Day: January 19, 2020

A few months after Singapore’s announced in June 2019 the guidelines for the new digital banks (Digital Full Bank and Digital Wholesale Bank) licences, Malaysia also made public the requirements for the digital bank licences in December 2019.

As per the guidelines, Malaysia will issue up to five licences. Licensed banks and Islamic banks may apply in a joint venture with new players. (Foreign companies can also apply, but preference will be accorded to the application, in which the controlling equity interest in the proposed digital bank resides with Malaysians.)

The digital banks in Malaysia are expected to kickstart in the first half of this year.

Also Read: Why Kubia is not in a rush to apply for Singapore’s digital bank license

According to fintech experts, a new digital bank licence will enable non-traditional financial services players to participate in areas where tech is the focus to be an enabler. Existing fintech players can look at maturing their product offerings and expand further with the new license. For those who are not in the fintech field today can look now enter with clear guidelines.

For the new digital banks, the unbanked and underbanked population (SMEs and individuals) are the key target market. With this population joining the digital economy, it will herald a new era in the fintech space.

But a moot question remains. How are the new banks going to affect the traditional brick-and-mortar banks? Will the customers ditch their existing banks for the new entrants, effectively making them redundant?

e27 spoke to a few fintech experts for their opinions.

“There is now a new space where the digital bank will serve in areas that the traditional banks do not necessarily want to serve. There is a collaborative opportunity here for both existing and new entrants to take the financial services industry to a new level,” said Jasmine N, former CEO of Razer Fintech, which has applied for a digital full-bank licence in Singapore.

However, there is always a possibility that traditional banks, which are averse to innovation, will disappear. “There is a danger that the new digital banks will replace the old ones. But I believe that the banks which work to meet their customers’ requirements will continue to change and transform,” she added.

Adrian Yap echoed Jasmine’s views, adding the introduction of new players into the digital banking landscape would give the much-needed fuel that that little flame needs.

“The new entrants backed with capital and talent without the shackles of legacy infrastructure will completely change the way we experience banking in the next couple of years. My gut feeling tells me that customers will be very willing to ditch their existing banks for the new entrants,” said Yap, CEO of MoneyMatch, a cross-border money transfer platform in Malaysia.

The new entrants will hit the ground running with more unique and innovative ways to provide financial services to customers, and existing banks will try to play catch-up with their modest attempts at digital banking, he added.

“I do see that banks eventually give up in this digital race and focusing solely on providing the pipes for fintech players and other new digital banks to process transactions. I see the role of banks evolving in the future by shrinking in functionality but not in its importance. Banks will always have a role to play in our ecosystem and economy just not the role that it is currently playing right now,” he observed.

His business partner and Co-founder of MoneyMatch Naysan Munusamy also believes the new era of digital-only banks will over a period transform the landscape. They will also force traditional banks to either evolve themselves or more likely trim their offerings to stay profitable and relevant in the new era.

“My caveat, though, is that this new era will take quite some time to take effect, several years at a minimum. In my opinion, people are over-simplifying what a bank does and trying to replicate several online services and offer them cheaper. The reality is that banks are very complex machines with a wide range of financial products providing banks with diverse ancillary income,” shared Munusamy, who is also Managing Partner at TH Capital

Elaborating further, he said most commercial banks make substantial profits on their treasury products and solutions which are often capital-intensive. New digital banks won’t be able to match them with their limited capital.

Additionally, the cost of regulatory compliance and putting in place robust risk management processes won’t come cheap. It makes the profitability target that the market regulator has made mandatory a strict criterion to fulfil, bearing in mind that major disruptors in most other industries are still bleeding money.

Also Read: Here are the 16 most influential fintech personalities in Malaysia

“Nonetheless, the opportunity remains very real but will take a while to really mature. But I feel traditional banks will be forced to go through a paradigm shift and possibly narrow down their financial services to profitable verticals with high capital requirements such as complex treasury products. And then they will work in collaboration with fintech startups to remain relevant,” he explained.

Varun Mittal, a fintech expert who has been tracking the Singapore and Malaysia digital bank landscape extensively, has a different view and said digital banks wouldn’t have much impact on traditional banks. “The entry of these new banks isn’t going to make anyone obsolete,” said the Global Emerging Markets FinTech Leader at EY.

