COMPETING in the tightly-regulated financial sector against well-resourced incumbents is a challenging prospect for any startup. Yet, iFast Corporation has managed to rise to that challenge over the past two decades.
The Singapore Exchange mainboard-listed company has grown into a regional fintech network with more than 800,000 customer accounts in five markets.
And Lim Chung Chun, chief executive of iFast, is setting his sights on taking the company even further, with plans for the group to become a “truly global” business.
“We believe that the future is one where investors from around the world will look for the best digital banking and wealth management platform,” he said. “... We feel (that) is a huge untapped opportunity – and we want to capture that.”
The former head of research at ING Barings Securities was named Outstanding CEO at this year’s Singapore Business Awards for his leadership in growing iFast into a company that has over S$18 billion in assets under administration (AUA).
Building up
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Lim co-founded iFast in 2000 during the early days of the Internet. The goal was to be a financial portal that allowed for the distribution of unit trusts online to consumers at a lower sales charge, while providing the information they needed.
“In those days, it was an environment where you (could not) even get simple information on the unit trusts,” Lim said.
The group later expanded to include business-to-business (B2B) operations serving independent financial advisers. AUA from both its B2B and business-to-consumer operations have been growing steadily, with the numbers surging strongly in the period post Covid-19.
Total AUA reached a high of S$19 billion in December 2021, almost double the levels in June 2019. AUA have since eased slightly – to around S$18.1 billion as at March 2023 – amid more challenging financial conditions globally.
Lim noted that the slip in AUA was largely due to stock market valuations. The group has still recorded net inflows of client assets each quarter.
“That’s the nature of the industry, you go through periods where the growth comes very rapidly. But you also go through one or two years where the growth seems to have stalled a bit,” he said.
Nevertheless, he remains optimistic that the group would still be able to achieve the S$100 billion AUA target that was set in 2018.
“All in, we believe that remains (an) achievable number ... given the various initiatives that we have in place, to progress and to continue to evolve,” he said.
Global ambitions
One of the initiatives iFast has been undertaking in recent years is to build a “truly global business model”.
Lim noted that most of the growth so far has been from countries where iFast has set up a full physical presence.
“That tends to be a more expensive model, because every country you go to, you start from scratch, then you’ve to take a number of years to invest and so on,” he said.
A truly global business would be different. This would involve operating from just a few centres, but having the ability to tap into capital flows from around the world.
Lim noted that Singapore has been very successful as a wealth management centre, with private banks operating from Singapore while tapping into customers around the world.
While such options are available to high-net-worth individuals, similar models have not emerged for mass market or mass affluent individuals.
“That hasn’t happened in a substantial way,” Lim said. The “huge untapped opportunity” is one that iFast hopes to capture.
“That’s the reason why we have spent quite a bit of effort in the last five years to try and get a banking licence, starting with Hong Kong and Singapore,” he said.
But the company faced setbacks on this front, as regulators in the region did not grant iFast the licence it was seeking.
“I definitely was very disappointed, because I was having high hopes for us to get that licence – and it was a wholesale licence, not a full retail banking licence,” Lim said.
“But I suppose, in business, you go through disappointment, then you have to look for alternatives.”
In 2022, iFast announced that it would acquire BFC Bank in the UK, which it renamed iFast Global Bank. The group’s digital personal banking services were launched in April this year. It now has customers from over 20 countries who opened accounts.
Lim noted that the cash market for retail investors is not properly developed, and iFast is aiming to get more clients from Asia on board.
“That kind of ease of use, and then good interest rate ... that’s something that most banks don’t want to provide,” he said. “Just being able to provide a simple service and then giving a decent rate for the simplest product. That’s a starting point ... From there, some of that will flow to other investment products.”
The way Lim sees it, getting one million clients for the bank in five years is a reasonable target.
“If on average, each of them just put S$10,000-S$20,000, that’s already S$10-20 billion,” he said.
Apart from banking, iFast also has another growth driver coming from its Hong Kong business as it executes its ePension business there.
iFast has targets for its Hong Kong business to hit net revenue of over HK$1.3 billion (S$208.1 million) and over HK$500 million in profit before taxes (PBT) in 2025 – higher than the entire group’s PBT of S$35.8 million in FY2021.
“In the next three years, the Hong Kong side will be the bigger growth driver,” Lim said. “But in the long run – the next 10 years – I feel that what our iFast Global Bank has opened up for us can lead to something much bigger.”
Key principles
Lim said iFast’s approach to growth is different from other tech startups that have subsidised sales in a bid to grow.
“We are not like the other digital bank that burns a billion a year or whatever it might be,” he said, adding that it seeks to invest in a “sufficiently prudent way”.
Other growth companies may have chosen to tap private equity (PE) investors in their journey, but Lim has decided against it, despite past conversations with PE firms, even before iFast was listed.
“I feel that if we go down this path, we will end up with a situation where we lose control of our destiny,” he said.
“If we lose control for the right reason, (it) may be still acceptable. But if we lose control, purely because the PE firms want to make more short-term money for themselves, then that, of course, is not right.”
Lim shared that iFast has always adhered to the principle to truly help investors to invest globally and profitably.
“It sounds so simple and something that should be common sense; but in reality, in the investment world, it’s not as common,” Lim said. “There are a lot of products out there in the wealth management industry that are not designed for the benefit of the investor, but designed for the benefit of the product manufacturer or the distributor.”
Instead of short-term profits, Lim emphasised that iFast is focused on the long term.
“In the short term, sometimes quarterly results may not be as nice, but I think we’re clear that once we get past certain quarters where things are not so good, then we will bounce back strongly.”
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