Every crisis is an opportunity.
Although the devastating COVID-19 crisis caused fatalities and crippled economies around the world, it has forced a behavioural change. And this change could be vital when the world comes out of the crisis.
Singapore-headquartered TranSwap, a cross-border remittance company backed by Quest Ventures, sees the current crisis as an opportunity to bring in sea changes to the way people think and companies do business.
In this interview, its Co-founder and CEO Benjamin Wong talks about how COVID-19 is changing the world, what companies can learn from this and more.
Edited excerpts:
You may have gone through multiple crises, including the economic recession of 2008. We are now fighting COVID-19. How do you prepare yourself to address unexpected crises in your entrepreneurial life?
The journey and the experience I went through in the previous crises help a lot. We learn something from the past.
But as for COVID 19, I think it’s something nobody was prepared for. It’s like the whole world itself got locked down. Nobody knew about this. COVID-19 is not going to be something that will last only a few months. It can be for years. Not exclusive for industries, countries. Everyone will get affected.
But what I learned itself is if you want to be an entrepreneur, you have to prepare for the ups and downs; you cannot have all the ups, or you cannot have all the downs. It is during this time whether you can survive or not.
So entrepreneurs must always be resilient. Never give up, no matter what. Because when things turn around and you survive, you’ll be much stronger and better.
It’s a position itself that we’re very conscientious of which I’ve learnt from the past. Never make too many big capital commitments, or borrow too much from banks. That will lead to big problems and your company may not survive.
Also Read: Singapore’s cross-border remittance firm TranSwap in talks for US$5-10M investment
So you must be very resilient. Be careful about your expansion plan. Everybody wants to expand fast.
When there’s a crisis, how do you communicate with your team? In other words, what is your crisis communication strategy?
When you hit by a crisis, whether it is COVID-19 or your normal business down, the important thing is to let your staff know what is going on. They are here to help and support you if they understand what is going on. They may be prepared to cut wages, some may be prepared to take lower pay. So staff is very important.
The most important is being transparent to your staff. You have to keep them updated and tell them there is a future. If you don’t think there’s no future, then there is no point and better shut the shop.
But if you can come up with a plan, then there’s a future. If you are transparent to the staff, many of them will be willing to chip in and be part of the journey in the same boat. That’s very important.
What if this crisis lasts longer than expected, say beyond a year. Do you have a long-term plan to come out of it?
TranSwap Co-founder and CEO Benjamin Wong
Currently, COVID-19 has completely changed how people work and behave. During normal times, we would like our staff to come to the office because we feel that in the office, we can see each other. But now, they have to work from home, so now trust becomes a very important issue.
For longer-term, it’s about survival. It’s right now about planning a tight cashflow. Month on month. Day today.
But it’s also a good time to be calm and look at more things that you’ll be able to build for the future. Some of the things here are getting cheaper and we’re in the space of a digital transformation.
It’s a good time to reach out to companies, which formerly do not like digitisation or don’t like to go online. But now they have no choice. Their behaviour and confidence level has changed.
After a long time, things change. Right now, like my school-going daughter who studies online now, companies will get used to the new normal.
‘Work from home’ has become part of companies policy. Do you think this will become a permanent arrangement now?
I think these are driven by several factors. In Singapore, which is under lockdown, you have no choice but to work from home. So there are essential services and non-essential services.
Essential services can still open but there’s a limit. I think 20-25 per cent of the staff can be in the office but the rest need to work from home.
If a company asks all of its staffers to go and work from home, many of them are not prepared for this. They may say ‘I don’t have a computer’ or ‘I do not know how to go online’, etc.
Also Read: How a startup founder in China tackled the COVID-19 crisis –and what you can learn from him
Until a couple of months ago, you needed to get approval from the management to work from home but now they have no choice.
Fortunately, the government is also helping a lot and is trying to help small companies digitalise. So when this crisis over, more companies would already be digitalised. Digitisation was not in their business plans earlier.
How has the current crisis affected the fintech industry as a whole, remittance included?
Overall when the economy drops, the amount of trade will also drop. It will affect some industry more. The current crisis has affected the travel, hotels, food industries.
One silver lining is that many offline companies have gone online.
On the one hand, when the economy drops, trades also drop, but online activities increase, which is good for us.
For us, we saw an exponential increase in online transfers in the past few months.
When the economic activities are down, people don’t send money, which impacts the remittance industry. But you say you are seeing a jump in transactions…
Everyone buys things online via e-commerce platforms during the crisis. So this portion has increased. Some of these platforms are our customers. When people buy things online, they need TranSwap to send the money back to merchants. That portion has increased quite a lot.
But overall, certain sectors, such as travel booking are down. Some industries are zero but they are compensated by e-commerce platforms.
