finews.asia spoke to Liew Nam Soon, managing partner for ASEAN financial services at EY.

Liew Nam Soon, how is fintech shaping the financial industry?

Fintech is clearly providing new ways to get access to customers. It addresses what previously had been unserved, unbanked and uninsured. In Indonesia for example 80 percent or more of the population don’t have a bank account. There, mobile telecom operators have tied up with fintechs to offer the utility of opening a simple bank account in a few steps.

Collaborating with fintechs offers many new possibilities. Let’s take China, where firms like Alipay offer even broader services not only for financial needs, but linked to lifestyle, like producing travel tickets. I think this development is the biggest disruption happening right now – how customers are acquired and served.

Fintech is also a B2B play, isn’t it?

Yes, it is an efficiency play. Particularly if you look at blockchain and robotics. A lot of fintechs are processing at much lower costs than the traditional industry, improving at the same time the quality of less manual intervention and less errors in work. This is definitely also changing the shape of the industry, by also lowering the costs to serve.

The third area of disruption is the whole compliance angle. How regtech is helping with automating and embbeding analytics into the KYC process to address fincrime and looking at trades and traders and identifying risks and non-compliant areas – that is another big area.

Is EY active in all these three fields?

Pretty much. We are involved on the customer side to see how we can strive for greater value for our clients. Clearly, on the operating and efficiency side, robotics is a big play for us. We are helping some major financial institutions to implement robotics in their back offices, in finance, operations and compliance.

It seems that EY itself is getting disrupted. True?

At a certain level yes. We have a percentage of our staff that has moved to other types of roles, as we have robots for certain jobs now.

How does EY cooperate with fintechs?

For the moment we have helped some fintechs to go for IPO, determining their valuation, validating technology platforms and evaluating whether they are compliant with regulations and to regulatory bodies. Then, we are also working with fintechs and with clients to look at what is the deployment opportunity, what is the operating model, where is the disruption in the value chain.

Finally we have fintech labs all around the world where we also identify certain fintechs that we think are adding value to us and to our clients.

What exactly are you doing in those labs?

We have some fintechs that are more closely associated with us. But basically there is an open ecosystem, so we often use fintechs for a specific client to develop a business case. We also link customers up with a couple of fintechs. They use the lab for their proof of concept.

There are different fintech hubs in the word, like in Israel, in the Silicon Valley, in London or Switzerland. How would you compare these different locations?

We have produced a comparative study for the London treasury about it. We looked at these different jurisdictions and benchmarked them across the globe.

What were your conclusions?

One is the availability of talents, and there Silicon Valley and London scored quite high because they are more mature, having been in that play for longer. Singapore is alright, but not as good as it should be in terms of its ambitions. But this might be outdated soon, as we are seeing a lot of talent coming to Singapore.

The other benchmarks are around support from the industry, the government and the regulatory bodies, and that is where Singapore scores very highly. There is a lot of money, progressiveness, top-down-approach, whereas Hong Kong might have a bigger talent pool but isn’t getting that much support compared with Singapore. London is quite well-balanced.

The other factor was around the availability of funding such as venture capital and other sources. Singapore and Hong Kong are quite equal in these terms of comparison, but the big money is clearly in the Silicon Valley, where there is a far bigger share of money available.

Another part of the report is quite interesting on how different fintech locations are focusing on specific areas. In Singapore there is a lot of emphasis on wealth management, in Hong Kong it is about capital markets and trading, especially on derivatives and so on. Looking at the startups coming up this supports our view.

How about other locations?

London tends to be quite balanced, across lending and peer-to-peer offerings. And China is interesting because it is in its own ecosystem overall and in every field. India is trying to emulate as well, the closest they got is PayTM, which is a major mobile payment provider, but Alibaba owns a big chunk of this fintech.

As interesting aspect of the report says that as time goes by, the fintech development will evolve naturally to support the market requirements of each individual location. And so, although Zurich is not covered in this report, the city will most probably evolve to something closer to wealth management.

Is there an entrepreneurial mindset in Singapore as the history shows a more top-down development in the last 50 years?

There are two answers to that question. One, there is a generational change as well as the fact that Singapore has traditionally been a very practical country that always had to survive. If you look at the statistics, you clearly see that more young people prefer to work as an entrepreneur than in the traditional corporate environment.

Second, the way of thinking is also changing. For a long time many young people have been a complete product of the Singapore education system, not having studied abroad. Now more people are educated overseas, so they have the benefit of both local and international foreign experience.

The short answer to your question is, Yes it is changing, but there are definitely still some gaps. Actually, the other element in Singapore is not a local play. If you look at the fintech startups, the majority are not local. So ultimately it is about tracking talent.

Could you elaborate on how some fintech hubs come to specialize in certain industries?

There are plenty of fintech developments in corporate banking here in Singapore, and the big banks are doing blockchain projects on the large scale. There are also a lot of retail and consumer banking fintechs which helps with payments. But the retail market here in Singapore is very small. How much money can you make out of that?

Wealth management is interesting because it is onshore and offshore here in Singapore. The city is a booking centre and you can deploy something that serves the region. That is where I see opportunities: in better investing, portfolio management, analytical driven advice, tailor advice, robo-advice.

Is blockchain the most disruptive development?

In longer term, let’s say over the next 3 years, definitely. It is a technology that enables scale. Everyone is recognizing this cost of ledgers, in terms of improving efficiency, settlement or payments, and therefore there are a lot of pilots going on. They show that it works, but it works at certain levels.

The next stage it that the technology is improved so it can be scaled on an industry-wide level. True?

At the moment people believe that you will see a dramatic uplift in blockchain applications in the next three years. So it is definitely something to watch out for.

Is blockchain so disruptive that we eventually won’t need banks anymore?

Let’s say the banks are very careful about this possibility. In payments, for example, you don’t need the banks anymore. That is why the banks want to stay involved with their own payment gateways. Banks have been so keen not to get disrupted – they want to stay in the game. Blockchain will not completely disrupt the banks, but it will definitely disrupt their value chain with certain niche areas, where the banks will be disintermediated.

Liew Nam Soon has 24 years of consulting and industry experience. He has worked in industries including retail, private and investment banking, asset management, corporate banking, life insurance and private equity. Prior to joining EY, he was the Chief Transformation Officer of a global insurer and a partner with the global business services unit of IBM. He was also previously a partner with PwC and started his career with Andersen Consulting.

Nam Soon graduated with an MBA from Imperial College, London, and a Honors in Bachelor of Engineering from Nanyang Technological University of Singapore.