FinTech: Business Opportunity or Disruptor? - tryb @ FIDE Forum KL 4 Aug 2016
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The document discusses the transformative impact of technology on financial services in Asia, focusing on the rise of fintech companies and their potential to disrupt traditional banking models. It highlights the importance of collaboration between fintech startups, financial institutions, and regulators while emphasizing the shifting consumer behavior and demands shaped by millennial expectations. Additionally, it outlines the key roles of data analytics, blockchain, and innovative financial solutions in creating a more inclusive and efficient financial ecosystem.
FinTech: Business Opportunity or Disruptor? - tryb @ FIDE Forum KL 4 Aug 2016
- 1. technology transforming financial services in Asia FinTech: Business Opportunity or Disruptor? FIDE FORUM 4 August 2016 @tryb_asia
- 2. Magnus BÖCKER Chairman Former: CEO of SGX, President of NASDAQ, CEO of OMX tryb invests in technology companies and platforms transforming financial services in Asia tryb creates value by: > originating proprietary high value deal flow > generating positive returns by driving growth and synergies within our portfolio companies > collaborating with financial institutions, technology vendors, government agencies and investor groups tryb connects fintech tribes 2 investment capital advisory and deal flow Nels FRIETS Vice Chairman Board Member Fullerton Fund Management. Former: MD Citi Equities, Head of Securities SGX, MD Asia CLSA Veiverne YUEN Managing Partner Former: GIC Private Equity, Rabobank Food & Agri Research & Advisory, MAS Capital Markets Supervision Markus GNIRCK Managing Partner Former: Co-founder Startupbootcamp FinTech, Board Member Kyepot & Creditseva, Forbes 30 under 30 www.tryb.asia @tryb_asia info@tryb.asia
- 3. 3 I am a Millennial
- 4. 4 I am not a millennial Regulator >> Banker >> Investor
- 5. 9 There are Millions of us millenials Born between 1980 and 2000 48% of the world's working population Asia is home to more than 61% Data-driven Digital Natives Major Spending Power
- 6. 10...but we are actually all very similar Same values Same behaviour Same goals
- 7. Trust of Consumers is Changing 11
- 8. Offline to Online 12 ‘The busiest branches of Barclays are the morning trains into King’s Cross London...over 150,00 customer checking their banking app’. Antony Jenkins, CEO Barclays
- 9. New Ecosystems 13 Full services in One-Stop Shop Customer never leaves Data collection
- 10. New Channels 14 Mobile Phone Virtual Reality Social Networks Social Media
- 11. INSIGHT 15
- 12. So, how does that affect Finance & Insurance? 16
- 13. Lost Focus on Customer 17 better branches than customised service
- 14. 18
- 15. Entrepreneur + Technology = FinTech Startup19
- 16. and InsurTech is coming... 20
- 17. GFC & Talent & Distraction = External Innovation21
- 18. Venture Funding Fueled Growth 22
- 19. The Rise and Fall of Unicorns 23
- 21. 25
- 22. How do FinTechs do it?? 26 Lower costs with technology > Lower margins > Minimum physical/fixed assets > Highly scalable Innovative use of technology > Social networks > Crowd knowledge/wisdom > Big data: market analysis, credit scoring > Artificial Intelligence > Cyber Security (Private Key, Touch Recognition etc)
- 23. Time to Rebundle: Watch the Tech Giants 27
- 24. The Alibaba Story 2004: > Alipay started as payment platform and escrow service 2010: > Microfinance started to lend to merchants 2013: > RMB 100Bn loans to 320,000 SMEs, 0.87% default rate 2014: > raised US$87Bn in mutual fund within 9 months 2016: > 400mn registered users, 80mn transactions / day, 70% market share mobile payments 28
- 25. Lessons Learned So Far > Institutions with large existing consumer base have the most potential > The integration of social networks with technology is innovative and crucial > The provision for innovative and specialized fintech products through large trusted entities > Agent Based, Risk Capital Based or Insurance Based > Applies for Banks and Insurers < 29
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- 27. 31
- 28. 32 Technology in Finance... ...is nothing new
- 29. 33
- 30. Finance is changing Source: World Economic Forum - The Future of Financial Services, 2013 3434 Consumer banking Deposits & savings Payments & remittance Mortgages Credit cards Installment lending Auto finance Student lending SMEs Commercial & corporate banking Large corporate lending Middle market lending Leasing Equipment finance Real estate finance Cash management Trade finance Supply chain lending FX Investment banking & capital markets M&A advisory ECM & DCM trading Underwriting Placement services Investment management Fund management Private banking Brokerage Asset custody & trusts Insurance Classic life / term Accident & casualty Asset-type Travel Situational & catastrophe Today: Institutional Monoliths Slow unbundling along product lines Tomorrow: FinTech rebundling across capital pools
- 31. big data blockchain cryptocurrency mobile Ux / Ui AML / CFT Basel III MiFID II PSD II Solvency II
- 32. What tryb is seeing tryb tracks over 600 FinTech companies across ASEAN 80% are early stage Deal flow of established FinTech firms is from Europe & US Much stronger B2B focus recently