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Image Credit: 123RF Stock Photos

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I realised 2019 was an important year for me, although I didn’t know this until about two weeks ago.

A successful entrepreneur whom I met at an event in Bahrain recently told me: “I can always start all over again,” as we were overlooking a golf course in the middle of the night. We were talking about what makes relationships work, what is essential in life, and our definition of success.

It all boiled down to two main things.

First and most important is trust. Trust in yourself and trust in others. It took me a while to understand why he was saying that he can start all over again. He was talking about how much trust he has in himself. If everything goes to shit tomorrow, I can always start over and build something new again.

Second, is impact. His comments showed me that he’s not obsessed with success, but that’s it’s more important to put his all into creating great things with people he trusts.

How is this important to you as a founder and to me as a venture capitalist? 2019 for me has been a pivotal year.

At 44 years, it never ceases to amaze me how much I still need to learn. I have used a personal mentor earlier in 2019 to work on insecurities, focus, and improving work structure.

In sports, I am used to working with a coach. It took a long time for me to decide to work with a business coach. In the end, I am glad I did.

Also Read: Today’s top tech news: Edtech firm Byju’s raises US$200M; Ovo hits 1B transactions in 2019

Working with a coach helped me learn to trust in my abilities and feel confident to voice my opinion. My coach showed me how to build my framework for decision-making and stick to my philosophy in difficult times.

My key takeaways from 2019 were:

Show up

We all know that feeling when you initially said ‘yes’ to a meeting or a dinner, but as it approaches, you’re dreading to go. Nothing wrong with that. It’s human nature. Instead of cancelling the meetup, just go.

You will create a habit of “showing up.” Showing up for me is making an appointment and sticking to it and being responsive. The most successful and busiest people I know always manage to respond fast to email or be on time for every meeting they attend.

When I ask how they handle this, the usual answer I get is that it is part of their work ethics to show up.

Be relentless

The meaning of relentless is unceasingly intense. It implies determination and focus (says Oxford and vocabulary.com). The year 2019 has been one of the busiest professionally; I also decided to join my second Ironman 70.3 in Hawaii and prepare for three Ironman 70.3 races in 2020.

I made a big mental switch in 2019. If I commit to anything, I commit 1,000 per cent, and I won’t let go until it’s finished, or I need to update my objectives. It’s intense, and to be honest, it’s quite exhausting as well, but the pleasure of making progress is more significant.

Relentlessness also forces you to focus more and say no to random disturbances.

Also Read: These later stage funding rounds of December are the perfect closure to the year 2019

Stick to your strategy

Days, when your plans don’t work out, are the toughest. Sometimes your day is full of wrong decisions and outcomes. You might get insecure about your approach or need outside validation that you’re still on the right track.

The easiest thing to do on those days is to throw everything overboard and start something new or give up and tell yourself it didn’t work out. The biggest favour you can do yourself is to stick to your original strategy (unless clear feedback and data tell you to tweak the plan).

Why is this so important? It takes time for a strategy to come to fruition. Beginning of the year, we launched a new project within our firm. Halfway through the year, it wasn’t easy to convince our stakeholders that the timing for this project was right, coming out of a busy 2018.

Towards the end of the year, the project gained strong momentum, giving the team new energy. I have seen it with this project, but looking back, I have seen this happen over and over again.

Give your strategy a chance, build a case for your strategy, work on the right arguments and gather data to support your choices. But most importantly, don’t let the first, second, and third disappointment catch you off guard.

Face issues head-on

The toughest habit to build is to get up in the morning and pick up the most complicated problem to solve first. It’s such an open door. As a founder, leaving urgent or complex issues outstanding can seriously hurt your business. In the back of our heads, we know this, but it’s tough to put it in practice.

Also Read: e27 community: 10 most popular contributions of 2019

Cleaning up a toxic environment in the team, a client issue that needs solving, or responding to shareholders’ questions. I have learned earlier this year; it doesn’t matter how complex the problem is, it matters which framework you use and your understanding of the urgency. Managing urgency is different for everyone, but one effective practice helped me.

