Asia Summit—FinTech: Disrupting the Future of Banking and Finance
How disruptive, really, is FinTech? How will it affect the financial services industry? These questions framed the discussion for the panelists of the FinTech session at the third annual Milken Institute Asia Summit in Singapore.
Dave McClure, founding partner of 500 Startups, offered a poignant response to why FinTech feels so disruptive. Traditional financial service firms, he said, have done a terrible job in providing value in customer service: terrible on time, on value, and on convenience. The FinTech boom is a response to this; it’s about improving and facilitating our experience of how we conduct transactions.
In the process, FinTech has opened up market segments and opportunities for greater access to financial products and services. Sahil Kini, principal at Aspada Investments based in Bangalore, said FinTech has given people access to banking and facilitated financial transactions where they otherwise would not have had access. Sopnendu Mohanty, chief FinTech officer at the Monetary Authority of Singapore (MAS), said that after the global financial crisis, FinTech enabled lending to people to whom traditional banks had stopped lending.
Chris Wei, executive chairman of Aviva Asia and Friends Provident International and global chairman of Aviva Digital, shared how Aviva sold over one million policies through its website and its mobile phone app. It offered a single place where customers could buy all their insurance policies and pay one premium. This reduced the need for staff to meet and negotiate directly with customers.
Chris Wei, Executive chairman of Aviva Asia and Friends Provident International; global chairman of Aviva Digital
FinTech is also democratizing access to venture capital. Jon Medved, through his equity-based crowdfunding company OurCrowd, provides crowd-funded venture capital to tech start-ups, opening up the venture capital space once dominated by traditionally tech-focused venture funds and angel investors. Not only does this provide capital for private companies to grow, it provides larger returns to portfolios compared to public market returns for investors.
What does this mean to businesses, financial institutions, and regulators?
While Kini sees FinTech firms as disruptors of traditional financial services, Mohanty and Medved see much more collaboration and cooperation between FinTech companies and financial institutions. Eighty percent of FinTech companies are helping banks succeed in their business, says Mohanty. Almost all banks, Medved points out, have at least one FinTech incubator, if not more. In the end, it may not be the banks and financial institutions being disrupted, but rather the large enterprise technology companies that these institutions use to run their businesses.
From left: Neal Cross, managing director and chief innovation officer of DBS Bank; Jon Medved, founder and CEO of OurCrowd; Sahil Kini, principal at Aspada Investments
This collaboration, Wei says, is necessary when the field includes giants like WeChat. Instead of trying to compete for the time WeChat’s customers spend on the platform, Aviva partnered with the company to offer insurance products directly on WeChat, billed through WeChat Pay.
Therefore, it is in the interest of regulators to encourage and facilitate this ecosystem. India is the world leader in this regard, says Kini, where the government’s Open API Policy has helped develop the world’s most advanced digital infrastructure system. Called the India Stack, it is built on the world’s largest biometric authentication system, Aadhaar. The role of the regulator is to facilitate payments, and then stay out of the way. Mohanty, himself a regulator, admits that regulators are historically late. He describes the MAS’s role as running alongside FinTech companies and deciding whether they really need to be regulated.
Wrapping up the discussion, moderator Neal Cross, chief innovations officer at DBS Bank, asked the panelists as to where they think the next FinTech hub will be. The consensus was that it wasn’t so much a physical hub (London, Bangalore, Tel Aviv, Silicon Valley), but rather a software platform. Today, it’s Google, Facebook, Amazon, and WeChat. Tomorrow’s strongest companies will have to be multi-hub, taking advantage of the different strengths in skillsets around the world.