Enabling Technologies

Putting the Tech Back in FinTech – SeedPlus Session

The advent of FinTech has led to many FinTech-oriented conversations focused on aspects other than technology – regulatory, sales, business, ecosystems, etc. The role of “Tech” has been somewhat dimmed as a part of FinTech. The event held at the end of 2017 by SeedPlus, AWS, TransferWise, and Let’s Talk Payments (LTP), represented an attempt to bring technology back into the center of the conversation. Here, we will share some of the key highlights.

Presentation by Myles Hosford, AWS APAC Security Solutions Architect

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Myles Hosford took a very matter-of-fact approach to explaining the benefits of FinTech startups partnering with AWS from a security and compliance standpoint. Most startups have a hard time understanding and meeting regulatory security guidelines. AWS has for the benefit of these smaller companies, created templates of security compliance requirements localized for Singapore, India amongst other major APAC countries. AWS provides world-class security services for FinTechs either free or low cost in a pay-as-you-go model. Some of the key benefits for the FinTech community are:

  • FinTechs can leverage AWS’ extensive compliance frameworks such as ISO27001, SOC1/2, and PCI-DSS to demonstrate security controls to their customers and achieve compliance themselves faster and at a reduced cost.

  • AWS Artifact allows FinTechs to ‘self-service’ compliance reports such as the Monetary Authority of Singapore Technology Risk Management (TRM) guidelines. This workbook maps AWS’ controls to the MAS TRM and allows FinTechs to overlay their own controls to be used in pre-sales or security conversations.

  • AWS Config Rules allows FinTechs to automate their security controls and compliance requirements in near-real time. This allows them to operate with transparency to their customers that they are implementing appropriate security controls.

Presentation by Vadym Vasyliev, Senior Software Engineering Lead at TransferWise

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Vadym Vasyliev gave a load down on how to build a FinTech product at scale. His presentation was more about organization structure and culture, and workflows/interactions within engineering and product teams to build an amazing product at scale.

Vadym spoke of different methodologies including:

  • A horizontal scaling approach where TransferWise runs autonomous, independent teams (startups within a startup), where each team has clear KPIs.

  • A culture of weak code ownership where each engineering teams has the freedom to change any other team’s code base to achieve their goals (KPIs) and a clear communicational loop to discuss and review their changes with teams whose code was changed. It allows every team to move faster and not wait behind the others.

  • A blameless post-mortem that focuses on the assessment of “what went wrong” without appropriating blame on an individual or person. The aim of it is to convert a negative situation into a discussion, learning and action points that would prevent similar issues from happening in future.

  • Feature Tag – an approach that suggests segregating feature releases from the actual moment when the feature is enabled. In this way, the code can be released into production but not enabled to the end-customers. After flipping the switch in a controlled manner, the feature can be enabled to a single, multiple or all customers. This approach allows to monitor the influence of new functionality, detect anomalies, and minimize their impact.

  • Monitoring and alerting tools used by developers to ensure any anomalies are flagged to the right subset of owners.

Vadym’s points are also applicable for startups working in areas beyond FinTech.

Panel Discussion: “Role of regulations in scaling regional markets”

The event concluded with a panel discussion on the role of regulations in scaling regional markets. The panel was moderated by Tiang Lim Foo, Operating Partner at SeedPlus.

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From left to right, Kwok Wai Lum – Executive Director of Capital Markets at Abu Dhabi Global Market, Jessica Chen Riolfi – Head of Asia at TransferWise, Aditya Khurjekar – CEO at Let’s Talk Payments/MEDICI, Tiang Lim Foo – Operating Partner at SeedPlus.

Aditya Khurjekar, CEO of Let’s Talk Payments/MEDICI, believes that “the regulator is a friend,” and emphasized the importance of FinTech startups to engage with appropriate regulators early and keeping them in the loop while innovating.

“Regulators are as eager to learn and they are as eager to internalize what is happening in the ecosystem. You don’t want the regulators to be the last ones to know about your ‘disruptive’ innovation. That will only end up disrupting your own plans!” he said.

Aditya believes that the future of the financial services industry is collaboration and not disruption.

“Big banks have the organizational knowledge, the inbuilt wisdom, built over decades and even centuries of dealing with the regulatory framework. That is a strength and not a weakness. Banks also have consumer trust built over decades and centuries of brand building, which the smart startups have learnt to use to their advantage.”

Kwok Wai Lum spoke about the need for collaboration between FI’s and FinTech’s and the importance of an open dialogue between the FinTechs and the Regulators. FIs and regulators will benefit from hiring from the FinTech industry and can better gauge the risks of technology and also benefits from it in the right way. Regulators like ADGM have embraced the need for policy changes with regards to the governance of FinTechs. “One size fits all” will not work.

ADGM’s RegLab is essentially a tailored regulatory regime for FinTech participants. It is designed to foster innovation within the UAE financial services market for both new market entrants and existing financial institutions. By taking into account the unique business model and risks of the FinTech participant and customizing the test boundaries and regulatory requirements accordingly, the RegLab allows the participant to develop and test its FinTech proposition in a safe environment while not putting an undue regulatory burden on the participant.

As the first of such initiatives in the region, ADGM’s RegLab authorizes FinTech participants for a period of up to two years to develop and test their FinTech proposition. The RegLab has now admitted 16 firms through its first two cohorts from across the world including the UK, the US, Hong Kong, Singapore, India, Saudi Arabia, and the UAE. These firms cover a wide range of FinTech verticals including ICOs, digital exchanges, robo-advisors, payment platforms, RegTech, etc.

Jessica Chen Riolfi, Head of Asia at TransferWise, spoke about following lean startup principles when growing to new markets. Jessica reiterated the advantage of lean startup method of testing and iterating quickly. The faster you can launch a test that validates your hypotheses about a customer need, the quicker you get real customer feedback and can iterate based on that.

Jessica also wanted to explicitly use the same method for geographic expansion. One of the biggest learnings from her international expansion was that you can’t assume that having a product-market fit in one market translates into a fit in every other market.

Jessica emphasizes that in a heavily regulated industry like FinTech, regulatory compliance is a must. There are still ways to make the two seemingly conflicting principles jive: lean startup + regulatory compliance. One of the things TransferWise does is to first enter markets where they can both comply with regulations and offer an amazing product to customers. Second, and more importantly, they have early conversations with the regulators. Most regulators are approachable, she notes; they care about doing what’s right for their people, and further, want to seek valuable insight from companies who understand their specific verticals.

Subhagini Chaudhary

Subhagini is building and strengthening partnerships for MEDICI, FinTech’s Global Knowledge Network. MEDICI enables collaborative innovation within FinTech’s complex ecosystem of banks, financial services providers, startups, investors, and innovations programs.