I came to Singapore to get an international perspective in financial technology, attending the inaugural edition of Money20/20 Asia as a media partner. The initial surprise for me on the first day was the emphasis companies place on financial inclusion.
Not that the topic of the unbanked doesn’t come up in the United States, but there’s a very different tone. Financial inclusion is “baked in” to the DNA and purpose of the large platform technology companies.
Bringing customers into the financial system
For instance, Grab, which started as a tax-hailing service. In his presentation to the full Money20/20 Asia audience, Anthony Tan, Co-Founder & Group CEO, told a number of stories about the firm’s entrepreneurial customers: a driver who started with no income and now owns a home, a shop owner who used the firm’s loyalty program to increase business and now wants to expand.
“We helped (our driver) become visible to financial institutions,” he said. Grab announced its financial services unit, Grab Financial, which is designed to use the Grab platform to provide loans, insurance, and other financial services to their small-business owners, whether they are drivers or shopkeepers. Financial institution partners announced include Chubb Group for insurance and () for lending.
Cheng Li, CTO at Chinese payments giant Ant Financial told a story about a merchant operating at the foot of Mt. Everest and how Ant Financial’s technology helps him worry less about money and put more effort into their business. “We bring more opportunities to people and small merchants. That’s what we are passionate about. Bringing more affordable financial services to others.”
Yes these types of stories, where the large company helps an individual small business person, are a staple of platform keynote speeches today. But inclusion really seems part of the DNA of these firms, as their founders often have the same sort of narrative to their personal stories.
A series of interviews and a detailed case study on Ant Financial appears in banking and technology consultant and author Chris Skinner’s forthcoming book, Digital Human. He reiterated in an interview with me (look for it soon) how much these large technology firms do put financial inclusive at their core purpose. And if you think about it, that is how they develop new customers from poor people.
As Skinner writes, “As I’ve said repeatedly, Ant Financial is the only company worldwide focused on building a global financial inclusion platform. A platform that can support and connect potentially seven-and-a half billion people in real time. At the very least, a platform that will include all those who are currently excluded from the financial network, by offering them a connection via the mobile network and simple technologies that are interoperable between operators in all countries.”
Rebecca Mann, Deputy Director at the Bill & Melinda Gates Foundation, made many of these points poetically, to end the panel on mobile money and financial inclusion. If I get a link to the original poem she read, I’ll post it.
The rise of technology platform companies
Tech companies in China and South East Asia are able to build purely digital and mobile service, using the most advanced AI and machine learning technologies, he says, because they are not hampered by a legacy of old and disparate systems. This poses challenges to U.S. and European financial institutions and an opportunity for technology firms.
Stripe, which provides a means of connecting multiple means of payments to ecommerce stores, is one of a number of technology firms attacking the problem by creating connecting technologies. The Strips API reduces friction in commerce, and the 19th century study of friction in mechanical systems cleverly took a central role in the keynote by Will Gaybrick, COO for San Francisco-based Stripe.
“It’s hard to expand into other countries, and we have grafted borders onto Internet systems,” he said.
Everyone I talked to mentioned how hard it is to work in the United States, with 50 regulators and half a dozen federal regulators that do not coordinate. “It’s so subjective,” an Australian payments executive commented. I smile and point out that U.S. firms have the same problem, leaving out the lecture on Federalism and how that does, in fact, have some advantages.
Two startup partners from Sweden, however, were not impressed with the technology in Singapore itself. They found the experience of opening a bank account in Singapore to be quite retro compared to the digital systems in Sweden. “We were surprised. It’s like they are years behind,” one said. “It’s digital on the front but probably all moving paper around” in the back office.
The legacy of legacy systems
That’s the legacy of legacy systems worldwide, and it will not go away anytime soon. Even Ant Financial faces challenges here. Realtime, secure computing is a major challenge and one that gets greater as payments become realtime. “KYC and authentication are still the pain points for customers to get digital financial services.” Ant Financial’s Li said.
But where there are problems there are opportunities. DBS Bank, Singapore, is widely regarded as one of the most digitally advanced large banks in the world, and its digital services are a key to current and future profitability.
Piyush Gupta, CEO & Director, DBS harkened back to the Intel Inside stickers appearing on PCs in the 1990s. It’s one of the greatest and most successful B2B marketing campaigns ever. “That’s what we want to do. Be part of the background but still have customers know that if their journey is powered by DBS, they are in better hands,” Gupta said in his keynote.
On the crypto front, I talked to a number of PR, marketing, and engineering types about blockchain services for identity and everything else, token offerings, and methods to arrive at real valuations of real ICOs. I noticed a couple people checking Bitfinex to see the state of their crypto-currency trading positions for the day. I expect more to come on this topic over the next couple days.