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Igor Pesin
Partner, Investment Director @ Life.SREDA VC
Lessons from Fintech in Asia
and future of open banking
Life.SREDA I Life.SREDA II Asia
Moscow Singapore
2012 20152014
13 investments
(US, UK, Germany, CIS) 7 successful exits 8 ...
This time has come:
Asia become
the largest fintech market in the world
in 2016
Fintech before:
disruptors and enablers
Fintech now:
Сreators
Investments in fintech annually ($B) Region distribution of funding (%)
47
38
USA
Asia
Other
8
8
2,5 2,9
4,4
12,3
20,3
23,6...
Asian market is the main driver for the growth
of global Fintech industry in 2016
Note/source: Source: Mattermark, Dow Jon...
Fintech unicorns: 4 Chinese giants are in TOP5 in 2016
25 fintech unicorns globally valued at $150B in aggregate value
Fint...
Payments and deposits
What is Fintech
Online payments
Processing / acquiring
Recurring
International P2P
Merchant acquirin...
p2p lending
Loan Marketplace
SMB Lending
Supply Chain finance
Student Lending
Real Estate and industry
specific originators
...
Number of rounds (#) and amount of capital
invested in Insurance quarterly ($B)
78 82
125
157
Insurtech market decreased b...
Credit scoring
Big Data
Risk management
Regtech
Machine learning and AI
Security
Main Categories:
Big Data & Scoring
What ...
Asian (Chinese) mega deals dominate
the global fintech market
Payments
Lending
Insurance
Fintech
for SME
Banking
Big Data
F...
Investments into FinTech in Afrika are
twice bigger than in South East Asia
in 2016
M-DAQ
Singapore
$82,5M
MatchMove
Singapore
$30M
GroupLease
Thailand
$30M
ItBit
Singapore
$25M
Fastacash
Singapore
$15M
Inv...
However all FinTech startups in SE Asia
are very early-stage and not growing fast
400+ fintechs
in South East Asia
early st...
6-12 months-to-market
$200-400K-to-market
3 months
Negotiation with bank
+3 months
Negotiation with IT-depatment
+6 months...
Challenges for Fintech evolution in Asia
Difficulty to launch financial services and products in cooperation
with traditional...
Challenges for Fintech evolution in Asia
Difficulty to scale geographically due to differences in regulations and infrastruct...
There are more than 20 verticals in Fintech
and more than 20 leaders in each vertical
(about 5K fintechs total)
How to conn...
Operation
Who will control and develop?
How to integrate? How to invite foreign projects?
E-wallets
Neobanks
mPOS
Onlineac...
Who needs banking infrastructure in Asia?
(top-down calculation)
The best and the biggest
fintech services,
Fintech startup...
Key challenges: how regulators and banks
will approach the Fintech industry
EMEA
Regulation activities in Europe
Most of activities are focused on controlling
and regulation of existing regimes
UK s...
~30% banks
invested via their own
venture instruments
– VCs, accelerators, incubators
Banks are getting more and more acti...
however partnerships in 2016 seemed to be safer
and more convenient for banks
Banks’ partnerships with financial technology...
Venture/debt investments and acquisitions from banks
Q4 D N/A
Q4 A $8,3M
Q3 A $8,3M
Q3 undisclosed
Q2 A $14M
Q3 $19.67M
Q2...
was all about
blockchain
saw an explosion of interest in
machine learning
and artificial intelligence.
2015
2016
2017
will...
APIs and Open Banking will start to shift the banking landscape with more traction in Europe and
Asia, but we’re likely to...
Bank-as-a-service is a
technological platform
with a suite of APIs, that
integrates seamlessly with
any existing back-office...
Banks
Licensed and regulated
banking back-ends (belongs to banks
in each country in Asia-Pacific region)
based on 40+ unive...
Integration of web based Fintech
Widgets and native Fintech Apps through
multi-layer Digital Banking Hub
A holistic, digit...
