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Towards open banking: what we can learn from the humble hawker stall
JUST as Singapore's small businesses have been called the heart of the country's economy, so too have hawker centres provided a foundation for the palates of generations of Singaporeans.
For those who truly "think with their stomach", this vibrant fringe of the food industry provides an easily understandable - not to mention appetising - reference model for the disruptive competition that is transforming banking. Competition that is leading to a greater variety of financial products and services catering to personal tastes.
What hawker stalls and fintech startups have in common
In Singapore, hawker centres have long been the go-to for quick, affordable, no-nonsense food. But a new generation of foodies is eschewing the frills of fine dining, and embracing the humble hawker stall as a culinary equal.
Singapore's hawker stalls are even being awarded Michelin stars, once the sole domain of haute cuisine. Liao Fan Hong Kong Soya Sauce Chicken Rice & Noodle, with its S$2 chicken rice dish, is in fact the most budget-friendly Michelin-starred meal on the planet.
Meanwhile, in established restaurants diners are now looking for qualities they've come to appreciate from small independent vendors (like hawkers) and gourmet food trucks: fresh, seasonal ingredients, local produce and sustainable practices. Provenance, honesty and openness are have now become basic "hygiene" factors in high-end dining.
And it's here that the gourmet street-food movement provides a powerful analogy for the emerging fintech industry.
Arguably, they started at the same time - the financial crisis of 2008 coincided with the food-truck revolution in the US, as well as the launch of the "myhawkers" website in Singapore, confirming the regeneration of hawker centres as venues for younger, modern Singaporeans. Local city governments across the world have promoted street-food revolutions as a way of creating "cool" new facilities in towns, supporting regeneration and attracting entrepreneurs into the ecosystem.
Over in the banking world, many national governments are now behaving similarly, forcing established banks to share space with upstart fintechs.
Part of this is a belief by the authorities that fintechs are better able to deal with new consumer demands than big established banks. One of the challenges is that products that consumers are now demanding often cannot be predicted or planned for by larger, more established organisations.
In other words, there is an inherent flexibility and agility within small businesses (fintechs and street food vendors alike), though "legacy" established businesses in both fields have not necessarily warmed to disruptive newcomers, particularly when they appear to skirt costly overheads relating to regulations and licensing.
The impact of upstarts on the established order
Success at street-level does sometimes spark development into bigger businesses. At the local level, that includes Chan Hon Meng, the Singaporean hawker whose success has been a springboard to a larger quick-service restaurant, as well as cross-border expansion to bring Hawker Chan to Melbourne and Bangkok.
While the impact of the street-food revolution on the established dining scene may be profound, it is still unlikely to take over the established order. Again, comparisons with fintechs may be prescient - new banking startups may boast a tiny fraction of account holders compared with established banks, but the impact of new consumer demands that are serviced quickly by those fintechs are likely to have a disproportionate effect on the speed of change at the big banks.
Over in the UK, where new Open Banking rules have come into effect, new payments businesses such as Third-Party Providers (TPPs) are encouraged to accelerate this effect. Essentially, established banks are being forced to behave more like agile upstarts. Consumer preferences (for food and for financial services) can indeed be irrational and unpredictable. Sometimes, it is best to capture new demands by allowing smaller organisations with lower regulatory overheads to start up and see what develops. Sometimes, it is better to open up, to allow new forms of competition to rejuvenate the market, even if it risks upsetting the old ecosystem.
Perhaps some of Singapore's new fintech "stalls" will capture specific consumer tastes, and grow into bigger establishments, maybe even becoming international.
Maybe partnerships with major established banks, which still retain high levels of consumer trust, will prove to be the stamp of approval - the finance world's Michelin star if you will - for their fledgling fintech venture. One that will lead to long lines of consumers eager to get a taste of the next big thing.
- The writer is solution practice lead, ACI Worldwide