As business begins to return to normal in Southeast Asia, the outlook is still mixed elsewhere. The pandemic forced a global slowdown, yet the economy has never fully stopped. The strength of our interconnected world and supply chains continued to power industry throughout the harshest periods of unrest.
While Singapore is uniquely placed with a pro-business economy, an innovative industrial sector, and support from progressive government legislation such as the Digital Acceleration Grant, there’s one lesson that the rest of the world can apply to their own recovery.
Collaboration, like the recently-signed RCEP free trade deal between 15 APAC countries, has been key to building back better financial services. Only by working together can we create the conditions for a competitive marketplace in which everyone thrives. Let’s take a look into how Singapore managed this.
Long-term planning enables quick reactions
The sudden transition to global remote working has shown that even the most traditional incumbents can and will adapt under challenging circumstances. For some financial institutions, upwards of seven in 10 employees shifted to work from home. Those who laid the foundations for transformation by digitising processes and payments have seen their efforts accelerated by three to four years, in just nine months.
Traditionally, fintech startups take their strength from their agility and ability to pivot overnight, while legacy industries looked on. But financial services providers are beginning to see the value of disruption: 94 per cent, in fact, believe that fintech will enable revenue growth.
Rather than decimate incumbents, startups have been building on the infrastructure laid by legacy players, creating a healthy symbiotic relationship that keeps financial services competitive.
In F10 Singapore’s first cohort, Staple was a great example of this. Their advanced AI extracts data from documents, typically during identity verification checks. They have several pilots underway with institutions, where they improve processes without challenging their partner’s core business: a perfect collaboration.
Also Read: GoBear grabs US$17M in funding to accelerate its financial services across Asia
The startups’ use of APIs allows them to automate data extraction, liberating employees from repetitive tasks while speeding up the processes that improve customer experience.
Companies that have already adopted flexibility have the foundations to succeed, no matter the external pressures. Collaboration is a key element in adopting these agile practices. And a thriving industry encourages new entrants and competition – which keeps established players on their toes. This equips all ecosystem members with the capacity to react quickly to sudden shifts.
The power of partnering
While digital meetings are enabling more global interaction than ever before, there is a new appreciation for the value of authentic human connection. However, even pre-pandemic, there was a limit on how many meetings one team could attend, and on how many people they were able to access.
These constraints limit business development opportunities for emerging fintech startups without brand or reputation. But teaming up with an incumbent can provide a rich rolodex of relationships.
This allows challenger products to gain important access to the community, leveraging the trustworthiness of their partners brand. This boosts the incumbent’s reputation too, associating them with innovation without risking operations.
Additionally, partnering offers legacy financial services exposure to cutting edge technologies while limiting its impact it has on their core business. No matter the size of their research budget, startup collaborations can help the financial services innovate in a responsible, and less risky way.
For instance, recently-graduated F10 startup DEXTF facilitates safe investment opportunities using decentralised traded funds on a blockchain, where fund managers can create funds of digital assets in mere minutes. Novel technologies like blockchain are seen as high risk, so exploring them through a startup gives incumbents exposure to the space with minimal risk.
The need for greater connection within our communities is clear: the financial services ecosystem has to come together to flourish. Accelerators can play a critical central role within the ecosystem, connecting startups, investors and partners and stewarding these collaborations.
Collaboration breeds competition
Endless pitch cycles and over-valuations created a bubble in the marketplace, where the winner took all. By instead shifting to long-term thinking and a considered approach to partnerships, the success stories of 2021 will be the products of collaboration.
Also Read: Collaboration is the key to success for evolving digital ecosystems in Southeast Asia
It is the development of monopolies that ultimately chokes innovation. Mega-conglomerates can strangle small businesses and push them out of the market. When one company dominates a sector, they no longer have the need to improve, which limits their growth potential.
For a sustainable market, we need to invest in the infrastructure that enables innovation, whether that is the ecosystem builders or the digital networks that connect services and products to end-users.
While innovation can never be completed, by coordinating opportunities for financial services and fintechs to collaborate, we can better support disruptors to build even more ambitious systems of change. Research from KPMG has indicated that 81 per cent of financial institutions favour partnering as an approach to fintech adoption.
And by drawing on the expertise of established players, we can build a competitive and varied market that drives demand for innovation and diverse offerings, and better meets the needs of customers.
In conclusion, a competitive market is healthy. Startups and corporates alike will benefit from pulling together to collaborate on products, projects and policy. In doing so, they lay the foundations for a more robust and inclusive economy, in which challengers have the space to compete, and incumbents can benefit from the exposure to emerging ideas.
The key to recovery will be to focus on people: just as you need the right mix of corporate capital, institutional advisors, and a balanced team to build an efficient product that delivers, we need to apply this same approach to our financial services industry. If it takes a village to raise a child, it takes a city-state to build a thriving market.
Only by working together can we create the conditions for the whole financial services system to flourish.
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