Successful
Partnership
Clearly, not all of today’s banks will survive. The survivors will be those that reimagine
relation...
Key initiatives in bank-as-a-service
and open banking areas
BAASIS, launched in 2016 in Singapore,  is
an open-API Bank-as...
Business/Operating Model: The BBVA Story
BBVA’s leadership has reiterated its commitment to digital since 2015
But BBVA ca...
In
d
ia
S
ri
Lan
ka
B
an
g
lad
e
shM
yan
m
ar
M
alaysia
P
h
ilip
p
in
e
s
In
d
o
n
e
sia
A
u
stralia
S
o
u
th
K
o
re
a
N
o...
APAC
South Korea permits for
banks to invest in Fintechs
Currently financial laws, financial institutions are
allowed to buy...
Traditional
bank
Servers
IT-guys to support
and manage servers
- complience
- processing center
- card issuing
- money sto...
www.
fintech-research
.com
Igor Pesin
Partner, Investment Director @ Life.SREDA VC
ipesin@lifesreda.com
Thank you
Life,SREDA's state of FinTech 2017
Life,SREDA's state of FinTech 2017
Life,SREDA's state of FinTech 2017
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Life,SREDA's state of FinTech 2017

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Life.SREDA's presentation of their annual research report, which you can download at https://fintech-research.com/

Publicada em: Economia e finanças

Life,SREDA's state of FinTech 2017

  1. 1. Igor Pesin Partner, Investment Director @ Life.SREDA VC Lessons from Fintech in Asia and future of open banking
  2. 2. Life.SREDA I Life.SREDA II Asia Moscow Singapore 2012 20152014 13 investments (US, UK, Germany, CIS) 7 successful exits 8 investments (South East Asia) Research & Vision Influelce on the whole infustry trough own blogs fintechranking.com and semi-anual Fintech research “Money of the Future” www.www. fintech-research .com .com Bank-as-a-srevice and open API playAccelerator in Singapore Taiw a n SM E-len d in g & Facto rin g P O S-m an ag m en t system & tab let b ased cash -reg is ters O n lin e-trad in gO n lin e- len d in g P 2 B -len d in g C ro w n d fu n d in g & C ro w n d in vestin g O n lin e- rem it tan ces P FM & P FP In su rtech re m P O S-acq u ir in g O n lin e-le n d in g fo r stu d en ts First BaaS-platform for Asia is very necessary for the future fintech development Life.SREDA is supporting a strategic fintech project: open API Pan-Asian platform BAASIS Life.SREDA VC Executive summary
  3. 3. This time has come: Asia become the largest fintech market in the world in 2016
  4. 4. Fintech before: disruptors and enablers
  5. 5. Fintech now: Сreators
  6. 6. Investments in fintech annually ($B) Region distribution of funding (%) 47 38 USA Asia Other 8 8 2,5 2,9 4,4 12,3 20,3 23,6 19,1 0,3 0,4 2,2 2,5 1,5 2,9 5,5 6,8 5,8 14,5 6,1 13,0 VC Backed fintech investments Other fintech investment +16% -6% 2011 2012 2013 2014 2015 2016 4,5 Ant Financial Asia is driving the growth of Fintech market worldwide accounting to almost 50% of global volume EU Amount of financing deals (#) +36% +7% 2015Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2016 308 366 410 398 442 428 378 343
  7. 7. Asian market is the main driver for the growth of global Fintech industry in 2016 Note/source: Source: Mattermark, Dow Jones, Life.SREDA VC analysis The total invested capital in Asian Fintech continued to grow in 2016, despite few mega deals that made >60% of the 2016 total; In Asia, almost 70% of dollar investments in 2016 went to Chinese companies; 257 deals are counted by Life.SREDA 0,5 1,5 6,3 9,8 2013 2014 2015 2016 Investments in Asian Fintech by year ($B) 257 DEALS 221 DEALS 156 DEALS Ant Financial $4,5B Zhong An $0,92B
