The first US Spot Bitcoin ETF has now been approved, and optimism for the industry has been at its highest levels since April 2022. We can, therefore, expect to see more liquidity enter the space, more building, and an increase in the number of emerging crypto startups.

However, as liquidity returns, token prices increase, and new projects come to fruition, so will interest from hackers. On the same day that Bitcoin reached its highest token price since April 2022, as if on a queue, Orbit Bridge got hacked for US$82 million. Therefore, as we move into 2024, it is fundamental that we learn the lessons from exploits in 2023 and highlight what we need to learn to prevent such exploits from happening again.

Equally, we must look at the technological developments we have made in the past year and plan ahead for the challenges that will arise out of these developments, namely the rise of zero-knowledge roll-ups. However, what is of paramount importance is that builders, in 2024, incorporate security by design and cease to deprioritise security.

Lessons from the HECO Bridge Hack and Curve Finance Hack

The HECO Bridge Hack of November 2023 was yet another reminder that protocols and organisations do not prioritise security. Cross-chain bridge protocols have proven lucrative targets for hackers, largely due to their experimental designs and the fact that they generally have large, centralised repositories of assets bridged by users to other blockchains.

The HECO Bridge Hack of November 2023 was likely due to an attacker gaining control of a private key, which should have been quite preventable. It highlighted a failure on HECO’s part to, above all adhere, to basic security practices such as adopting a multi-signature security wallet. It also showed that HECO Bridge had not been properly audited.

Also Read: Securing the future: Navigating the digital transformation in BFSI amid cybersecurity challenges

Reputable audit reports often explicitly identify which parts of protocols are controlled by external addresses and, therefore, vulnerable to private key theft. It is possible that the hack could have been prevented if more in-depth audits had been conducted.  

Another example, the Curve Finance Hack in August 2023, illustrated that protocols need a “panic button” in place. Nothing in DeFi (Decentralised Finance) is completely safe from hackers and it is essential that, if in the event a protocol is hacked, there needs to be an emergency function. Immutability, a central concept of blockchains, is the idea that they remain unchanged to stop people from tampering with them.

However, it can leave people powerless when trying to fix a potential exploit. This became apparent during the Curve Finance exploit. Curve’s Liquidity Providers (LPs) had a timelock embedded in the smart contracts, making it technically impossible to fix a coding vulnerability within Vyper. By forfeiting the ability to edit the state of the smart contract, the protocol was unprotected against an exploiter who was able to drain US$62 million from Curve.

Although a comprehensive audit might have detected these exploitable functions, the nature of immutability would have made it impossible to fix. Therefore, it is imperative that protocols consider having some kind of emergency stop system that can prevent these types of attacks from occurring.

Examples of this would be the Pausable Contract from OpenZeppelin’s library or the Million Ether Homepage, where the Emergency Stop pattern is implemented inside the main contract and gives the owner of the contract the ability to stop the execution of several functions at any given time.

New challenges from technological developments

Blockchain technology is always developing. These developments can come with their own inherent risks. Ethereum is by far the most popular blockchain for user activity. However, it has considerable issues with scalability. That is to say, the network’s capacity, how many transactions it can process, and how quickly it can process them is low.

Therefore, Layer 2 blockchains were created as scaling solutions for Ethereum designed to speed up transaction speeds and lower costs, and they are seeing significant development. For example, the Total Value Locked of Ethereum layer 2s now amounts to US$14.46 billion, while Ethereum’s TVL stands at US$26 billion. In 2024, Zero-Knowledge rollups are Layer 2 blockchains that are showing promising development and the potential for many projects adopting these solutions.

With this explosive growth comes the need for significant security auditing. However, zkRollups are complex and difficult to navigate, and only limited experts are able to read and write in zk-specialised programming languages.

This introduces an entirely distinct realm of security whereby technological development outpaces the ability of security researchers to study them comprehensively. Understanding zk requires a mathematical background equivalent to that of a master’s or doctoral level.

Therefore, teaching this to current security researchers would be a formidable challenge. Instead, protocols should focus on recruiting security researchers with a strong mathematical background in large numbers as soon as possible to cater to this need. 

Security by design is the way forward 

Security may not always be seen as the first priority to look at for projects in the crypto industry. Companies prioritise rapid development and deployment of their products to stay ahead in the market, which can sometimes lead to overlooking certain security measures.

Also Read: The business edge: Why prioritising employee cybersecurity is a smart investment

As Web3 technology is relatively new and continuously evolving, developers face a lack of established best practices, standards, and tools for ensuring security. Certain crypto startups operate with limited resources, including funding, time, and skilled personnel. This can make it challenging to invest adequately in robust security practices and conduct thorough security audits.

All these contribute to products being built that do not have a robust foundation layer, which can be detrimental in the long run. However, building protocols with security woven into the fabric through collaborative code reviews and rigorous audits will significantly curb vulnerabilities before malicious actors exploit them.

