Expect More Collaboration, Niche Players in Fintech

Expect More Collaboration, Niche Players in Fintech

April 2, 2020

TranSwap CEO Benjamin Wong shares his global outlook on what the market can expect to see from the Fintech space over the next 12 months. 

By Benjamin Wong

There has never been a better time than now to be in Fintech.

In recent years, many regulators are becoming more Fintech-friendly and encouraging of financial innovation. In the United Kingdom, for example, the Bank of England has extended direct access to real-time gross settlement systems (RTGS) accounts to non-bank service providers.

Closer to home, Hong Kong has issued the city’s first virtual banking licences in 2019, and Singapore anticipates to issue their own digital banking licences this year. At the same time, Singapore is also exploring opening up its real-time, round-the-clock payments system, known as FAST, to Fintech firms to broaden access to various payment players.

Thanks to these regulators, Fintech companies are provided a fintech-friendly environment and the relevant licenses to operate.

Due to the proliferation of online banking and electronic funds transfer services among others, what was once considered a challenge to manage finances is now adopted by businesses across industries such as banking and payments. This has spurred the rapid growth of the Fintech ecosystem in every country, where the global Fintech market was estimated at about USD127.66 billion in 2018, and is expected to grow to USD 309.98 billion at an annual growth rate of 248% through 2022.

It is encouraging to see that Fintech companies have become unicorns. Known for its portfolio of large market players like Under Armor, Facebook, Grab and Google, online payments processor for internet businesses Stripe raised USD 100 million in Series E round and recently launched a point-of-sale payments terminal package targeted at online retailers that are implementing an offline business model.

Property platform OpenDoor achieved Unicorn status in 2018 with a USD400 million investment from Softbank. Health insurance company Oscar, which employs technology, design and data to humanise healthcare, also raised an impressive USD165 million during its last funding round in March 2018.

Today’s B2B cross-border payments market is huge, with gross transaction value at an estimated US$133 trillion in 2018 that is projected to grow to USD 220 trillion in 2022, while banks currently have over 95% of market share. Yet the industry faces a potentially great threat in the next 12 months as the COVID-19 becomes more widespread. Besides companies facing a cash crunch, the pandemic has also triggered a global recession and caused financial markets to plunge, economies to stall and contract to lower levels since the 2008 global financial crisis.

It is also during this difficult period where governments are encouraging and mandating the workforce to adopt a work-from-home policy, that individuals and businesses alike are willing to change. Both start-ups and large corporations are on the lookout for ways to digitalise, and are more receptive to adopting new technologies and trying new processes.

As Fintech uses technology to improve efficiency and drive financial inclusion, the Fintech industry will see an increase in collaborations with Fintech and banks. For the purposes of not only bringing better value to customers, but also carving out new areas of niche services and growing their customer base.

At this moment governments are working hard to stimulate the economy to deal with the economic impact of Covid-19 and we expect that they will be open to supporting different initiatives, including solutions that are innovative and will contribute to jump-starting the economy. Fintech could potentially contribute in areas of payments, invoicing and collection, financing and access to capital, investing, etc, that may help to create more economic opportunities for growth. While authorities are still in the preliminary stages of developing their plans, I believe that they will have an open mind towards Fintech and the role it could play.

From the perspective of my company, TranSwap, where we help SMES with cross-border payments, we are ready with our tech to help them with their payment needs.

Our customers can perform all their payments online. However, we have extended more digital touchpoints to support our customers. Examples of these digital tools include video call, WhatsApp and WeChat. Companies who want to reduce cost on FX payments during these trying times can tap on our Fintech solution to meet their payment needs as our technology allows us to tailor a bespoke solution for them.

Earlier in the year, we developed a payment solution with API integration for seamless transfer from collection to settlement. This has helped the SME to make small transfers in large volumes to be credited directly to beneficiaries’ wallets and bank accounts in real-time, drastically improving processing speed and optimizing settlements, which is essential for maintaining cash flow.

This is something that we can help SMEs with during this Covid-19 situation, should they require such customization, as our platform is built with a focus of enabling businesses to make FX payments as seamless as possible.

Like many Fintech firms, our technology goes into solving a pain-point faced by many in the industry and it boils down to improving processes and driving efficiency. I’m excited to see what other innovations will be developed by Fintech.

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