Every morning I write down what my intended outcome for the day needs to be and what I need to do to get there. Let me be clear. The day never ends the way I planned it, but this simple writing exercise helps me to visualise the biggest challenges for the day.

For the framework, I use the structure I worked on with my coach.

For anything complex I need to solve or work on, I ask myself these questions:

• How do I extract value and deliver returns for my counterpart
• Is there alignment with our strategy and policies
• How do I slow down to generate long term growth
• What do I need to do, to protect the downside

Say no and be transparent about it

It remains difficult saying no when people ask for help. Mainly when you’re used to helping others out. The intention is not to speak to anyone that asks for help but to be more critical on me.

Anytime someone asks for help, I ask myself first if I can help, if I can honestly make time and if someone is better off with or without my help. In the past year, I have learned that giving direction and let others figure things out for themselves is stronger than blindly trying to help everyone.

It is as simple as saying: “have you tried this yet?” You don’t have to be everything to everyone.

Also Read: From coffee to dentistry: The top 10 funding news that rocked the Southeast Asian startup ecosystem in 2019

Check-in on health

Everyone will have their take on health. There is no one right away to approach it. I decided to stop drinking for the last three months of 2019. Why? I spend a significant amount of my professional time on an aeroplane.

Combined with long working hours, my desire to stay fit, triathlons, family life (two kids), and spending time with friends, I felt I needed to change something before I wore my body and mind out. Quitting with alcohol seemed like a quick win, and after 2.5 months, it has indeed made me feel much better.

During the day, I feel much sharper, and it’s easier to focus. I also sleep a lot better; more hours and feel rested. Not drinking helped me recover faster after my runs or a long-haul flight. There is, however, a downside, though. Socially it’s not entirely accepted not to imbibe. In the last few months, I have had to explain myself for not drinking. Or people try to convince you to have a drink and not be such a weakling. The best I’ve heard is: “One drink doesn’t make much difference.” It makes all the difference to me; I am not about to break this promise to myself.

This was from 2019, and I hope my lessons help you give some insights for 2020.

We’re at the end of this millennium’s teens, how will you start the new decade?

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Editor’s note: e27 aims to foster thought leadership by publishing contributions from the community. Become a thought leader in the community and share your opinions or ideas and earn a byline by submitting a post.

Join our e27 Telegram group, or like the e27 Facebook page.

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Despite all the hype surrounding Bitcoin and its promised overhaul of the current financial system, it would appear it has died before having its intended impact.

Silicon Valley, the pulsing heart and hub of global tech innovation, has lost its crypto buzz, mostly due to the digital currency’s lack of mainstream application in the real world.

It makes sense: Facebook and Uber have thrived because of their ability to be adopted wholeheartedly by the average person, while the notion of cryptocurrency still reeks of insider trading, security risk, and underground tech geek talk.

People still doubt whether a digital application, the very idea of which is difficult for the average Joe to understand, is to be trusted with something as valuable as one’s hard-earned money.

Who is to know where the money will go, or how much it will all be worth in 20 years’ time? Despite the fact that the very notion of crypto is premised entirely on it having the most high-level security in the world, the recent mysterious disappearances and deaths of those holding the keys to peoples’ digital wallets have people questioning whether it really is the safest place to keep their digital assets.

Cryptocurrency, or crypto – for those who have lain dormant for the past five odd years – is a digital asset designed to work as a medium of exchange. It uses cryptography to secure financial transactions, control the creation of additional units, and verify the transfer of assets.

Also Read: The call of crypto: why Bitcoin points to need for investment startups in Asia Pacific

Bitcoin is very often confused or used interchangeably with other monikers – typically, crypto or blockchain – albeit incorrectly, as is quite common with other new asset classes that fall under the umbrella of “cryptocurrency”, Bitcoin to cryptocurrency is what the US dollar is to currency – it is just one type of cryptocurrency.

Each bitcoin is a computer file that is stored in a ‘digital wallet’ app on a device such as a smartphone or a computer. People can send Bitcoins (or even portions of one bitcoin) to your digital wallet, and you can send bitcoins to other people as digital payment for an asset.

