The Rise of FinTech: Are banks at risk with the emergence of FinTech?

One of the hottest trends in the Tech industry currently is the move towards FinTech, short for financial technology.

What is FinTech?

Wikipedia defines FinTech as an industry composed of companies that use technology to enable provision of financial services (through utilisation of technology) or drive technological innovation in provision of financial services.

FinTech companies are startups or already established technology companies trying to replace or enhance the usage of financial services of incumbent companies.

In layman’s terms, think of FinTech as using technology to disrupt the current way we deal with finances like how consumers perform banking transactions or get a loan financed, making it better, easier, cheaper or faster.

A successful FinTech company would be doing what Uber did to disrupt the traditional taxi operators and what AirBnB did to disrupt the giant established hotel chains.

Does this mean that face-to-face banking services will become obsolete? Can banks remain relevant?

From our finding, this is quite the contrary. Many banks are actually deeply involved with the FinTech space, from investing to providing support and more. The adoption rate for such initiatives is still not very high, but these baby steps will slowly but surely change the way we deal with finance in Singapore and globally.

After doing some digging about Singapore’s FinTech scene, what I found very interesting is that Maybank was one of the common names that kept appearing in the results. What makes it even more interesting is that they even have a dedicated website specifically for FinTech

Specifically to Maybank, as my main point of research I found that they have a few attractive programmes on FinTech which really caught my attention. I will only focus on the two which I find most relevant to the FinTech scene.

Firstly, #MaybankFintech. From my understanding this is an initiative formed from their 2015 partnership with 1337 Ventures, a recognised Malaysian technology accelerator, to search for the best FinTech ideas in the region.

Let me dive a little deeper into this initiative. In #MaybankFintech2015, early stage startups joined roadshows in Manila, Jakarta, Bangkok, and Kuala Lumpur whereby startups were picked to join a three-day-long idea validation bootcamp. The inaugural #MaybankFintech2015 witnessed the participation of over 100 technology companies from 10 countries.

#MaybankFintech2016 however managed to attract 91 start-ups to register for this initiative where 40 of them were selected to pitch their ideas to improve the banking experience for their customers.

Next, it’s the programme which really resonated with me, MaybankHeart. Maybank has bridged the gap between donors and legit recipient of donations through this social fundraising platform. Now, people with busy schedules are able to engage in philanthropy whenever and wherever with just a few taps on the screen!

Now this got me questioning… Why is Maybank heavily involved with FinTech?

It’s most likely because they want to be a digital bank of choice in the region and the bank is ensuring that it is able to leverage on the convergence between mobile technology and banking services.

Personally, I think it is a great step for banks to support the FinTech scene at this time and age. While banks have the financial strength, they may lack in departments to develop creative financial solutions which can be found among FinTech startups. Both FinTech startups and banks are able to complement each other’s strengths and weaknesses through sharing of ideas and resources respectively.

Even the government recognises the importance of FinTech and is offering several grants and schemes to aspiring financial disruptors.

Here’s a quote from Maybank Singapore’s CEO, Datuk Lim Hong Tat which really struck a note with me:

“With technology evolving rapidly and smartphone use on the rise, including in emerging markets, customers are increasingly more comfortable with digital options for banking and payments. We are therefore working on various other digital initiatives as part of our efforts to extend our reach in the region and offer an even better customer experience.”

That’s a mighty good answer.

#HereToTalkFintech

If you want to know more about FinTech from the experts themselves, do check out this ongoing video series called #HereToTalkFintech by Maybank where they invite experts to talk about what exactly is FinTech and how it impacts our lives.