Posts published on May 2017

Toucan Weekly Roundup – 19 May 2017

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Fintech, Payments and Asia Focused Articles

Singapore’s longest established bank tells us three trends fintech startups cannot ignore.

Many fintech startups dream of having their solutions adopted by top banks. The problem is that many times, their solutions do not meet the regulatory compliance or are difficult to commercialize and integrate with the existing systems of banks. The top fintech trends right now include digital tools in wealth management, new data points for credit and financing and streamlined operations with Artificial Intelligence.

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Singapore fintech startup 4xLabs offers solutions to forex firms; raises US$1.5M from Dymon Asia, OSK Ventures

Singapore based 4xLabs has secured US$1.5 million in pre-Series A round of funding from Dymon Asia Ventures and OSK Ventures. 4xLabs is a fintech startup that provides a one stop suite of services for money changers that helps them improve their top line by helping them acquire new business, optimize their price setting and scale their business. It also helps businesses grow their bottom line by improving efficiency, managing cost of stock and facilitating compliance risk management.


Fintech unicorn TransferWise reaches profitability, planning ‘new financial services’

Fintech unicorn TransferWise has announced that it has reached profitability this calendar year and is cash-generating. Transferwise allows its customers to send and receive money across borders for a fraction of the charges imposed on bank transfers. To do that, it uses a p2p system that matches users according to the currencies they want to send and receive, ensuring that payouts are made without funds ever actually crossing borders.


Fintech startup Telr raises $3 mn

Mumbai based fintech startup Telr has baaged Series B funding amounting to $3 million from Innovations East. Telr is a payment gateway aggregator of multiple payment methods like cards and online banking, offering a set of unified APIs and tools that enable businesses to accept and manage online payments via web, mobile and social media. With growth of over $500 million worth transactions annually, Telr anticipates reaching $1 billion worth of transactions per year by end 2017.

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Alibaba Makes Its First Fintech Investment in Hong Kong

Alibaba has expanded its investment portfolio in Hong Kong and has chosen Qupital to be its first fintech investment in the city. Qupital is Hong Kong’s first and largest online invoice discounting exchange. It allows companies to raise finance against their receivables by connecting them with professional investors, hedge funds and family offices. Lack of access to working capital is a big problem for Hong Kong’s startups and SMEs. Qupital is positioning itself to address this major problems and help solve the reported $200 million SME financing gap by allowing them to turn their invoices into cash.


Toucan Weekly Roundup – 12 May 2017

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Fintech, Lending and Asia Focused Articles

3 things Asia can learn from Sweden’s booming fintech scene

Sweden’s Fintech sector has been influential in bringing about a cashless society, something that Asian Countries like Singapore and South Korea are hoping to emulate. There are 3 key lessons that Asian Countries can take away from this case study. Firstly, Fintech ventures should actively address specific needs and tailor their services according to the prevalent attitudes of their market. Secondly, Fintech companies should simplify lending and borrowing experience for consumers. Thirdly, Fintech startups should seek collaboration with government and traditional financial institutions.

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Former Citi Chairman and Asia Pacific CEO Shirish Apte invests in fintech startup Invoice Bazaar

Invoice Bazaar, a supply chain SME finance platform headquartered in UAE, with operations in Singapore and India, has received an undisclosed sum in investment from Shirish Apte, former CEO and Chairman Asia Pacific of Citigroup. Invoice Bazaar is a technology platform that offers supply chain finance, receivables finance and dynamic discounting. The company helps connect large buyers with SME suppliers, which enables them to avail early payment on their receivables.


“Asian fintech is a man’s world. But I’m now trying to change that”

Anna Vanessa Haotanto is the CEO of The New Savvy, Asia’s leading financial & career platform for women. She is also the head of the women in fintech group at the Singapore Fintech Association, a non-profit organization that encourages industry collaboration. The New Savvy provides content to help women make better informed investment decisions, empowering women by transforming their money relationship.


Mirador Financial Raises $7M to help banks compete with marketplace lenders

Banks continue to lose business to online lenders that can approve and offer small business loans in a matter of minutes. Fintech startups like Mirador have developed technology that lets banks offer similar convenience. By partnering with such Fintech startups, more banks will be able to level the playing field with online lenders who are able to offer fast and easy small business loans as well as maintain their lending relationships with small business customers.


Investors are busy people, so Funding Societies created an App for them to invest on-the-go

Funding Societies has announced the launch of its new investor mobile app that will offer the platform’s investors more convenience across all activities, from the sign-up all the way to the actual investing. Funding Societies helps connect SMEs with investors through an online marketplace. New users can apply and sign up to become investors entirely on the app. Additional features like advance notification for upcoming loans and low balance reminders ensure that investors will not miss an investment opportunity again.

Toucan Weekly Round Up – 5 May 2017

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Fintech, Payments and Asia Focused Articles

Your online, mobile, and social behaviour are now data-points used by fintech startups and governments in scoring credit-worthiness

Imagine a world where authoritarian governments and fintech companies monitor everything you do, amass huge amounts of data on almost every interaction you make, and award you a single score that measures how ‘trustworthy’ you are. China has been pushing to develop a nationwide social credit system that aims to generate a score for individuals and institution in the country based on data from tax filings and driving demerits. The score will also function as a signal mechanism for authorities about whom or what deserves to be penalized.