In conclusion

In 2024, we are still seeing hacks occur despite being relatively easy to prevent, namely, private key hacks. With optimism high and liquidity returning, growth must be met with robust security or we will see past mistakes continue to repeat themselves which continues to hinder the industry’s progress and reputation.

The lessons learned from hacks like HECO Bridge and Curve Finance show that prioritising speed and neglecting basic security practices leave projects vulnerable. This is especially true as innovative technologies like zero-knowledge rollups emerge, demanding expertise that outpaces current security research capabilities.

Now is the time for protocols to be more responsible and ensure that they have taken all the necessary security measures. Audits should not be worn as badges of approval; they are a means of assessing where vulnerabilities lie, and it is essential that any weak spots are reinforced immediately, as one never knows when one could be the next victim of a hack.

Equally, startups built with security woven into their core, employing rigorous audits and collaborative code reviews, will stand strong against malicious actors. However, this ultimately requires a shift in mindset, where security ceases to be an afterthought and becomes a priority of every project.

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Financial institutions function through a complex web of operations. Technology has long been used to streamline these better and alleviate the burden on human resources. This evolution can be traced from the first computers in bank branches to the adoption of cutting-edge cloud-based software solutions. 

While initially, financial institutions turned to SaaS solutions primarily for assistance with non-essential workloads. We are now also seeing an increased uptake of SaaS solutions for core functions. From core banking systems to customer relationship management, today, they have access to a range of Software-as-a-Service solutions because several benefits can be derived from its adoption:

Scalability

SaaS solutions are highly scalable, which allows financial institutions and fintechs to adjust capacities according to demand. For example, using SaaS solutions designed to conduct underwriting for lending can be scaled up around the festive season when there is a higher demand for financing among users. Users of such SaaS products can upgrade or downgrade their subscriptions, unlock new features, and manage their operations more flexibly.

Accessibility

Since SaaS solutions are cloud-based, users can access them anywhere as long as they have an internet connection. Even professionals using this software can access data anywhere, easing logistical issues. Data accessible through SaaS platforms tends to be real-time, which improves operational efficiency and promotes collaboration.

Also Read: How can you build a living, thriving community around your SaaS product?

Analytics and insights

SaaS solutions analyse data in real-time and, combined with machine learning capabilities, identify patterns and develop insights based on this data. Machine learning has enabled faster trading decisions through algorithmic trading, fraud detection and prevention by flagging anomalies in large data sets, robo advisory to identify investment opportunities with the highest returns, and loan underwriting by scanning consumer data to make decisions.

The evolving role of SaaS and its relevance in financial institutions

Undeniably, SaaS in financial services has gone from being a good-to-have to a must-have. While capabilities such as scalability and accessibility have made it essential for financial institutions, the evolving landscape of financial services now calls for increased value addition from SaaS solutions.

Artificial Intelligence

Artificial intelligence made long strides in 2023. This trend will cause a seismic shift in how financial institutions operate. Where SaaS tools once assisted financial institutions in workflows, the advancements in AI have opened up automation possibilities for administrative workflows, data collection and processing, generating insights, and reporting them. 

Moreover, using large language models (LLMs), as a natural progression from machine learning, is becoming more commonplace now. These models are capable of understanding and generating even human language text.

Its applications include navigation of consumers’ financial decisions while limiting the need for a human in the loop – which could potentially improve user interfaces of customer-facing personal finance management applications by adding the critically missing human context.

Cost-effectiveness

Generative AI will streamline labour-intensive functions such as pulling data from various sources. Financial information trained on LLMs could help customer service agents generate answers to practically any query a user might have about their finances or create loan profiles for potential credit seekers by analysing data from several sources. This would eliminate the costly resources required in procuring and processing data.

Also Read: 7 lessons from building a 7-figure SaaS business with just 1 engineer

SaaS will usher in innovation and agility in financial services

Banking and investment services worldwide were expected to spend US$651.1 billion on IT services in 2023, and spending on software was expected to increase by 13.5 per cent. This is no surprise, as evidence of its efficiency can be seen across analytics, accessibility, and business imperatives like cost-effectiveness and scalability. And SaaS solutions are only being constantly upgraded to enhance productivity and efficiency in delivering financial services. 

The use of generative AI will further boost these interests and many others. It can enable superior forecasting thanks to its capability to write queries and formulas for Excel and SQL. It could also be used to improve reporting exercises by automatically creating graphs, charts, and text.

SaaS is evolving to ease compliance obligations through more efficient screening and better prediction of questionable transactions that could stem fraud, phishing and money laundering at a larger scale than ever seemed possible. 

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The Parentinc, the Singapore-based content, community, and commerce ecosystem for parents in Southeast Asia, recently snapped up Motherswork, a luxury retailer for mum, baby, and kids’ products in Singapore and China, for an undisclosed sum.