- 33. SingaporeKuala Lumpur Jakarta Mumbai Bangalore Manila Beijing & Shanghai Hong Kong Bangkok Ho Chi Minh City Seoul Tokyo *120 Startups *5 FIs *10 Investors *1 MoF *80 Startups *2 Incubators *8 VCs *10 Angels *80 Startups *3 FIs *8 Vcs *2 Regulators *70 Startups *3 FIs *8 VCs *5 Family Offices *200 Startups *15 FIs *35 Investors *1 Regulator *70 Startups *2 FIs *3 VCs *3 Family Offices *80 Startups *4 FIs *3 VCs *10 Family Offices *30 Startups *5 FIs *3 VCs *1 Regulator *30 Startups *2 FIs *3 VCs *1 Regulator *28 Startups *30 FIs *12 VCs *1 Regulator *2 Government *40 Startups *4 VCs *1 Government *28 Startups *2 FIs *2 VCs Total *1000+ Startups *40+ FIs *70+ Investors *10+ Governments tryb’s Asian network
- 34. Startups are addressing the obvioustryb sees the financial services sector as a tightly interwoven web both horizontally across numerous players, and vertically across many, many different processes financial technology has focused so far on mostly front office activities (circles) because tech developers are unaware of internal processes at banks and other players a lot of white space in middle and back office for transformation Source: Ernst & Young, 2013 3838
- 35. Case Studies 1) Challengers_ a) DE: Solaris, No. 26 b) UK: Atom, Mondo, Tandem 2) Explore / Partner_ a) Wells Fargo // Amazon b) AXA // Alibaba 3) Buy_ a) Blackrock // FutureAdvisor b) Groupe BCPE // FIDOR 4) Build_ a) DBS Digibank b) Fidelity GO 39
- 36. 40
- 37. Build 41
- 38. Frameworks ‘New’ FinTech Sector Moat Opportunity Blockchain (decentralised) Big Data (analytics) CryptoFx Mobile Ux / Ui Asset Management Banking Capital Markets Insurance Trade & Payments Assets Relationships Flow Disrupt Include Transform
- 39. Asset Management 8 Securities Acorns Bambu Money Design WeInvest
- 40. Banking / Credit Creditseva Crowdo Kickfurther Lending Club Zest Money
- 41. Capital Markets AIREX Markets Extract Alpha FundedHere R5FX Smart Karma
- 44. Regulation / Compliance Handshakes Jewel Paymentech Sybenetix Trustsphere
- 45. Back to Basics Sector Moat Opportunity Asset Management Banking Capital Markets Insurance Trade & Payments Assets Relationships Flow Disrupt Include Transform What is the objective?
- 46. Disrupt Include Transform ? Underbanked, Underinsured, Underinvested Higher credit card penetration Wider product distribution Cross-selling e-Commerce integration Better underwriting Improved collections Reduced fraud & disputes Shorter capital cycles Lower chargebacks Lower cost of product creation Cheaper compliance Some Concrete Opportunities
- 48. Blockchain: Old vs. New A distributed ledger system that allows companies to make and verify transactions on a network instantaneously without a central authority. BlockchainOld System 52
- 49. Blockchain: Pros & Cons > Secure and Transparent > Immutable and hack-proof > Efficiency due to decentralization > mega miner pools > Slow > Layman PROS CONS
- 50. Blockchain: Pros & Cons > Secure and Transparent // no anonymity > Immutable and hack-proof // are people infallible > Efficiency due to decentralization // why > mega miner pools // market makers are necessary > Slow // sometimes you want it to be slow > Layman // do you need to understand your bank PROS? CONS?
- 51. When will blockchain matter? 55 2016 2018 2021 2026 Early-stage technical prototypes within the next two years Limited market adoption in 2-5 years Broader acceptance in 5-10 years Blockchain-based identity and reputation management systems Capital Markets prototypes rolled out Regulatory stability and large number of market participants in large-scale markets such as cash equities in the US.
- 52. 56
- 53. What is happening in ASEAN? 57 FinTech Activity > tryb is tracking over 600 FinTech companies in ASEAN > Majority focussing on payments & lending (B2C) > B2B models starting in Singapore & HK Financial Institutions > Innovation becomes key strategy > Diversified approach (e.g. investments, partnerships) Governments > Sandboxes being considered > Support innovation vs protecting incumbents? Opportunities > Inclusion: credit, payments, e-commerce driven > Transformative: asset mgmt, security, trade finance Challenges > Lack of entrepreneurial talent with background from industry > Smart investors to help scale
- 54. ACTION 58
- 55. It starts with the leadership...
- 56. 60
- 57. A change in culture 61 Hackathons Incubators Accelerators Innovation Labs Extrapreneurship
- 58. 62
- 59. 63 AGILE (like a startup) BUILD (like a tech giant) SCALE (like a bank)
- 60. Strategic & Financial Investments 64
- 61. A few small things > What isn’t yet digital > Change procurement process > Adjust KPI / bonus structure > Create open API structures > Build Sandboxes for experimentation 65
- 62. 5 Questions To Take Away 1. Culture: How do we evolve, first leadership and then organisation-wide, to become more agile by being tech-first? 2. Talent: Where and what kind of non-banking hires can be deployed and what responsibilities can they be given to empower innovation? 3. Interfaces: How fast can we digitise and create user (Ux) and software (API) interfaces that nurture FinTech partnerships to improve RoE? 4. Analytics: What kind of data is available and how can we leverage it for better decision making? 5. Efficiency: What decisions and processes can be automated? 67
- 63. Markus Gnirck | markus@tryb.asia | +65 8175 2061 Veiverne Yuen | veiverne@tryb.asia | +65 9736 8370 www.tryb.asia | @tryb_asia