Having said that, if the current situation persists for a longer period, say for a year, fintech will also feel the heat. Indeed, all industries will get hit.
As a veteran entrepreneur, what advice would you give to entrepreneurs who have recently started but only to get hit by the coronavirus?
As for startups, it is always about expanding and burning money, so cash itself is very important.
You may not be able to scale up the business if you won’t get the next round of funding. But funding will be very short. For those startups that are already funded, maybe they should go back to those VCs that funded them to have more cash.
Cash conservation becomes important. So are planning and communication. Look at your current customer, get back to them and support each other.
What it means is that you look at what’s on your table, your plate, your current customer, your current investor, your staff, so all these are the current things that you are having. Try to talk to them, support each other. That will be quite helpful.
Do you think the current situation will alter the startup landscape in Asia and also in the world?
I think it will change a lot of things. Post-COVID-19, many startups will not make it because of cashflow. But when it turns around, those who survive the virus will be much stronger.
Fortunately, major governments are helping out. That will be very useful to hang on to it. What it means is you just need to survive. Maybe you don’t have three meals a day but only have one meal a day. But make sure you survive. Say when it is over, if you get over this itself, you’ll be much stronger.
Many VCs have asked their portfolio companies to be very cautious about spending. How will the virus spread affect VC investments in the world, especially the Asia Pacific?
Overall, investors tend to be cautious; if they can delay the funding for one more day, they will delay. Unless you’re a star or unless they feel that they have to invest in you because they have confidence in you, then they will invest in you.
Otherwise, they will just conserve until COVID-19 is over and they can see some silver lining ahead.
But there are still investors out there that invest. Sometimes it may be a good time to invest now because the terms may be cheaper. And some companies will feel that they will not disappear because they have good fundamentals then they probably will invest.
But overall the investment is down.
Many companies are firing employees in the hundreds. Is it the right strategy to fire employees when there is some crisis?
There are cultural differences between East and West when it comes to addressing a crisis, just like the difference between the western and Asian treatments to an illness.
In Asia, firing employees is not the first thing that comes to companies’ mind when they are hit by a crisis. Here companies will try different medicines to keep the body strong and improve the body’s immune system. Layoffs are the last resort.
However, in the West, when a crisis befalls, companies immediately reduce the workforce. It is akin to removing the tumour when a patient is diagnosed with cancer.
The crisis has already made millions of people jobless. When people are out of a job, it becomes a social problem and the government will lose control of the people.
When people are out on the streets with no job or food, it becomes devastating.
For individual companies, there are so much we can do. Governments world over are now making serious efforts and tells employers ‘Don’t lay off people. We are here to help you. We can cover a part of the salary of your employees’. These will help entrepreneurs.
The government help is one thing, but businesses have to help themselves. We can’t always depend on the government.
You started in 2015 and now have a presence in Indonesia, Hong Kong, and Singapore. Do you have plans to expand into multiple markets in the Asia Pacific despite the crisis?
Our plans remain the same. We are now accelerating our future plans. We got the resources. Now we have three licenses. This year we are going to apply for another five licences — the UK, Europe, Australia and Malaysia.
We are now hiring people. We are not sacking people. In Malaysia, we just hired somebody. We’re also hiring in Indonesia and Singapore.
We’re also looking for staff in the UK and Europe. This may not be something that other start-up will do. It also depends on your resources.
We aspire to have global licenses in at least 15-20 countries.
We have seen a lot of companies come together to apply for new digital-banking licences in Singapore and Malaysia. Do you think that digital banking will change the financial industry?
I think digital banking is getting a lift in the UK. For digital banking, if we learn from the UK and Europe, what is their role? Is our bank not digital? It’s very digital now.
The role of a digital bank is to reach out to those certain sectors of the industries where the current banks do not serve well. So digital banking is reaching to certain sectors, certain people, certain groups where the big banks do not serve them well.
They also give competitions to the banks. Now because of Challenger banks, traditional banks have become much more competitive and transparent, which eventually benefits the consumer.
So for Singapore digital banks, unlike the UK Challenger bank, the regulatory bodies study and look at it and decided to issue digital bank in Singapore on a certain status and standing. Challenger banks in the UK are much cheaper — only GBP5 million to start a Challenger bank.
My point is digital banks have a role to play. They compensate what the big banks don’t do well.
As per records, TranSwap has raised only one round of funding — US$1.2 million in 2018. Was it a deliberate decision not to go for big rounds of funding?
So far we have raised about US$2.5 million, and we are going to close another bigger round soon, of around US$5-10 million.
When we started in 2015, we used our own money and friend’s money. When you take VC money or other people’s money, you must be ready for it. Otherwise, it will put a lot of stress and pressure on you because when a VC pumps in money, they are looking for returns and traction.
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