Australia introduced an open banking initiative, monitored by the Australian Competition and Consumer Commission (ACCC). From July, Australia’s banking customers can share their financial and banking data with accredited businesses under Consumer Data Right Act to access a better suite of financial applications.
There is global expansion as well. Railsbank, a global open banking platform with a presence in Southeast Asia introduced their services in the US market. The company will offer Banking-as-a Service, Cards-as-a Service and Credit Card-as-a-Service in the US market. Khaleeji Commercial Bank (KHCB), an Islamic bank in Bahrain, launched their open banking service enabling a customer to link their bank accounts with other banks and manage through the ‘Khaleeji 360’ platform. The portal allows clients to view all their bank accounts, automate operations and conduct banking through a unified platform.
Financial Institutions Increasing Partnerships with Fintech
Financial institutions no longer look at Fintech as competition. They appreciate that customers are at the centre of their entire operation – and Fintech services can and will provide them with the solutions they need. As financial institutions re-think their transformation journeys and face increasingly stringent regulations, they no longer have the option of ignoring Fintechs.
American Express, Visa, Mastercard and Discover came together to roll out a global standard. The big four’s advanced digital checkout solution Click to Pay is an online checkout system based on EMV Secure Remote Commerce (SRC) to make online payments across websites, mobile applications and connected devices, frictionless.
With an aim to unify payment solutions, a group of 16 major European banks launched the European Payment Initiative (EPI) to create a unified pan-European payment solution leveraging Instant Payments/SEPA Instant Credit Transfer (SCT Inst), including a card, e-wallet and P2P payments.
We also saw financial institutions strengthen their cross-border payment services in July. Deutsche Bank partnered with Airwallex to offer virtual account collections and API-enabled foreign exchange services in Japan and Hong Kong. The service will enable merchants and traders to transact through virtual accounts and APIs without opening bank accounts in foreign markets. Mastercard and Bank of China partnered to enhance cross-border business payments into China. This will enable global businesses to send payments to China while accessing real-time exchange rates, reduce the need for unnecessary documentation between merchants, and reduce transaction hassles and costs.
Fintechs Facilitating Cross-border Trade
Seamless cross-border financial transactions will be key to economic recovery, whether easy remittance or the ability to reach a larger market and be able to trade beyond borders.
July saw the formalisation of the Digital Economy Partnership Agreement (DEPA) between New Zealand, Chile and Singapore, to facilitate end-to-end digital trade, which includes establishing digital identities, paperless trade and the development of Fintech solutions to support it. The initiative also intends to allow cross-border data flow and give access to necessary government data to small and medium enterprises (SMEs) enabling them to be digital-ready to explore newer markets.
Dubai International Financial Centre (DIFC) signed an MoU with Jiaozi Fintech Dreamworks based in China opening new opportunities for innovation and trade. The agreement will enable Fintech companies based in both cities to access each other’s markets. Primarily established to facilitate the ‘Belt and Road’ initiative, it is a critical component of the DIFC’s 2024 strategy to strengthen relationships with the international financial community and increase access to the South-South corridor. Over the last few years, DIFC has been associated with over 200 Fintech organisations, and last month invested in four Fintech startups through their accelerator program. The agreement with Jiaozi will look at collaboration opportunities in Blockchain, AI and Cloud and will facilitate cross-border workshops and training programs.
Continuing Interests in Emerging Economies
Fintechs have been a means to bring about financial inclusion and are increasingly being used to target the unbanked and underbanked. Emerging economies continue to be attractive for Fintech organisations and global financial institutions.
With much of Malaysia’s economy dependent on foreign workers, Instapay, regulated by the Bank Negara Malaysia (BNM), announced a collaboration with Mastercard, to provide e-wallet accounts to the migrant workers. The widespread use of e-wallets by the migrant worker community will bring benefits to both workers, as well as their employers. Interestingly, Fintech providers in emerging economies are also looking to expand into other emerging markets. Malaysia’s GHL Group received approval from Philippines Securities and Exchange Commission to operate a lending business through their new unit, GHL Philippines Financing Services. GHL has been diversifying its business and has been operating its lending business in Malaysia and Thailand since 2019.
Crown Agent Bank, a wholesale foreign exchange and cross-border payment services based in the UK, partnered with South Africa’s biometric-based payment company, Paycode. Together the companies are aiming to reach 100 million unbanked customers where Crown Agents Bank will use their FX and payment services to bolster Paycode’s product offering and support financial inclusion across Sub-Saharan Africa.
India and Indonesia in the Asia Pacific continue to be popular markets because of the huge proportion of the unbanked population. Rapyd, a UK based global B2B Fintech-as-as-service provider partnered with major Indian e-payment providers – including Paytm, PhonePe, PayU, Citibank, DBS Bank, HDFC Bank, BharatPay, and Unimoni to launch an all-in-one payments solution that spans credit and debit cards, UPI, wallets, and cash. New registrations for digital banking in Indonesia are on the rise and Fintech startup Akulaku is capitalising on the potential digital banking overhaul to offer affordable and comprehensive financial services to consumers.
