The nuts and bolts of fintech innovation

• Partnership between fintech and techfin might be the way forward
• Online business startups are the entrepreneurs of the future

IN THE ocean of financial services, fintech isn’t the only fin swimming around. Techfin – which comprises tech companies that provide financial services – has been slowly making waves. How do traditional fintech players defend their turf?

This was one of the main concerns raised during a panel discussion dubbed the Fireside Chat, at an event entitled “Internet Finance & Accessing Credit” held on Aug 16. It was organised by FinTech Association of Malaysia (FAOM), with HLB LaunchPad as the event partner.

The panel had an interesting line-up consisting of a banker, an Islamic crowdfunder and two P2P lenders, to help provide a more diverse and comprehensive dialogue with insights from different perspectives.

The panellists were Hong Leong Bank Group SME Banking head Terrence Teoh; Fundaztic P2P chief executive officer Kristine Ng; Ethis Ventures chief executive officer Joann Enriquez; and Alixco P2P chief investment officer Andre Betker.

FAOM vice-president Raja Adam Malik, who is also the chief financial officer of fintech startup MoneyMatch, moderated the discussion.

“We want to get down to the issues and talk about technology innovation – not just skimming the surface but getting into the nuts and bolts of it,” he said in his opening remarks.

Battle of the fins

There is now an emerging trend of large tech companies, such as Google and Amazon, providing financial services to consumers and they are showing no signs of backing down. This is proving to be formidable competition for fintech players.

Betker admitted that the competition from tech giants would be tough for them. “The only chance I see for us to survive is to focus on what we’re really good at, how we can be different, and how we can offer something they can’t offer or don’t want to offer,” he said.

Enriquez proposed that partnership between the two groups is the way to go, adding that both parties would have something to bring to the table. “I think that is the best way forward, for both the big and small.”

Ng agreed with both Betker and Enriquez. She highlighted that P2P lenders have a niche market for startups, and that makes them attractive for techfin companies to consider collaborating with them.

For Teoh, regardless of whatever form of challenge comes their way, he believes the way to move forward is to be adaptable to changes.

“We know that changes are coming at a very fast speed. But in order to survive in the market, it’s not the strongest that would stay on the longest, but the ones who are able to adapt to the changes,” he said.

Building trust

When it comes to online financial services, one main concern is the issue of trust. How do P2P companies get people’s trust to utilise the platform online?

Betker noted that in order to gain people’s trust, transparency is key. “As an investor, you’ll know exactly which company you invest in. You’ll know the name of the company and what they use the money for.”

However, gaining trust is not their only challenge. According to Ng, there is still a lack of awareness and understanding of P2P especially among laypeople, as it is still a new industry.

“A lot of people don’t even know what P2P is. So you’ll need to build awareness, and from there, you build trust and acceptance,” she said.

Future trends

There was no need for them to look into a crystal ball for them to come to a strong consensus that digital businesses are here to stay and will be even more prevalent in the future.

Startups with online businesses are usually knowledgeable of the internet world, said Ng. “They are the entrepreneurs of the future. So I think they are definitely going towards that direction.”

Betker noted that the expansion of digital businesses would be a huge market for the millennials. “We want it easy to invest, instantaneous, flexible, easy to cancel or switch, and low-cost.”

Another digital aspect that was highlighted was cashless payments. The panellists concurred that, moving forward, cashless should be the next king.

“For e-wallets, Touch ‘n Go and so on, I think this is where the future is going to be,” said Enriquez.

Teoh echoed the sentiment, adding that going cashless is inevitable. “Money as cash is very costly to the country, so we should go cashless.”

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Cooperation needed to elevate fintech industry

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