December 2, 2016
It was a full house and many people were standing at the back and on the sides of the room. November 14, 2016, was the first day of the Singapore FinTech festival and Life.SREDA hosted a special event to discuss some real challenges of FinTech development in Asia and the steps to be taken towards building a successful FinTech ecosystem. The main topics discussed during the event were Bank-as-a-Service and open API banking as the way to address existing challenges and to make a substantial impact on the success of the FinTech ecosystem. The event saw prominent figures from the FinTech industry share their thoughts along with panel discussions.
So let’s jump in to see what we learned from the various speakers.
Speaker: Chris Skinner, CEO of The Finanser and Chairman of The Financial Services Club
Evolution and importance of bank-as-a-service for the future of banking
Chris Skinner mainly spoke about open sourcing finance using APIs, apps and analytics. Technology is leveling the playing field for finance to platforms and marketplaces, where any company can deploy just a piece of financial processing and make a fortune. An example of this is Stripe.
It’s all about moving from closed and proprietary systems that banks own and control to the opening to banking-as-a-service. An analogy is the car industry, where they used to make all the parts, build the cars, sell the cars and service them. Now, car manufacturers just assemble a bunch of components made by others and ship them to distributors.
BaaS platform and the open API economy – the only future for FinTech in Asia. BAASIS Case Study
Vladislav Solodkiy spoke about BaaS platform and the open API economy and how essential it is for the future of FinTech in Asia. He spoke about how a FinTech hub means catering to several markets and cannot be limited to one country. Scaling a FinTech business is critical to success but going to a new country means hiring new IT directors and managers, integrating into the backend and complying with regulations.
For Asian startups, it is easier to go from India to the UK or Singapore to the US rather than Indonesia, Malaysia, etc., but they face issues due to regulatory or technology hurdles in Asia. There are several startups that are trying to integrate into the backend systems of banks and trying to scale faster and at a lower cost. The issue is not just with FinTech startups alone, but also with e-commerce, telcos, messengers who want to integrate with banks but face several challenges due to differences in infrastructure.
Stripe and PayPal have shown us that it is possible to be successful using third-party developers and be open to using new ideas, technologies and resources from third parties. Banks have tried creating their own solutions from scratch and now the market is prepared to be united.
Players across APAC have to integrate using some middleware, using APIs that are available to the ecosystem so that FinTech startups and larger companies can launch and scale into new markets quickly. This is very important for the unbanked since new technologies usually prioritize developed markets. For example, between Myanmar and Australia, companies will always go to Australia. But if there is a middleware layer, it's possibly easier to get companies to serve unbanked countries with the same priority.
Igor Pesin, Partner at Life.SREDA and interim CEO of the fund’s strategic investment BAASIS, presented plans to create a pan-Asian API-based bank-as-a-service (BaaS) platform that intends to connect banks across Asia in order to provide core banking infrastructure for FinTech startups (not only from Asia, but also from other regions who plan to expand their operation to Asian markets), telcos, e-commerce and Internet giants, messengers and other non-banking financial corporations in Asia. BAASIS is a software platform with an API layer connecting banks and startups that helps to unify and transfer information from banks to FinTech in a standardized manner, functioning as a middleware and consists of a standardized suite of APIs that enables an effective flow of information. FinTech ventures and their systems do not need to communicate directly with the core banking systems. It solves this problem of FinTech by providing a common, unified infrastructure layer that will enable a simpler and faster launch in different countries.
BAASIS is a pan-Asian platform, meaning that it will connect banks from different countries and allow FinTech startups to easily scale from one market to another. So, BAASIS plays a role of ecosystem-builder: connecting banks, startups, regulators from different markets. BAASIS can help decrease the time to market for FinTech ventures and on the other hand, it can help banks reduce R&D expenses, generate new revenue streams, get new customers and increase the effectiveness of their processes and operations.
India Stack & JAM – Transformative Platforms for Financial services innovation
FinTech in India is a dramatic story. Traditionally a cash-based economy with less than 5% of personal expenditure being digital, only 25 million credit cards and less than 1.5 million POS terminals (and various such metrics), one would argue why we are even discussing FinTech innovation in India. But India has been reimagining financial services by the way of a fast and determined financial rewiring process. It all started with the Nandan Nilekani-led UIDAI creating Aadhar – that now has 1 billion people biometrically authenticated – and therefore, creating opportunities for digital onboarding and eKYC as done by Digibank and IDBI bank amongst others. Shown below is another such big initiative called India Stack which is acting as a base for innovation. Open API technology for developers to build solutions on:
India is building its financial services foundation with the direct involvement of the central government, regulators and various industry bodies and organizations. We are just getting started on a five-year journey of transformation. ePlumbing and rebuilding of scalable financial services infrastructure are happening now at a rapid pace. Startups should begin capitalizing on these tailwinds.
Founders and CEOs of some of the prominent startups from Asia and Europe like Ravi Patel from Yolopay, Dora Ziambra from Azimo, Andries De Vos from Slash, Rajinda Jayasinghe from Kashmi, Christopher Low from Softpay and Prajit Nanu from Instarem discussed their achievements along with issues and challenges for FinTech startups to launch and scale their business in SE Asia and Singapore specifically.
The event also saw female entrepreneurs like Ayesha Khanna, Chloé Gueguen, Isabella Carvalho, Ng Wan Peng and Dora Ziambra talk about the growing role of women in the FinTech industry. This is an important topic given how male-dominated FinTech is everywhere. This panel had several successful female leaders challenging the gender gap in finance as engineers, entrepreneurs, storytellers and problem-solvers.