Fintechs benefiting other industries
The Fintech revolution has shown the path to several other industries – Healthcare and Agriculture are some of the industries that are hoping to benefit from Fintech organisations and their innovations. The MoU between Alibaba Cloud, Pfizer and Singapore’s Fintech Academy announced earlier in July, promises to give early and necessary guidance to Healthtech start-ups, and shows the deep connection between Healthtech and Fintech. In the Philippines, in an effort to improve financial services for farmers, AgriNurture acquired Fintech firm Pay8. By leveraging Pay8 e-wallet services, farmers will be able to access online payment services. This will enable the largely unbanked farmer community to become an active part of the economy.
The technology that these industries are looking to benefit from is Blockchain. South Korea brought Blockchain to their healthcare industry for better data management and storage. The 3 major telecommunications providers in the country – KT, SK Telecom and mobile carrier LG U+ – have also collaborated with KB Insurance to launch the blockchain-based mobile notification service (MNS) by matching customer data to their mobile subscription information. Oxfam Ireland – a charity organisation based in Ireland, received a sum of USD 1.18 million from the European Commission for a Blockchain-based pilot. The company is working on a project -The UnBlocked Cash – to help disaster-affected communities receive cash-based entitlements with more efficiency and traceability.
Fintech will continue to be a cornerstone of economic and social recovery in the future, and the financial industry will see more collaborations between Fintech organisations, financial institutions and governments. Other industries will continue to take learnings from Fintech.
Continuing the conversation around Fintech, we discussed the FinTech ecosystems building in Singapore and New Zealand.
This virtual event was a part of Techweek NZ, and in partnership with the Singapore FinTech Festival. 👇
This follows the announcement that was made last year by the Monetary Authority of Singapore (MAS) and Infocomm Media Development Authority (IMDA); of the successful completion of phase 1 of the proof-of-concept (POC) for its Business sans Borders (BSB). BSB is meant to be a “meta-hub” connecting several SME-centric platforms (starting within the Philippines, India and Singapore) giving SMEs seamless access to a larger ecosystem of buyers, sellers, logistics service providers, financing, and digital solution providers; and allowing them to be part of the larger global marketplace. The PoC involved a collaboration with private sector partners such as GlobalLinker, Mastercard, PwC, SAP and Yellow Pages.
AMTD Aligns with the BSB Objective
Hongkong-based investment banking firm AMTD Group leads a consortium that includes Xiaomi Finance, Singapore’s SP Group, and Funding Societies, that is a contender for one of Singapore’s digital wholesale banking licenses. While announcing their bid, they had clearly stated that they aimed to focus on SMEs in the region and globally. They continue to focus on SMEs by strengthening their partner ecosystem.
Last week AMTD announced a partnership with GlobalLinker making them the preferred financial services partner on the GlobalLinker’s SME-focused platform. AMTD intends to make available their entire ecosystem to SMEs including their virtual bank in Hong Kong, Airstar and their potential digital wholesale bank consortium in Singapore (which is to be called Singa Bank). In line with Singapore’s BSB objective, the partnership will see GlobalLinker join AMTD’s network which includes Fintech companies, regional banks and enterprises – SpiderNet. SpiderNet is a cross-sector ecosystem which is continuously expanding to connect and collaborate with shareholders, government bodies, industry associations, and clients. GlobalLinker’s AI-powered SME networking platform fosters SME digitalisation and helps members and customers connect with each other and use digital solutions. AMTD will be part of this network and bring the breadth of their partner ecosystem onto GlobalLinker’s platform.
Ecosystm Principal Advisor, Dheeraj Chowdhry says, “This marks the deepening of the trend of convergence between the established industry players and the Fintechs. The inefficiency of the obsession to ‘build’ and the associated resource and cost effort has perhaps been recognised on both sides and hence the path of coexistence and synergy seems more pragmatic. Fintechs are not competing but, in fact, complementing industry players by accelerating customer adoption of new digital formats for the entire landscape.”
Such partnerships by AMTD provides a glimpse of the group’s strong focus on Singapore. In April this year, AFIN and AMTD partnered to establish the USD 36 million AMTD ASEAN-Solidarity Fund. In May, AMTD, MAS, and Singapore FinTech Association (SFA) announced the launch of a USD 4.3 million MAS-SFA-AMTD FinTech Solidarity Grant to support Singapore-based FinTech firms.
AMTD remains committed to evolving their capabilities and ecosystem to empower the SME market in Singapore and the region. AMTD Digital announced their intention of acquiring a controlling stake in PolicyPal, Singapore’s InsureTech pioneer, and CapBridge Financial, a leading private capital platform for investing in growth companies globally. They have also expressed their intentions to acquire a controlling stake in FOMO Pay, a Singapore-based QR code and digital payment solution provider.
“AMTD’s early cognizance of the need for a strong ecosystem has led the organisation to their foray into partnerships and stakes in PolicyPal, FOMO Pay and now GlobalLinker. This strengthens AMTD’s commitment to the Fintech space including stakes in AirStar Digital Bank in Hong Kong and the Digital Bank application in Singapore,” says Chowdhry. “The Fintechs in AMTD’s stable will be part of the ‘AMTD web’ associated companies cutting across geographies and accelerate the ‘Business sans Borders’ objective of MAS and IMDA.”
As a part of Techweek NZ, and working once again with the Singapore FinTech Festival, Ecosystm is delighted to launch the “Re-Imagine the Digital Economy” webinar series. For more information please visit the link 👇