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BNY Mellon eyes a big slice of fintech pie in South-east Asia
A SLEW of announcements at the recent Singapore FinTech Festival cemented the Republic's position as a leading global financial technology hub. One of the more notable of these proclamations was the opening of an innovation centre by top financial player BNY Mellon.
Speaking to The Business Times, Suresh Kumar, BNY Mellon's senior executive vice-president and chief information officer, said the company's Singapore innovation centre will focus on collaborating with fintechs and clients to create "evidence-based management solutions".
Globally, BNY Mellon has eight innovation centres, each with a unique focus, Mr Kumar said. "Collectively, our network of innovation centres is allowing us to open new doors for our clients with opportunities to collaborate on new solutions."
He added that 24 members of the company's technology team in Singapore had already relocated to the innovation centre and that BNY Mellon is planning to expand the head count by another 50 per cent by the end of next year. Globally, BNY Mellon's eight innovation centres are staffed by over 2,700 employees.
As at Sept 30, BNY Mellon had US$30.5 trillion in assets under custody and/or administration, and US$1.72 trillion in assets under management. It is the corporate brand of The Bank of New York Mellon Corporation.
Mr Kumar said BNY Mellon's work with fintechs has many levels. "All of our eight global innovation centres are actively working to establish relationships with fintechs in their regions and determine if there are opportunities for various degrees of collaboration."
These can range from knowledge sharing all the way to building new solutions on the company's Nexen App Store, he added. Nexen is BNY Mellon's digital platform that uses open-source, cloud-based architecture that complements in-house solutions with third parties (including fintech firms) and clients onto a single operating system, Mr Kumar said.
"Nexen provides a common platform for fintechs and our clients to collaborate. Currently, we are talking with more than 300 fintechs globally to assess potential for various levels of collaboration, including potentially offering solutions through Nexen."
He added that the company is "finding good opportunities for mutually beneficial relationships" with various fintechs.
"We are looking at the work that they are doing to find synergies with our clients' and the industry's evolving needs. Once we find those synergies, we can work with them to help solve some of the challenges that fintechs may face in bringing their ideas to fruition, like regulatory and compliance concerns, as well as opening doors for them in the marketplace."
Talking about the company's decision to set up a fintech development centre here, Mr Kumar noted that Singapore is heavily focused on the development of fintechs.
"Among a number of announced 'regulatory sandboxes', a number of South-east Asian countries have committed government resources towards the fintech space. Singapore is particularly well placed as it has established infrastructure, strong corporate governance, very good talent pools, a forward-looking regulator that understands the power of technology, and universities looking at a lot of the new technologies coming out."
He noted that the sector is fast growing in the region, with companies looking to capitalise on opportunities in everything from online acquiring and lending, to crowdfunding, blockchain technology, and big data analytics.
Over the last 18 months, South- east Asian fintech startups took a combined US$345 million of funding. "This demonstrates the level of investment and focus being placed on the sector in the region," Mr Kumar added.
According to a study published earlier this month by KPMG International, during the third quarter of this year, funding activity backed by regional venture capitalists (VC) for Asian fintech firms jumped 50 per cent quarter-on-quarter to US$1.2 billion.
Asia is the only region where there was a growth in fintech funding activity in Q3; North America and Europe both saw a fall in VC-backed funding activity. In the year to date, Asia- based fintech investments have hit US$4.7 billion - a figure likely to surpass last year's US$4.8 billion, which was already a record, according to KPMG.
Mr Kumar noted that, in order to be successful, financial services firms need to embrace the changes that are occurring in the industry, thanks to technology advances.
"This means figuring out how new and emerging technologies, like blockchain, can solve business problems and meet client needs.
"For technology, it also means that we need to be aware of our constraints - for example, regulatory - and see those as opportunity points for innovation, rather than inhibitors.
"We've had some great innovation success stories that are the result of meeting new regulatory requirements, like tri-party repo."
(Tri-party repo refers to a financial transaction for which post-trade processing - like collateral selection, payment and settlement, custody and management during the life of the transaction - is outsourced by the two parties involved in the transaction to a third-party agent.)
Mr Kumar noted that traditional financial services firms like BNY Mellon need to think like startups - "even if we are 232 years old".
"In many ways, we have the best of both worlds . . . We have access to the talent and the technology that the best startups have . . . and we also have the benefit of our size, our client base, our market knowledge, and our capital. This puts us in a prime position to be an innovation leader in financial services for our clients."
He noted that blockchain technology holds tremendous potential for many industries. Blockchain is moving beyond a digital currency and is increasingly important as a digital ledger of transactions, he added.
"At BNY Mellon, we can see a use for this technology for almost every type of transaction involving value, including money, goods, and property.
"We are exploring a number of potential uses for blockchain, including its application in the payments space, as well as an internal resiliency use."
Mr Kumar said that blockchain is a fundamentally disruptive technology, much like the Internet was when it first started. "What definitive solutions and applications will emerge remains to be seen. The impact that this technology has had in starting and unravelling a conversation is extremely vibrant. Its value cannot be underestimated," he added.