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Is Asia the new fintech frontier?

Tracey Davies, president, Money2020, the leading industry conference for fintechs, outlines how Asia is emerging as a fintech frontier

India, China, Singapore and Japan have large number of fintechs than many other countries. While developed countries are conservative in their approach towards innovations and regulations, Asians have shown dynamic progress. At the Money2020 event in Singapore, the focus was more on Asia’s rising fintechs. The conference is dedicated to future of money and happens in 4 countries, targeting a different country every quarter.

Amol Dethe: Why do you think Asia is the next fintech frontier?

Tracey Davies, president, Money2020

Tracey Davies: The reason is it’s very exciting. There are lots of things happening and you can see a lot of excitement in Singapore, China and India. We had a fascinating session with the CTO of ICICI Bank at Money2020. He was outlining the Indian government’s strategy and the opportunity that has been created. I think there are amazing and exciting things happening in every market in Asia. They are pushing the boundaries for different things in different markets.

How is the trend in developed countries versus Asia?

In Asia, I think we are doing things better than the others. We are doing really interesting things. We see a lot of different and exciting things happening in Europe. Lot of big startups, fintech hubs and businesses are emerging. There are many digital startups in the UK and the US too. I think in this market innovation is all over. India, Singapore and many other countries in Asia are exciting happenings places and there is very progressive government thinking. Singapore is quite interested in fintechs. China is very clear about wanting to be leaders in international finance.

Is there a business potential in Asia? Is there a potential for thousands of fintechs to grow in Asia?

Yes. There is a great potential. I would say the startups are very important because of the innovations that are happening. The big companies sometimes find it hard to be innovative, because when you are a big company you focus on the established business. The big thing in the fintech industry is that previously startups had an aim to kill the banks. But, now it is more of a collaborated growth, which leads to a coming together of intelligence. Big companies and big players and they are looking at the startups for really exciting ideas for partnerships. So, there is a lot of potential. Not all startups succeed because you must have that level of innovation. And when it comes to failure there has to be a lot of reinforcements in order to overcome and succeed.

What kind of business opportunities do you see in Asia for fintechs? How big fintechs can become? Can they grow bigger than established businesses?

We see a lot of opportunities in artificial intelligence.  Many fintechs are in this area. And yes, they can grow bigger than established businesses. All of them can. It is hard to speak about specific businesses. We know that fintechs are growing, the market is getting bigger and this creates a lot of potential. With the right startup, there is great score.

Most of the fintechs started with payments and now lending is the new area for the new entrants. Which are the other areas? 

Regtech, or regulatory technology, and insuretech, or insurance technology are the new domains. But I would say the main one is the payments. There is a lot happening in lending, but the payment is an emerging area. With AI and blockchain making payment systems faster, easy and efficient, it is now the realm of frictionless payments. We are in the future of money where payment is the core of wheel and new commerce.

Where is the future of money? Is it in cryptocurrency like Bitcoin or cash?

Definitely, not in cash. We have just seen the rise of the mobile, which is quite interesting. We have bitcoin, gold, mobile wallet. As you see, it will keep changing because the customers keep on demanding and they want a faster and frictionless world. I do not know, what will really happen in the course of 5 years, but what I do know is that it will keep on changing and that seems to keep on getting faster. I am afraid that it would be a different world and I myself do not know how I would be paying say in 5 years from now. But, I am pretty sure that it would be fundamentally different in the course of time and it is getting faster and the change seems to be coming true.

Money 2020 is 7 years old. What is the major difference you have seen in last 7 years in the finance sector?

The main difference and the major shift that I noticed are the collaborations. Fintechs and startups are now working with banks. Big companies want to partner with small, agile startups so that they can grow. Blockchain has really emerged and its growing really big. Artificial intelligence, when it started, no one really knew what it was. Now it is the talk of the town. Secret tech was introduced 9 years ago, and it is a very big trend now. ICOs are happening and a hot topic. So, it keeps changing. I think what has not changed is the people coming together and working out. The collaboration and partnerships is a big change.

Ravi Menon, governor, Monetary Authority of Singapore, in an interactive session at Money 2020 Asia

No doubt startups, fintechs are rising. But many are also winding up. Why? Is it the wrong business model? Why do they fail even when you have support from all the verticals?

The reasons why business fail can be wrong ideas or right ideas at the wrong time or vice versa. So, the reason why fintechs fail is the same reason why businesses fail. Sometimes, the ideas are executed before time, or someone has already got that idea first. Sometimes, it is that the concept is great but not up to market standards. Usually, if you are a deep tech expert, you need to get your idea revolutionizing. I think it is just the way and not all of them may be able to make it. I was reading a report the other day, the RCM report that had just released, and it spoke about serial entrepreneurs. And what they do is, they take on a challenge and establish a business and then delegates the responsibility of running the operations and moves on to other ventures. They take on this challenge repeatedly. And most of the time they are the ones who succeed. The nature of startups in terms of work and function is best executed by serial entrepreneurs. And that is very dynamic. The industry must be very supportive to such startups.

Is it tough for regulators to frame policies for fintechs?

There are some progressive regulators. Take for example, the views of the regulator of Singapore on cryptocurrency. It is pretty interesting. Similarly, the views of the Japanese regulators. I think, they really want to engage with the industry and the industry really wants to talk to the regulators. So, considering the separations and breakdowns, since there is a huge number of regulators, I think we need to get them together.

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