  8. 8. Fintech unicorns: 4 Chinese giants are in TOP5 in 2016 25 fintech unicorns globally valued at $150B in aggregate value Fintech Unicorns Valuation 2015 24 unicorns $112B Total valuation 2016 $150B Total valuation [+$38B] 25 unicorns USA AsiaEurope ZhongAn Online 8,0 Kabbage 1 FundingCircle 1 Jimubox 1 Gusto 1 ChinaRapidFinance 1 Lakala.com 1,6 Rong360 1,6 Prosper Marketplace 1,9 Avant 2,0 GreenSky 2,0 3,6 PayTM 1,9 4,8 Adyen 2,3 Mozido 2,4 CreditKarma 3,5 SoFi 4,0 Transferwise 1,1 new Lufax 18,5 10,0 AntFinancial 60,0 45,0 Zenefits 4,5 2,0 JD.com 7,4 Stripe 9,2 5,0 Qufenqi 1 5,9 Klarna 1,4 2,3 Oscar 1,4 2,7 123456789101112131415161719212224 2325 20 18 Disclaimer: Public companies are not included; only $1B>; no SaaS, Cloud, enterprise software, hardware etc; only FinTech accordiing to Life.SREDA $B
  9. 9. Payments and deposits What is Fintech Online payments Processing / acquiring Recurring International P2P Merchant acquiring B2B Main Categories:
  10. 10. p2p lending Loan Marketplace SMB Lending Supply Chain finance Student Lending Real Estate and industry specific originators Marketplaces Main Categories: Lending / Deposits What is Fintech
  11. 11. Number of rounds (#) and amount of capital invested in Insurance quarterly ($B) 78 82 125 157 Insurtech market decreased by 34% in 2016, while the number of deals increased by 25% Q1 78 37 110 56 114 311 1727 198 124 189 384 210 390 190 280 790 Q2 Q3 2013 2014 2015 2016 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Today, the market consists of <1400 insurance tech companies, the launching tendency is decreasing, almost 300 companies founded in 2015, 40% less in 2016 In 2015, the pike was mainly because of a large Chinese deal – Zhong An, that made almost 40% of the whole year’s funding amount There is an increase in investment rounds: in 2014 – 54 rounds; in 2015 – 125 rounds; in 2016 – 157 rounds. -31% +165% -34%+236% 747 281 1650 2510 Zhong An $981M
  12. 12. Credit scoring Big Data Risk management Regtech Machine learning and AI Security Main Categories: Big Data & Scoring What is Fintech
  13. 13. Asian (Chinese) mega deals dominate the global fintech market Payments Lending Insurance Fintech for SME Banking Big Data Financial management North America 14 companies $2.25B Europe 3 companies $648M South America 2 companies $262M Asia 11 companies $8.7B Top 30 companies made >50% of all fintech funding Lending prevailed in 2016 with 12 deals out of 30 gone to this field While North America saw the biggest number of deals, Asia leads a total funding volume Blockchain has not entered the TOP-30 largest deals list yet – looking for 2017 Ant Financial $4,5B B Lu.com $1,2B B JD Finance $1B n/a Qufenqi $449M Late Oscar Insurance $400M C Ion Investment $400M PE U51 $310M C China UnionPay $296M n/a CommonBond $275M Late Fenqile $235M D Mosaic $220M Seed HeTai Insurance $218M Seed Payoneer $180M n/a WeLab $160M B Clover Health $160M C Weidai $153M C Lendup $150M B Stripe $150M n/a Hero FinCorp $150M n/a EDM Group $145M n/a Nubank $132M C-D XP Investimos $130M PE PaySimple $115M n/a MetroMile $103M D Kreditech $103M C Betterment $100M E Fractal Analyst $100M n/a Affirm $100M D Avalara $96M n/a Ygrene Fund $95M n/a Wealth management
  14. 14. Investments into FinTech in Afrika are twice bigger than in South East Asia in 2016
