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Fintech Types, Lifecycle, Startup skills, Drivers & Emerging Fintechs …
Fintech Types, Lifecycle, Startup skills, Drivers & Emerging Fintechs
Lifecycle of Fintechs & Startups
From Risk-taking, Entrepreneurial and Fail fast -> Risk Mitigating, Formalisation and Stable operations
5 phases of a startup
Key activities of the Phases: Entrepreneurship Journey
Classification & Types of Fintechs :
Classifications
Content Offered
Licenses Granted
Full Banking Licenses
Partial Banking (e.g. Wholesale banking)
Product Specific (e.g. remittance, money lending)
Origin or Source
Standalone Fintechs
Corporate Venture
Big tech-led e.g. Google, TenCent, Alibaba
Incumbent Banks
Collaboration Structure
Consortium formed from different industries e.g. singtel/grab
Standalone e.g. Revolut
Subsidiary of PArent e.g. MOX from SCB, Ant Fin from Ali Baba
Joint Venture e.g. SCB & NTUC income
Digital Challenger Banks
Challenger Banks (with full banking license)
FinTech Banks
Recently founded; acquired full banking license; permitted to provide full range of banking pds/svcs. e.g. Revolut, Starling Bank, Monzo
Build brand and customer base from scratch
Offer free products/services to quickly gain market share
Prioritise valuation over profit in early stages
Lower cost structure (app centric - lower communication costs (in-app notifications & chatbots over SMS; No legacy - Lower infrastructure and setup costs by leveraging Cloud, modern tech reduces IT maintenance and product development costs; Branchless - No infrastructure and staff costs associated with physical branches
Typically launch with transactional business (e.g. payments)
Non-FI Corporate & Consortium
Large established non financial corporates from industries such as Telco, Social Media, e Commerce, Ride Sharing and others, that have gone on to acquire a full banking license e.g. Kakao, WeBank, MYBank
Inherited strong brand recognition and large customer base
Focus on high margin banking products to monetise customer base and data
Prioritise profitability early on
Corporate-backed firms typically launch with Accounts and Lending Business (i.e. Current/Savings account)
Neobanks (without full banking license)
Partnership (with a bank license holder)
Firms that partner with a bank license holder, either directly or via an intermediary processor, to provide banking products and services
Independent (leverage another license type to provide bank like feature)
Firms that have acquired an electronic money, payments or securities license and provide "bank like" services Some are FinTechs that specialized in lending or investments prior to extending into banking
Startup Skills
Leadership & Teaming
Investment Related
Customer & Market Orientation
Product Orientation
Finance
Drivers & Emerging Fintechs
2022 Trending Developments in Fintech Macro Directions
Digital Banking & the rise of challenger banks
Data and the customer experience
Payment technology and going cashless
Embedded Finance
Open banking and eKYC as an enabler for Digital Challenger banks
OB - Reduce time to launch a bank (leveraging on open APIs)
Enable Marketplace strategies (enabling fintech to digitally access financial info )
Build better, more personalised and holistic products
Enable branchless banking with remote onboarding of customers (eKYC)
Save operational costs
Reach underserved/unbanked segments that are difficult to access by physical branches
Value proposition to customers (affordable and accessible financial services with improved customer experience)
Pricing
DC banks generate better unit economics leverage through modern tech stack and pass on better pricing to customers
Accessibility
Deliver full suite of services through mobile app and digital engagement; and improving accessibility to financial services for unbanked/underbanked population
Experience
Strong focus on customer experience leading to greater personalisation, ease of us and wider variety of product features
Active role of regulators to encourage controlled competition
In SG/HK, the presence of digital bank licensing regime with a calibrated approach that encourage entry of well-resourced non-FI firms; and presence of super-apps/tech giants with financial services experience