TEMASEK-FOUNDED Affinidi has launched a new business unit called Finnovate to help both underbanked individuals and under-served small and medium-sized enterprises (SMEs) through Web 3.0 technology.

Also known as decentralised technology or decentralised finance (DeFi), Web 3.0 is a third generation of online services where information is decentralised and shared through various applications. It allows end-users to perform financial transactions directly using smart contracts, without the need for financial intermediaries.

In a press release on Tuesday (Nov 9), the Singapore-based technology firm said Affinidi Finnovate aspires to enable a more innovative and inclusive financial ecosystem that better meets the needs of underbanked individuals as well as Asean-based SMEs that currently do not have access to loans they need.

This will be achieved through Web 3.0 innovations such as decentralised protocols and verifiable credentials (VCs), said the group, as well as partnerships with stakeholders across the financial services sector including banks, insurers, asset managers, fintechs and regulators.

Highlighting underserved SMEs as a "chronic issue", the group identified the lack of documentation as a key barrier to access banking.

"One of the consequences of underbanking is that less than 20 per cent of the population in Asean has access to credit. As we emerge from the pandemic, this is a potential handbrake on economic growth across the region," said Varsha Jagdale, general manager of Affinidi Finnovate.

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Affinidi Finnovate seeks to address this pain point through the use of VCs, which are digital certificates that can be used to represent information ranging from financial and health records to education qualifications for individuals, or business licences and certifications for SMEs.

As a VC is digitally signed by the issuer of the credential and hence machine readable, Affinidi said the authenticity and validity of VCs can be easily verified without reverting to the issuer. The group also highlighted these digital certificates as tamper-evident and difficult to forge, as asymmetric cryptography is used to sign and verify them.

"Using VCs, we are creating a win-win for financial institutions and their customers; financial institutions have a deeper understanding of their customers, while their customers can access a wider variety of products," added Jagdale.

According to Affinidi, its technology allows financial institutions to identify, onboard and serve their customers faster and in a more personalised manner.

The group also announced a new initiative, ChekFin, at the Singapore Fintech Festival on Nov 9.

ChekFin aims to facilitate the identification, verification and monitoring of fintechs globally, and in turn speed up engagement and help to accelerate innovation in the global financial services sector.

It will be launched as part of Asean Financial Innovation's (AFIN) APIX platform, a global cloud-based open architecture API (application programming interface) marketplace to facilitate collaboration between fintechs and financial institutions.

APIX is an initiative of the Asean Financial Innovation Network, a not-for-profit entity formed between the Monetary Authority of Singapore, the World Bank Group's International Finance Corporation and the Asean Bankers Association.

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