Fintech spurs innovation in Asian wealth management

WHEN DBS recently announced the first "digital only" retail banking platform in India, in partnership with Kasisto, naysayers and old guards started taking note of the buzz surrounding fintech (aka financial technology) and admitted that this is not a passing fad. Recognising the trend, the Monetary Authority of Singapore (MAS) is bullish on creating a strong ecosystem for fintech development in Singapore by way of its new Fintech & Innovation Group.

We have come a long way since the US$8 billion valuation that Lending Club, arguably the world's largest online peer-to-peer lender, achieved in 2014. In 2015, investments totalling US$19 billion flowed into fintech, over 70 per cent of which was focused on the "last mile" of the consumer banking experience. On the wealth side, a startup called Robinhood now offers a free trading platform, while another called R3 is building a blockchain union among traditional banks. Blockchain, which is the technology on which the cryptocurrency bitcoin is based, could potentially be deployed to legitimise fintech-enabled transactions without the need to comply with the typical know-your-customer norms used in traditional banking.

Large traditional banks have begun to fortify their positions by either investing heavily in their technology infrastructure or, better still, launching their own fintech outfits to foster innovation from within - Citi Fintech being a recent case in point. A few banks are even experimenting with launching their apps within WeChat or Weixin (the micro-messaging platform in China), thereby circumventing the entire process of having to develop their own platform from scratch. However, when we look past the general euphoria, we find that while every fintech entrepreneur may claim to have found the "the next big idea", only a select few have been able to successfully monetise that idea and turn it into a sustainable business model. But competition is sure to grow in this space.