  15. 15. M-DAQ Singapore $82,5M MatchMove Singapore $30M GroupLease Thailand $30M ItBit Singapore $25M Fastacash Singapore $15M Investments in SEA Fintech dropped by 36% Total investments and deals number TOP 5 DEALS 2015 2016 $245M $157M deals57 58 20162015 Despite the decline in funding amount, the amount of deals remained on the same level; Singapore leads in invest- ment and deals amounts, remains to be a region’s leader; Philippines and Indonesia are following the trend, together hold 1/5 of all companies funded; Cheques are down in 2016 – growth barriers; investors are being careful with targets. By geography, number of companies funded Indonesia Thailand Vietnam Others 60 9 9 4 9 62% 12% 8% 6% 4% 8% 11 Philippines Singapore 2015 2016 Momo Vietnam $28M Quoine Singapore $20M Omise Thailand $17.5M Funding Societies Singapore $12.6M MC Payment Singapore $8M
  16. 16. However all FinTech startups in SE Asia are very early-stage and not growing fast 400+ fintechs in South East Asia early stage (seed and Series A) will not reach even Series B round because they can’t scale and show the real results 98% 95%
  17. 17. 6-12 months-to-market $200-400K-to-market 3 months Negotiation with bank +3 months Negotiation with IT-depatment +6 months Long & expensive direct integration with bank back-end Head of Business Head of IT Startup Startup’s pain
  18. 18. Challenges for Fintech evolution in Asia Difficulty to launch financial services and products in cooperation with traditional banks Negotiations with banks to be licenced and integrated to back-end Direct integration to the banking back-end (pain!) For banks: - not main KPI’s - not safe & secure - not fast & cheap & easy - do not have ability to work with many startups Going to BaaS platform or using open APIs 80%to business development in tne US/UK 80% 20%In Asia In the US/UK 1+ year 3-6 month Spend 80% of their resources to be launched Spend only 20% of their resources to be launched Asia US / UK In developed markets, fintech innovations are primarily aimed at improving the user experience for tech- and financial literacy advanced people. But, for the billions around the world with- out access to traditional financial services, fintech innovations go well beyond convenience. Fintech could be their ticket to financial inclusiveness and membership in the global digital economy. “
  19. 19. Challenges for Fintech evolution in Asia Difficulty to scale geographically due to differences in regulations and infrastructure In each country you have to start from scratch: 1. New regulation 2. New integrations In Asia In the US/UK 1. Easy regulation 2. Easy integrations EUROPE US Unbanked markets always loose competition for attraction of attention of the best talents & startups to deploy their cutting edge technologies for somebody who really need it “ Recognizing the importance of financial inclusion for the global population, various international structures are investing efforts into developing strategies for facilitating financial inclusion
  20. 20. There are more than 20 verticals in Fintech and more than 20 leaders in each vertical (about 5K fintechs total) How to connect? Price comparison Remittances Wealth management Trading Online scoring SMELending P2Ploans Onlinelending forindividuals Crowdinvesting Crowdfunding E-wallets Cashregister POSsolutions Online acquiring mPOS Neobanks RegTech Acounting InsurTech PFM/PFP Blockchain Bitcoin Banks’ pain: With whom to work?
