They have to look at: How they are embedding themselves and their offerings into the entire user journey, including existing market places and ecommerce platforms where consumers are, in order to stay relevant. What are some new customer segments that they have neglected in the past, which can be tapped into via these market places and platforms? And finally, how to build a sustainable and ongoing relationship with your customers through frequent interactions on different touchpoints, including outside of your usual banking platforms.
On the other hand, non-financial services providers, like the market places or platform providers, will also be considering their own go-to-market strategy; whether to build their own or work with the banks and insurers. Banks and other financial services providers should take this opportunity to proactively engage these merchants so as not to be displaced.
As regulators continue to keep an open mind towards innovations by the alternative providers, how do you see this further changing or reshaping the consumer and financial services landscape as a whole?
The industry is converging as a whole, for example recent examples include a major insurer working with an onDemand taxi hailing service provider and one of China’s biggest ecommerce merchant launching their own wealth management application via their investment arm.
«Traditional and alternative providers need to cross the bridge and have that open conversation»
There needs to be more consultations and open conversations as well as exchange of ideas between regulators across the different sectors. Traditional and alternative providers need to cross the bridge and have that open conversation, looking into collaboration rather than competition.
The end goal is to make sure their target customers are protected, especially from a data protection and privacy standpoint and that their own business is sustainable.
How do you think banks can best work with fintechs or even support them to arrive at a win-win outcome for both parties and their end customers?
In our recent Asean FinTech Census, one of the key challenges identified is around funding and sustainable growth. While 87 percent of them have ambitious growth plans to expand their business beyond their home or current markets, 45 percent are self-funded and 68 percent have a buffer of less than a year before their funding runs out.
«Funding is crucial in order to continue to foster innovation and provide a conducive environment»
Capital raising and funding is key for these FinTech start-ups and they have limited run-way as well as challenges in getting credit and loans from traditional financial service providers without either a visible or proven credit history. Funding is crucial in order to continue to foster innovation and provide a conducive environment at a national level that supports entrepreneurial growth of high potential fintech start-ups that can make a positive difference to the consumers’ lives.
Financial services providers should therefore look at this positively as an opportunity to work and support these fintechs that are aligned with their business goals and strategies. This can be in the form of accelerator programs to help them with their expansion plans or by relooking at their current funding models to cater to this specific group of customers.
Liew Nam Soon has more than 25 years of consulting experience in the retail, private and investment banking, asset management, life insurance and private equity industries. Before EY, he was a partner with PwC, and started his career with Andersen Consulting. He holds an MBA from Imperial College in London as well as an undergraduate degree in engineering from Nanyang Technological University in Singapore.
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