In this interview, The Parentinc’s Group CEO Roshni Mahtani delves into the strategic vision behind the acquisition and its implications for Southeast Asia’s parenting retail landscape.

How does the acquisition of Motherswork align with The Parentinc’s long-term strategic vision and goals for the parenting retail industry in Southeast Asia?

The Parentinc’s overarching vision is not only to dominate the online market but also to establish a significant offline presence. Motherswork’s existing brick-and-mortar stores complement our online efforts, providing a holistic approach to meeting the diverse needs of our target audience.

By integrating its established physical retail footprint with our digital platform, we aim to create a seamless omnichannel experience for our customers. This strategic move positions us to capture a broader market share, enhance customer engagement, and solidify our position as a leader in the parenting retail sector across SEA.

Also Read: The Parentinc acquires luxury retailer Motherswork to expand offline presence in SEA

Ultimately, we don’t identify as a typical retail company or an FMCG brand; we position ourselves as a parent-tech company with our community at its core. This fundamental aspect has been well-established for several years. Our portfolio includes key brands such as Mama’s Choice and now Little Ray, which we retail through Motherswork. Additionally, we exclusively distribute over 20 other brands.

We aim to ensure seamless synergy between these elements and expand into new territories and markets. Little Ray, currently exclusive to Singapore, will soon be introduced to all other SEA markets. Mama’s Choice is available in five out of six markets within our operational scope.

Furthermore, we are set to make a strategic entry into physical retail in Vietnam, with plans to replicate this model in several other countries. The upcoming year promises to be dynamic for us, marked by expansion and strategic initiatives.

Can you elaborate on the Southeast Asian markets where The Parentinc plans to expand Motherswork stores and distribute Mama’s Choice exclusively? What factors influenced the selection of these markets?

While we can currently disclose our entry into physical retail in Vietnam, our expansion strategy extends beyond this market. A meticulous analysis of various factors drives the decision to enter specific markets in SEA: evaluating the demographic landscape, consumer behaviour, economic indicators, and the competitive environment in each potential market.

Vietnam, a dynamic and rapidly growing economy that targets 6-6.5 per cent GDP growth in 2024, presents a strategic opportunity for The Parentinc to establish a solid physical retail presence. The decision to distribute Mama’s Choice exclusively through Motherswork in these markets is rooted in the brand synergy and the unique value proposition it brings to our customers.

You mentioned that 70 per cent of SEA retail is still offline. How does the acquisition of Motherswork contribute to The Parentinc’s efforts to establish a significant offline presence, and what challenges do you anticipate in this transition?

Motherswork’s existing brick-and-mortar stores provide a ready-made infrastructure, allowing us to integrate our online and offline operations seamlessly. This move allows us to cater to the sizeable portion of the market that prefers in-person shopping experiences.

However, we anticipate several challenges in this transition. One key challenge is adapting to SEA’s diverse retail landscapes across different countries. Each market has unique consumer behaviours, regulatory environments, and logistical considerations. Overcoming these challenges will require careful localisation strategies and a nuanced understanding of each market’s nuances.

The Parentinc has successfully implemented a content-to-community-to-commerce business model online. How do you envision refining and adapting this model by adding offline stores through the Motherswork acquisition?

In today’s digital age, customers seek more than just online transactions; they crave immersive encounters with the brands they support. The addition of Motherswork’s physical stores aligns with this consumer demand—and we aim to provide an avenue for our community to engage with our products in a tactile and experiential manner.

Also Read: I don’t think true-blue text-based digital media companies exist anymore: theAsianparent Founder Roshni Mahtani

This offline expansion not only satisfies the need for a more profound brand experience but also enables our community to receive personalised assistance and answers to their queries in real-time, fostering a deeper connection between us.

Could you share more about how The Parentinc plans to integrate media solutions into Motherswork? What benefits do you foresee for both parties and the parenting community?

We’re nurturing a symbiotic relationship between our media and retail platforms. By leveraging the reach and influence of our media platforms, theAsianaprent and Webtretho, we aim to provide robust promotional support for Motherswork’s partner brands.

Simultaneously, we plan to capitalise on these media platforms to drive customer engagement and traffic to Motherswork. Through targeted content, campaigns, and promotions, we envision a seamless flow of interested customers from our media channels to the Motherswork retail ecosystem. This reciprocal approach not only maximises brand exposure for Motherswork but also enriches the overall experience for our parenting community by offering them curated content and exclusive promotions.

Integrating media solutions presents a win-win scenario, providing valuable promotional avenues for Motherswork’s partner brands while enriching our parenting community’s content and engagement opportunities across theAsianaprent and Webtretho platforms.

What challenges and opportunities do you anticipate in integrating the online success of The Parentinc with the offline expertise of Motherswork, and how do you plan to navigate them?