  21. 21. Operation Who will control and develop? How to integrate? How to invite foreign projects? E-wallets Neobanks mPOS Onlineacquiring Cashregister/POSsolutions Crowdfunding Crowdinvesting Onlinelendingforindividuals P2Ploans SMELending Onlinescoring Trading Wealthmanagement Remittances Pricecomparison PFM/PFP InsurTech RegTech Acounting Blockchain Business Who will possess clients / startups? Value How to help partners to expand to other markets? Fintechs forretailforSME it is expensive it takes time it is not main business / KPI Banks’ pain
  22. 22. Who needs banking infrastructure in Asia? (top-down calculation) The best and the biggest fintech services, Fintech startups Telecoms Large e-commerce, retail corporates Messengers and social networks which want to expound to Asia which want to launch & scale which wants to deliver fintech services for their customer base 50+ 1000 + 30+ + +300 5 USA Europe Asia Pacific Currently existing demand from non-banks for banking infrastructure in Asia Pacific is estimated at $1-1.5B USD in 2016 Market size and opportunity:
  23. 23. Key challenges: how regulators and banks will approach the Fintech industry
  24. 24. EMEA Regulation activities in Europe Most of activities are focused on controlling and regulation of existing regimes UK sets out open banking API framework Aimed for the creation of an open banking standard that makes it easy to share and use financial data, arguing that the move would improve choice for customers, promote competition; #regulation #bank #UK OpenBankingThe cohort of the regulatory sandbox closed 69 firms from a diverse range of sectors, geogra- phies and sizes have been accepted. 24 applications met the sandbox eligibility criteria and were accepted to develop towards testing #regulation #opportunities #UK Sandbox A specially created “Fintech” licence  Plans to encourage crowdfunding and the market testing of new technologies. FinTech firms, with a minimum of $300k in capital, are allowed to accept funds from clients, up to $99m, which remain outside the depositor protection scheme and are not subject to the same regulations, auditing and the capital requirements applied to banks.  #Implementation #Switzerland #EU #2016 Banking Standardized mobile and internet payments (PSD2) in EU PSD2 enables bank customers, both consumers and businesses, to use third-party providers to manage their finances. In the near future, customers may be using Facebook or Google to pay bills, making P2P transfers and analyse spending, while still having money their safely placed in current bank account. #Announcement #Payments #Global #2017 Payments Solvency II is a programme for insurance regime It introduced a new, harmonised EU-wide insurance regulatory regime. The Solvency II programme is divided into three areas, known as pillars: Financial Requirements (Capital Requirement and etc), Governance & Supervision (Own Risk & Solvency Assessment) and Reporting & Disclosure (Insurers required to publish details of the risks facing them). #Implementation #Insurance #EU #2016 Insurance Controlling & Regulation Source:Fintechranking.com Introducing a European Standard for e-Invoicing The European Commission announced the e-invoicing directive require all 28 EU member states to use specific e-invoicing standards for all B2G e-invoices by November 27, 2018. Europe’s current e-invoicing adoption rate of 24 percent is expected to rise to 95 percent by 2024 and accrue savings of approximately 64.5 billion euros ($72 billion) per year for businesses. #Announcement #e-invoicing #EU #2018 e-Invoicing Key message
  25. 25. ~30% banks invested via their own venture instruments – VCs, accelerators, incubators Banks are getting more and more active in FinTech Barclays, Goldman, CITI, Santander and BBVA are leading the show Major Bank Investments to VC-backed Fintech Companies -2015 -2016 more companies funded by banks in 2016 +61% Top South-Asian banks are starting to follow Chinese/HK/Japanese/Korean megabanks with playing active role in FinTech: DBS, OCBC, UOB, Siam Commer- cial Bank, Mandiri, RHB, MayBank, CIMB, KasikornBank and others laucnehd a bunch of initiatives related to fintech Leaders are mainly from developed fintech regions US, UK, Europe. Note/source:Source:Mattermark, Life.SREDAVCanalysis,Crunchb 23 15 13 8 3 3 3 3 3 2 2 1 1 1 1 1 1 1 17 9 7 6 4 6 6 5 5 5 4 4 4 4 4 3 3 3 2 1 1 2 1 1 1 1 2 Barclays GoldmanSachs CitiGroup Santander BBVA WellsFargo Commerzbank MorganStanley HSBC CreditSuisse BNPParibas MitsubishiUFJ Mizuho JPMorgan CapitalOne China DevelopmentBank UBS Sberbank China ConstructionBank CreditAgricole SocieteGenerale ICICI SiamCommercialBank OCBC MandiriBank
