Scott Bales, Echelon and Banks
An expert with over ten years of international experience in advancement of financial services and mobility, Scott Bales is scheduled to speak at Day 2 of Echelon on the digital transformation in banks today. He is also currently the Chief Mobile Officer at Moven, a mobile money service that helps you spend, save, and live smarter. In this article, e27 interviews Scott about the startup opportunities in the Banking scene and focuses on Asia and its potential for banking innovation.
What is your opinion of the FinTech scene in Singapore and Asia as a whole?
FinTech is an interesting space to be in the region, mainly due to the huge opportunities that exist. Countries like Thailand, Indonesia, Philippines, Vietnam and more still have huge gaps in the provision and availability of financial services. So people tend to be forced to pay a premium price for a legacy or traditional services, like sending money to someone. Due to historical margin squeezes, most of the traditional banks steer away from marginal business like mobile money, payments & commerce as their business models don’t have the cost-to-income ratios required to serve these markets. My guess is there is close to 200 million under served consumers in the region that would jump at Fintech offerings if they were available and met their needs.
Singapore is also a huge opportunity, as one of the nations with the highest ‘readiness’ for a cashless society. With the right mindset and innovation we could lead the world. The challenge is that the incumbents are very conservative when it comes to cash replacement offerings. Plus, there are many regulations that prevent some world leading innovations from even starting. Businesses like Square, Dwolla, Mint, Simple and Moven can’t operate under current regulations. This creates two large barriers to entry, strict regulation and a small market. There is definitely an opportunity to open up to allow innovators and entrepreneurs a chance to build truly transformative startups.
Trends in FinTech around the region…
These phenomenons tend to be fringe plays like Personal Finance Management, Electronic/Mobile Commerce, Deals & Coupons, and Financial Education. Many of these can get off the ground reasonably easily, but are often attracted to American markets due to market size and favourable regulation.
Potentials and unexplored opportunities in Asia
A huge opportunity that goes unresolved is transforming Singapore into a cashless society. We have many of the core infrastructure requirements such as CEPAS, NETS, etc. But these remain exclusive to the incumbent banks, which have historically been poor at transformation innovation. Mobile Commerce is also a huge opportunity in the region as we move away from the current Point of Sale (POS) model to a more efficient, engaging mobile oriented model. In the US, businesses like Square have completely transformed the way in store payments behave, removing the need for expensive hardware, and bring delightful & insightful purchase experiences. Singapore is ideally placed to take advantage of Mobile Commerce, with some reports suggesting that Singapore enjoys an 88% Smartphone penetration.
The other area I feel remains untapped is the empowerment of consumers to make smarter money decisions. Opportunities like money coaches, spending assistants, simple budgeting platforms, all remain gaps in the market. As a society we need to free ourselves from the instance gratification desire that fuels credit crisis’, and the only way is by creating educational and behaviour change platforms that are fun, informative and have the best interests at its core.
Historical milestones in the development of FinTech innovation trends
Learning from other markets around the world, the key milestones for unleashing the power of transformative change in financial services tend to revolve around opening up the ‘exclusivity’ of the industry. Innovators become open and incentivized to experiment with the market’s wants and desires. To make this happen, we need the industry to open up, foster innovation and create opportunities for founders to pursue.
Are banks willing to open up and listen to startups?
Banks are willing to open up in other parts of the world. Many of the world’s top banks now have Venture arms that invest, mentor and guide startups. This is fantastic as it combines the industry knowledge of a bank with the passion, creativity and ingenuity of a startup founder. I’ve recently been working on building a FinTech Lab in Singapore that would enable such collaboration in conjunction with some of the worlds top banks, innovation companies, design companies and entrepreneurs. Places like this are ideal for growing and harvesting transformative innovation in the industry.
There are already several in the US and UK.One of the key barriers to this happening before is Startups don’t have the resources to engage meaningfully in Business Development discussions with Banks. Plus, let’s not forget its hard work to get the attention of a decision maker in a bank.
This article was originally posted on e27