One challenge lies in harmonising the digital and physical aspects seamlessly. The transition from online to offline retail involves adapting operational processes, inventory management, and customer experiences. Ensuring a cohesive and unified brand presence across both channels is crucial to maintaining consistency and meeting customer expectations.

On the flip side, this integration brings forth numerous opportunities. Combining online and offline channels allows for a holistic approach to customer engagement. The offline stores provide a tactile and experiential dimension, enhancing the brand experience. It also opens avenues for targeted marketing strategies, utilising data from both channels to create personalised campaigns and promotions.

Navigating these challenges and capitalising on opportunities involves a strategic and adaptive approach. A robust technology infrastructure will be key in seamlessly connecting online and offline operations. Training and empowering staff to provide consistent and quality service across channels will contribute to a positive customer experience. Additionally, leveraging data analytics to gain insights into customer behaviour and preferences across both realms will inform decision-making and enhance overall performance.

Also Read: How theAsianparent aims to help reduce stillbirth rates in Southeast Asia

Ultimately, the success of this integration hinges on maintaining a customer-centric focus, ensuring that the benefits of the online and offline synergy translate into a seamless, enriched, and satisfying experience for our diverse customer base.

The recent IPO valuations for Mamaearth and FirstCry have been substantial. How does the acquisition of Motherswork position The Parentinc in terms of future IPO plans, and what factors contribute to the valuation expectations for your organisation? When do you plan to hit the bourses? Will you merge with an SPAC or go for a direct listing?

We do not rule out an IPO within the next three years. But at this point, we are bringing the retail tech footprint into other markets in SEA, so we’ll be expanding the Motherswork store. We’ll add the data and analysis from our community into how mums can experience retail.

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X marks Echelon. Join us at Singapore EXPO on May 15-16 for the 10th edition of Asia’s leading tech and startup conference. Enjoy 2 days of building connections with potential investors, partners, and customers, exploring innovation, and sharing insights with 8,000+ key decision-makers of Asia’s tech ecosystem. Get your tickets here.

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Southeast Asian startups secured US$439 million in venture funding across 31 rounds in January 2024, a 43.65 per cent drop from December 2023 but a 107.1 per cent jump over January last year, according to a report by startup research platform Tracxn.

Of the 31 rounds, 17 were seed-stage deals and 13 early-stage ones.

Silicon Box topped the chart with a US$200 million investment, followed by Motorist (US$60 million), Sygnum (US$40 million), Be Group (US$31.2 million), and FlyORO (US$16 million).

See the picture below for more details:

 

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X marks Echelon. Join us at Singapore EXPO on May 15-16 for the 10th edition of Asia’s leading tech and startup conference. Enjoy 2 days of building connections with potential investors, partners, and customers, exploring innovation, and sharing insights with 8,000+ key decision-makers of Asia’s tech ecosystem. Get your tickets here.

Want more from your Echelon experience? Be an Echelon X sponsor or exhibitor. Send enquiry here.

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Hong Kong-based MediConCen, a startup automating insurance claims using AI and blockchain, has raised US$6.85 million in its latest Series A round.

HSBC Asset Management led this round, with support from existing investors G&M Capital and ParticleX and new investor Wings Capital Ventures.

Also Read: Wealthtech, insurtech, SaaS fintech are the new hot verticals in Indonesia: AC Ventures report

This brings MediConCen’s total raise to US$12.7 million.

The capital will be used to expand into the Middle East and Southeast Asia.

“Insurance does good for the society, but often it is not felt by the customers. There is much frustration dealing with the medical claim process for both customers and insurers alike. We are changing the paper-based and human-based claim process to digital and AI-assisted journey, utilising the latest AI and blockchain technology,” said William Yeung, CEO and co-founder of MediConCen.

MediConCen is an insurtech company that utilises Hyperledger blockchain technology to provide clients with an automatic experience in insurance claims. MediConCen has secured a blockchain patent in the US and Hong Kong. The company serves over 16 insurers and over 1 million insured individuals, and its cashless claim platform has over 1,200 medical providers participating.

Also Read: Welcome the new game changer in town: Insurtech

MediConCen is a Cyberport community startup that joined its incubation programme in 2018. With the support of Cyberport Macro Fund, a fund that provides seed to Series A stage and beyond funding to Cyberport digital entrepreneurs, MediConCen has secured extra co-investments to facilitate its growth in 2020.

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X marks Echelon. Join us at Singapore EXPO on May 15-16 for the 10th edition of Asia’s leading tech and startup conference. Enjoy 2 days of building connections with potential investors, partners, and customers, exploring innovation, and sharing insights with 8,000+ key decision-makers of Asia’s tech ecosystem. Get your tickets here.

Want more from your Echelon experience? Be an Echelon X sponsor or exhibitor. Send enquiry here.

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