  26. 26. however partnerships in 2016 seemed to be safer and more convenient for banks Banks’ partnerships with financial technology start-ups are developing, Enable Citi card members to use their Citi Cards with PayPal online, in-app and in stores P2P payments, provides making payments via the social networks Offering investing advice and data-driven recommendations P2P-lending. Enables local SMEs to borrow short-term business loans Study and test blockchain technology to enable payment transactions  Provides direct financing to SMEs To contribute to the acceleration of the rollout of its digital strategy Online wealth management platform Automotive pricing and information website for car buyers and dealers Offering its clients access to equity crowdfunding opportunities Use Fincast to advise customers on the types of financial products they need to meet their investment goals To offer a TD and Westpac branded spending app An extensive interest was shown by banks and financial institutions partnering with robo-advisors, digital wealth managers; In addition, there is a growing tendency by banks to partner with crowdfunding companies (Santander, UOB, Belfius Bank, Alfa Bank, etc); Asian banks are widely partnering with Fintech accelerators in order to pilot new products with fintechs residents; Many pilots were initiated in 2016 between blockchain companies and banks worldwide (SG, SCB, Barclays, etc)
  27. 27. Venture/debt investments and acquisitions from banks Q4 D N/A Q4 A $8,3M Q3 A $8,3M Q3 undisclosed Q2 A $14M Q3 $19.67M Q2 $33MD Q2 $56M Q2 D $75M As mentioned earlier, partnerships and investments are closely linked, however, investments primarily focused on realizing returns; Investments generally go from venture instruments of banks: VCs, accelerators, debts financing; Asian banks are getting involved and investing through the partnerships with accelerators (StartupBootCamp Fintech, Nest, etc.) Q4 $100M
  28. 28. was all about blockchain saw an explosion of interest in machine learning and artificial intelligence. 2015 2016 2017 will be the year of open marketplaces and platforms. Platforms support the rapid cycle deployment of micro services into a financial marketplace... As the financial world is rapidly moving to open, loosely coupled marketplaces, any bank with old legacy technology will start to look like a dinosaur
  29. 29. APIs and Open Banking will start to shift the banking landscape with more traction in Europe and Asia, but we’re likely to start seeing the gap between leaders and laggards widen William Sullivan, Head of Global Financial Services Intelligence for CapGemini The hype around banking APIs will increase, even overtaking cryptocurrencies. Major banks will launch public API platforms. APIs are arguably one of the biggest topics in the industry. The business model for profiting as a platform is key here, and many are still struggling with it Global regulators will embrace fintech competition and regulatory concessions … Africa will embrace APIs … financial inclusion will become a mainstream and actionable topic … and the US will embrace change in the regulatory and political system 2017 will be the year of open marketplaces and platforms Shamir Karkal, Head of Open APIs at BBVA David Brear, CEO and Founder of 11:FS Chris Skinner, Author and CEO of The Finanser Ltd Open Banking and APIs – What else … Simon Taylor, Co-Founder of 11:FS
  30. 30. Bank-as-a-service is a technological platform with a suite of APIs, that integrates seamlessly with any existing back-office of traditional banks and provides for non-banks a cost-effective, easy and fast way to launch various financial products. Bank-as-a-Service do not compete either with banks or fintech, instead it’s a ecosystem builder that connects all players of financial indsutry, provide them new revenue streams and products for their customers. Bank-as-a-Service (BaaS): solution to address Fintech challenges in Asia Chris Skinner one of the TOP5 fintech-influencers and predictors, author of bestsellers “Digital Bank” and “Value Web”, managing partner of the BB Fund in London ” You’re probably all familiar with SaaS – it’s basically paying for applications as you use them, rather than buying them. These services used to cost you a fortune, but are now free or near enough. That’s where banking is going. Banking becomes plug and play apps you stitch together to suit your business or lifestyle. There’s no logical reason why Banking shouldn’t be delivered as SaaS. ” This is the future bank, and old banks will need to reconsider their services to compete with this zero margin model. ” ...anyone in the near future would be able to build their own bank through apps, APIs and analytics.
