepted by financial authorities who try to reach sectoral goals (which lie outside the direct reach of regulation) through co-creation.

In this paper we analyze how effective co-creation in the financial sector can be compared to more rigid policy instruments, incl. regulation and what effect it can have on the field of financial policy. As co-creation in the public sector setting has usually been analyzed in the context of social innovation, working together with citizens; new insights can be gained from looking at co-creation in the financial sector where the state’s partners are capable, large private sector organizations with high levels of capacity in their field. We also look at how technology facilitates such organisational developments.

We specifically look at the case of the Monetary Authority of Singapore, a de facto central bank, which has taken steps to actively and formally collaborate with the private sector on a number issues: from monetary policy to legal matters. The context of state capitalism in Singapore as well as co-evolution of its public and private structures presents us with an extreme and rich case to analyze possible effects of co-creation vs regulation in governance of the financial sector.