3 Reasons Banks are collaborating with Fintech Startups

Technology is impacting every sector including finance, contributing to the popularity of fintech startups – businesses that leverage AI and machine learning to create better financial services. Large financial corporations are starting to invest and partner with fintech to ensure digital advancement and growth. The 3 main benefits banks gain when investing in fintech companies include faster innovation, more accurate decisions and solving industry specific problems.


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Australian Fintech Payments Startup Airwallex Raises A$17 Million from Mastercard, Tencent, Sequoia China

Australian cross-border payments Fintech startup Airwallex has raised a A$17 million in a Series A funding round that saw participation from Mastercard, Tencent and Sequoia Capital China, in a bid to fuel its international expansion. Airwallex enables SMEs to make cross-border transactions at mid-market interbank exchange rates that are effectively cheaper than traditional wire transfers. The platform uses big data analytics, quantitative models and a sophisticated foreign exchange and payment engine to avoid volatility and inflated margins in foreign exchange markets.


How other countries can learn from China’s digital payment platforms

At a macro level, digital payment services have the potential to dramatically improve living standards for large sections of the population, especially in developing countries, through increased transparency, security, cost savings, and financial inclusion, particularly for women. For payment providers, e-commerce firms and social networks, one lesson they could apply is to attract users by building on existing e-commerce platforms and social networks, using strategic incentives to deepen usage.


API Innovation coming from inside and outside banking

For the last several years, the financial services industry has been undergoing a transformation that has led to changes in business models, delivery mechanisms, clients, and more. Consumer needs and expectations have shifted as new demographics of clients enter the market and existing clients demand digital offerings. As financial services regulations have tightened, the burden on financial services institutions has increased, putting pressure on them to adopt APIs from Fintech companies and third party providers.

NBFCs, MFIs and their hidden “unique unfair” Fintech advantage

Southeast Asia’s consumer finance scene is an interesting beast. While formal banks serve the top 5-10% of working class, Non-Bank Financing Companies (NBFCs) or Micro-Finance Institutions (MFIs) takes care of the next 25-30% of rising under-banked. As a result, close to 150 million under-banked consumers in countries such as Indonesia and the Philippines are served much less meaningfully than their “banked” counterparts due to a gross lack of automation, digitization and ‘data-fication’ in the traditional workflows of NBFCs/MFIs.

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Source: Toucan financial inclusion pyramid

While this huge group of consumers lose out on key aspects of financial services such as convenience of service, fast loan-turnaround time, and more inclusive financing offerings; NBFCs/MFIs are actually leaving a TON of potential business revenue on the table by underserving their target market.

While things look pretty grim currently for the shrinking traditional financing scene – the fact is, with all major financial institutions including banks around the world looking into digitizing and going data-driven, NBFCs and MFIs might just have an edge over traditional banks.

What, seriously?

To understand how, let’s take a look at the three main challenges slowing banks down from going digital despite the urgency to change and their deep pockets:

1. Consumer Inertia – most banks have some form of digital customer management platform in place, while this can be great, it can be a bane as moving customers from 1 digital platform to another digital platform that is marginally better can be difficult. Oh, and the usual affluent bank customers = older customers who are more financially stable but way more resistant to change.

2. Legacy technology debt – banking technology are built over multiple decades in chunks, the amount of “technology debt” built up is no joke and totally out of sync with today’s Application-Programming-Interface (API) driven standards. In many instances, technology stack have to be built from the ground-up. And for those who might not know: core-banking vendors such as Silverlake Axis and Infosys can be pretty pricey.

3. Legacy regulatory frameworks – working with regulators have never been a swift process. Banks are highly regulated and any change in operations tends to require approvals by multiple bodies. With so many stakeholders to please, change is naturally slow.

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Now, let’s contrast these points when NBFCs/MFIs embark on digitization and data-fication of their operations:

1. Consumer Inertia – NBFCs/MFIs serve primarily the under-banked/unbanked population, which usually consists of a much younger group of consumers receptive to change. More importantly, there is no inertia per se – any digital platform that makes their lives accessing financial services easier is at least 10 times better than the current non-existent platform.

2. Legacy technology debt – Compared to banks, most NBFCs and MFIs have at most a 3-5 men technology department. Therefore (ironically), because of the lack of technology in the first place, adopting new intuitive business/enterprise technology provided by more agile FinTech startups such as Oradian (European based offering user-centric core banking solutions for MFIs) or Mirador (US-based provider of small business lending platform) is way more straightforward. Fortunately too, with a leaner technology solution package, the price tag of adoption of their solutions is drastically reduced as compared to their full-fledged core-banking counterparts.

3. Legacy regulatory frameworks – most NBFCs and MFIs are subject to regulations too, but unlike full-fledged banks, there is a lot more leeway to operate without the need to obtain a million approvals for every single action performed.

As a result, the only thing standing between NBFCs/MFIs and their “unique unfair” Fintech advantage comes down to one single variable: the willingness and urgency to adapt to a time of great change where an unstoppable digital trend can bring with it plenty of mutual benefit for both supply and demand forces.  NBFCs such as “Global Dominion” and “Asialink Finance” are some examples of forward thinking companies that are moving quickly to reap the benefits of digitization.

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An old Chinese saying goes “Being on a boat against the current, you either progress, or you get left behind”

Will you be left behind?