  31. 31. Banks Licensed and regulated banking back-ends (belongs to banks in each country in Asia-Pacific region) based on 40+ universal APIs 100+ fintech-startups Middleware provide for them universal APIs Fintech-startups do not need to spend time, money and human resources to be integrated in each Asian country Banks do not need to spend their time and money to create new APIs and to communicate with all startups all over the world Bank-as-a-service Ecosystem Layers of BaaS platform “ The real impact of fintech in developed countries will be felt in the back office, where new efficiencies and technologies, and improve- ments to know-your-customer processes, have the potential to transform some banking operations for the better.
  32. 32. Integration of web based Fintech Widgets and native Fintech Apps through multi-layer Digital Banking Hub A holistic, digital marketplace banking ecosystem with a set of services for Fintech companies to connect to and integrate into the platform Required audit logging, user tracking, statistics and appropriate administration tool functionalities Appropriate subset of APIs and common data used by Fintech Orchestration API for collaboration and communication with Fintech Connecting Blockchain application securely to the platform Sustainable and extendable platform, easy to connected to different bank’s core systems Billing and charging engine Widget based FinTech Native FinTech Apps Banking API‘s and overall concept delivery
  33. 33. Successful Partnership Clearly, not all of today’s banks will survive. The survivors will be those that reimagine relationships with their customers and partners. Fintech offers banks access to technologies, brings new ideas to market at speed, enables to add value from bank’s data and changes bank’s culture Why banks need FinTech? Acces to ideas Acces to new technology Acces to agility: speed to market Acces to expertise around data Exposure to different culture Acces to customers - trust, inertia Acces to clearing and Central Bank settlement Acces to in-depth payments expertise Acces to data Avoidance of regulation Why FinTech need banks? Banks and Fintech. For what reason?
  34. 34. Key initiatives in bank-as-a-service and open banking areas BAASIS, launched in 2016 in Singapore,  is an open-API Bank-as-a-Service platform, aimed to connect banks and FinTech startups across Asia Pacific region. Currently is in integration phase with several banks on different markets. In 1H 2016 was launched solarisBank, banking-as-a-platform startup with a full banking license in Germany. It provides account and transaction services, compli- ance and trust solutions, working capital financing, and online loans for fintech startups. Bancorp – industry leading US-based largest bank-as-a-service platform, hosting 100+ non-banks with processing volume of $200+ billion USD annually. Different clients of different size, including google wallet, PayPal, T-Mobile, yodlee and others In 4Q 2016 Citi launched global API Developer Portal aimed to open architec- ture to facilitate collaboration with FinTech companies. APIs includes account management, p2p payments, money transfer, rewards, investment purchases and account authorization. Otkritie, the biggest privately-owned bank in Russia, through the process of integrat- ing with leading digital bank for SMEs Tochka, developed its own modern API-platform, that was later used to integrate with fintech startups, including mobile bank for retail clients Rocketbank. In 2H 2016 BBVA launched its API market- place, aimed to offer other companies a way to leverage BBVA’s capabilities to build their services. Fintech startups has an access to such APIs as PayStats, Connect, Accounts and Cards The UK government in 2016 has set up the Open Banking Working Group (OBWG) in order to create an open banking standard that makes it easy to share and use financial data. It includes development of open API to enable services to be built using bank and customer data In Q4 2016 the Korean Government launched an open banking platform for financial institutions (16 banks) that will allow them to build services that automatically populate financial information for new customers. The platform will essentially serve as database of consumer financial informa- tion that is accessible via API. In 4Q 2016 The Monetary Authority of Singapore (MAS) published 12 sets of data from MAS’ Monthly Statistical Bulletin as APIs. MAS is encouraging financial industry players to publish open APIs on their datasets, to allow users to connect information and offer innovative solutions Startups and tech companies Banks Government initiatives