Every single transaction conducted via this digital realm is recorded in a public list that we refer to as ‘the blockchain’.

There you have it, the 101 in crypto and Bitcoin. But it may well be too late because apparently, it’s all over before it began.

Or is it?

This week, Iran downed a Ukranian passenger plane, believing it to be a US aircraft, in retaliation for a US airstrike that killed Iranian commander Qasem Soleimani.

Tehran also reacted to the death with missile strikes on Iraqi bases housing US troops. As tension between the two countries intensified, peaked, and fell, so too did the value of Bitcoin. The currency climbed higher to almost US$8,500 – almost 10 per cent higher than it was the day before – after news reports of Iran’s missile attack on US-led forces in Iraq, before falling back to less than US$8,000 following President Trump’s White House speech that suggested the situation was less volatile than it really was.

The sharp movement of the cryptocurrency’s value has rekindled a long-standing debate: does crypto become a safe-haven asset, like gold, in times of increased geopolitical and economic turmoil, or will it forever be a fringe tool used for cybercrime?

Also Read: Today’s top tech news: Uber reveals “super app” plan, Bitcoin falls below US$8K

And is this what will ensure its longevity and survival over the coming turbulent years?

What is interesting to note is that while bitcoin surged in value following the airstrike, US stocks fell as investors grew worried that the conflict between the two nations might escalate into a prolonged and damaging third war. That being said, US stocks shortly returned and even grew the following night, suggesting that the market was opting to “shrug off” the escalating war. S&P actually powered to a new all-time high in the wake of the attack.

Jens Nordvig, CEO of Exante Data, said of the correlation between the market and rising tensions, “I think the lesson from the last couple of years is it’s quite dangerous to get trapped in these risk-aversion news cycles because they don’t tend to last very long.”

Does this, then, mean that the growth in the value of Bitcoin immediately following the international incident was a mere one-off? That soon investors will realise the market only moves due to widespread panic, and that all it takes is the psyche trip that President Trump took investors on when suggesting nothing too dire would anytime soon happen in the Middle East?

Oil prices surge whenever anything of potential consequence happens in the Middle East. US stocks fall whenever something happens that could disrupt the global flow of trade into the world’s largest economy.

Is crypto simply much of the same? A financial asset that is regulated just as much by geopolitical events by any other?

Greg Cipolaro, co-founder of Digital Asset Research, says that Bitcoin, ultimately, is a hedge against inflation. “Acts of violence and war can create inflation and have demonstrated that in the past … so heightened violence now could portend higher demand for Bitcoin.”

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Editor’s note: e27 aims to foster thought leadership by publishing contributions from the community. Become a thought leader in the community and share your opinions or ideas and earn a byline by submitting a post.

Join our e27 Telegram group, or like the e27 Facebook page.

Image credit: Duncan Kidd on Unsplash

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The new digital bank licences proposed by the Singapore government is the talk of the town nowadays. Almost 21 companies/consortia from across the globe, including Ant Financial, Grab and Singtel, and Razer, have applied for a licence — but only up to five licences (two digital full-banks (DFBs) and three digital wholesale banks (DWBs) — will be issued in total.

For the uninitiated, a digital bank licence will allow entities, including non-bank players, to conduct digital banking businesses in the city-state.

As the enthusiasm is getting high in the city-state, Malaysia is also playing catchup, with its government issuing guidelines for new digital bank licences. Although there are a few similarities between the guidelines issued by the two countries, some experts feel that Malaysia’s digital bank guidelines are unique from the perspective of achieving a balance between innovation and level playing field.

“Compared to Singapore, Malaysia has ensured that new digital banks can access ATM networks and cheque infrastructure, acknowledging that some parts of the economy with unmet and unserved needs will still need access to these while using digital banks. That the advent of digital banks won’t magically make cash vanish with their launch is an undeniable truth,” said Varun Mittal, Global Fintech Leader at EY.

Also Read: Will the new digital banks sound the death knell for traditional banks?

Regarding foreign participation, Malaysia has clearly articulated the preference for local “equity” control, thereby ending debate about headquarter location and subjective definitions of management, operating and board control.