  35. 35. Business/Operating Model: The BBVA Story BBVA’s leadership has reiterated its commitment to digital since 2015 But BBVA cannot simply embark on a complete redesign of its business — especially when the ideal target operating model is not clear A good way forward in this type of scenario is to run experiments — they have invested in “beta banks” across the globe in markets not primary to them Aimed to find the optimal operating model that could potentially be at the core of the new BBVA Following the investment in Simple in 2014 they have invested in Atom in the UK and Holvi in Finland They are all very innovative approach — superb CX focus, based in markets where they do not compete with an established BBVA entity For BBVA this is a well-hedged gamble: invest a few hundred million dollars to get a well-tested, blueprint of the bank of the future
  36. 36. In d ia S ri Lan ka B an g lad e shM yan m ar M alaysia P h ilip p in e s In d o n e sia A u stralia S o u th K o re a N o rth K o re a T h ailan d H o n g K o n g Lao s C am b o d ia S in g ap o re Taiw an Jap an B h u ta n SM E-len d & Facto P O S-m an ag em en t system s & tab let b ased cash -reg isters O n la O n lin e-trad in gO n lin e- len d in g P 2 B -len d in g C ro w d len d in g & C ro w d in vestin g O n lin e- rem ittan ces P FM & P FP m P O S-acq u irin g O n lin e-len d in g fo r stu d en ts It enables banks to evolve and vital for fintechs as a helper in overcoming regulatory barriers as well as optimizes time and money consumption before going to market. is very necessary for the future fintech development First BaaS-platform for Asia
  37. 37. APAC South Korea permits for banks to invest in Fintechs Currently financial laws, financial institutions are allowed to buy stakes only from companies in the same business sector. The FSC have included fintech companies in the scope of the financial industry. #banks #2016 SouthKorea MAS establishes a dedicated Fintech Office MAS and the National Research Foundation opened a dedicated FinTech Office to serve as a one-stop virtual entity for all FinTech matters and to promote Singapore as a FinTech hub.  #opportunity Singapore MAS established a regulatory sandbox. To allow more flexible application of the regula- tions, while maintaining safeguards to protect consumers and the wider financial system. Singapore Financial Sector Technology & Innovation scheme MAS committed $225M ($166.48M USD) under the “FSTI” scheme to provide support for the creation of a vibrant ecosystem for innovation. Singapore 6 P2P Lending Licenses Granted in Malaysia Six P2P lending licenses were granted in Malaysia recently, making them the first authorized platforms in the ASEAN region. #p2p lending #license #2016 SouthKoreaMalaysia Korea has launched a platform for banks The platform allows financial institutions to build services that automatically populate financial information for new customers. #banking #2016 HongKong Hong Kong to launch banking fintech 'sandbox' HongKong Hong Kong establishes a Facilitation Office HK Monetary Authority established the FinTech Facilitation Office to facilitate the healthy develop- ment of the FinTech ecosystem in Hong Kong and to promote Hong Kong as a FinTech hub in Asia. #opportunity #2016 P2P Firms Regulation in Indonesia The draft regulation proposed that a Fintech company is required to have Rp. 2 billion in working capital and is required to show Rp. 2.5 billion applying for a business license. To help maintain Hong Kong's competitiveness as a financial hub by supporting the development of fintech in the banking sector Indonesia Malaysia issues the Fintech Regulatory Sandbox To experiment with FinTech solutions in a live controlled environment which is accompanied by the appropriate safeguards #opportunity Malaysia Establishing an infrastructure Regulation activities in the APAC and Asia Most of activities are focused on establishing an early stage infrastructure and development Source:Fintechranking.com Key message
  38. 38. Traditional bank Servers IT-guys to support and manage servers - complience - processing center - card issuing - money storage You may write off infrastructure investments or use them as new revenue streams human resources support marketing product customers Amazon’s profit comes from AWS! 67% 2015 Creation of AWS for new players 2006 License New fintech players To fight with or to earn with ? BaaS for banks as Amazon Web Services for e-commerce
  39. 39. www. fintech-research .com
  40. 40. Igor Pesin Partner, Investment Director @ Life.SREDA VC ipesin@lifesreda.com Thank you

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