“Clarity on preference for year five as the breakeven mark is also a welcome step to ensure applicants can develop and evaluate their plans internally,” added Mittal, who has been tracking the Singapore and Malaysia digital bank landscape extensively.

Below is a document prepared by Mittal comparing the licence guidelines issued by the two countries:

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Image Credit: 123RF Stock Photos

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Fuckup Nights, a movement where entrepreneurs share stories of their failures, is getting immensely popular globally. Audiences are drawn to seeing entrepreneurs speak openly about their challenges–and what they learn from it.

The failure-turned-to-success story of serial entrepreneur Leza Klenk is a perfect embodiment of this spirit.

Before she founded Spendless Group, Klenk was a mother of three with no degree, skills, or personal networks to rely on. But that did not stop her from launching a million-dollar company that is now worth double the size of her first failed venture –a hairclip company, Bebebows, which went bankrupt in 2014.

Spendless Group comes from the concept of “spending less”. The firm aims to empower individuals –with limited tech or retail skills– to earn money or gain skills by working remotely.

The company has branched out to three major units: Spendless Cosmetics, Spendless Academy and Spendless Creative Studio. As a founder, Klenk has also disclosed plans to launch a joint venture with a legal tech firm, to offer legal services at minimal costs.

In an exclusive interview with e27, Klenk shares some of the lessons she learned along the way.

Also Read: Creativity meets entrepreneurship: Why it is the next big thing Singapore needs to thrive

Kill the ego

Admitting that you are not smart enough can sometimes be a big blow to your self-esteem, but it can also be the first step towards learning.

During the interview, Klenk candidly declares that she does not think that she was smart enough, which is why she had failed. “I knew the reason why I failed was that I did not know enough about people’s behaviour,” she says.

Coming from a background where she was unable to afford a degree, Klenk says that she had little knowledge about the industry, fundraising, and legal aspect of setting up a company. So it was crucial for her to gain better insights using unconventional methods.

She promised herself after the bankruptcy that 2015 would be the year when she would invest primarily in learning. To get there, Klenk decided to go on a lunch spree to learn the ins-and-outs of each person’s expertise within their specialised fields.

“I didn’t have a degree, so I decide to learn from the people who have it,” she quips.

Learn from the best

So, how did Klenk manage to convince top-level working professionals to share their knowledge with a stranger?

Also Read: How to choose a coworking space for your startup

The entrepreneur reveals that she would go to networking events and pick a diversified group of people to connect to every week.

“I decided to ask out different people from different areas of the industry for lunch, close to their workplaces. I was very strategic about how, when, and where I asked them,” she elaborates.

“People also generally tend to comply more when you make it more about them and less about you,” she adds.

With this newfound thirst for knowledge and tenacity, it was not difficult for Klenk to reach her goal. In no time, she gained a firsthand perspective on the industry and human behaviour in general.

She also stresses the fact that it is not easy to do this as it requires the “utmost patience.”

What investors want

When raising capital, as a founder with no “proper” background in business, can investors be biased towards one’s background?

According to Klenk, the key to winning investors is to assure them of your intelligence and tact despite your background. “Investors need to be convinced that you’re smart,” she quotes.

“Here are some of the ways they come to this judgement: Through the way you dress and your conversations,” she explains.

This does not necessarily mean that one has to wear fancy clothes while pitching their product, Klenk stresses. But it leans more towards being “neatly” dressed, as neatness reflects a mindset that is structured and organised.

Also Read: Turkish pricing intelligence startup Prisync to double down on APAC growth initiatives with US$1M funding

Investors are also interested in the kind of conversations that interests the founder. This reflects their attitude towards the industry. If they are someone who is simply fixated on their product, it shows that they have a closed mindset.

Therefore, it is crucial for entrepreneurs to keep up with the changing trends and have ample amount of information not just about what they do, but what and why everyone else in their industry is doing.

Paving her way through bankruptcy, employee boycott and raising funds, Klenk proves that entrepreneurship is a series of endless possibilities if only hurdles are seen as opportunities and not excuses.

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Image Credit: Leza Klenk

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