Overview of Fintech & RHB’s POV5th September 2016

Rohan Krishnalingam

Group COO, RHB Banking Group

RHB BANKING GROUP

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FinTech companies are providing services in multiple areas that are typically provided by financial institutions and this causes disruption to banking business…

Lending Payments

Retail Investments Personal Finance

Equity Financing

Consumer Banking

Remittance Financial Research

In Asia

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Emerging and rapid advances in technology enables Fintech to go to market quickly causing rapid disruption to banks..

Cloud Mobile Development Cloud Infra Providers Cloud Banking Providers Cloud Payment Providers

Machine Learning

Blockchain

Big Data & Analytics

Natural Language Processing

Distributed ledger removes the need for centralized processing body such as

banks for payment clearing.

Intelligent algorithms replace the need for human financial advisors for investments.

Predictive risk scoring through social media information mining allows near real-time financing online.

NLP allows machines to understand human

speech and respond accordingly; removing

the need for banking staff to respond to

sales & service inquiries

BiometricsFingerprint, voice & facial biometric is simplifying

digital experience for authenticating & authorizing transactions such as payments.

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Established BBVA Ventures for early stage and

later stage venture investments, with USD

100m raised so far.

Has acquired Simple, and invested in Coinbase,

Taulia, Radius, Ribbit Capital, 500 Start-up,

Prosper Marketplace, DocuSign, Personal

Capital, SumUp, Kasisto

Established a Direct Private Investment arm

that does Seed, Early Stage, Venture, Later

Stage, PE and Debt Financing Investments.

Has over USD 125 billion of capital to invest

and has 313 investments in 215 companies

with 33 IPOs and 67 acquisitions

Financial institutions are taking a wide range of approaches to keep up with

technology innovations that is threatening to disrupt the sector

Launched Innoventures; a USD100

million FinTech venture capital fund

based in London

Created of a USD200 million fund

targeted at the FinTech sector, focusing

on both retail and wholesale banking

markets with the aim of improving its

technology systems

Sberbank’s SBT Venture Capital; a USD100

million fund for the FinTech sector,

providing finance and support in return for

insight and potential collaboration

The Plug and Play FinTech Programme; a

partnership between Citi’s global corporate

venturing arm, Citi Ventures, and Californian

accelerator Plug and Play, with locations in

the US, Germany, Singapore, Brazil and

Spain

The Barclays Accelerator Programme; a

London-based incubator scheme providing

FinTech start-ups with funding, office

space and access to Barclays’ APIs and

data

Launched a FinTech Accelerator program

that combined a cash investment with a

minority stake for 6 months of coaching &

collaboration

Selected 3 companies in areas of artificial

intelligent, location and mobile identity

technologies

Launched Blockchain Innovation Lab; in

London’s Level39 accelerator space with

the aim of collaborating with the wider

FinTech Community

Set up MyIdea to provide a platform where

employees can pitch ideas and enter

competitions to improve business areas

Launched 36-hour hackathon under its

LeumiTech and Salesforce in Tel Aviv, with

the aim of developing applications within the

FinTech space

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Regulators in Malaysia and the region has been increasing their focus & support for Fintech market to flourish.

• BNM intends to come out with a framework to encourage Fintech innovation.

• Currently reviewing changes and additional guidance needed to ensure regulatory framework remains appropriate to manage the risks, while encouraging productive innovation that will drive costs down and improve the quality of service to consumers.

• Plans to set up a “regulatory sandbox” to enable financial institutions (FIs) as well as non-financial players to experiment with financial technology (FinTech) solutions.

• Intends to create a "Sandbox" environment for Fintechs to test innovative products, services, & business models whilst ensuring consumers are protected

• Will ask Fintechs to register and have the powers to regulate them once they get to a certain size

• P2P Lending seems to be the largest focus area for Fintechs in Thailand now, guidelines have been issued

• The other area of focus for Fintechs in Thailand is in Payments and likely to be under oversight of BOT

• Setting up a FinTech Office to serve as a one-stop virtual entity for all FinTech matters and to promote Singapore as a FinTech hub

• The FinTech office will provide advice on various FinTech grants & schemes, as well as identify gaps and propose strategies, policies to encourage FinTech

• Partnering with Australian regulator to help fintechs with cross-border expansion

• Plans to set up a “regulatory sandbox” to enable financial institutions (FIs) as well as non-financial players to experiment with financial technology (FinTech) solutions.

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Throughout the last 2 years, RHB has been actively involved in Fintech collaboration through our partner Startupbootcamp including organizing hackathons to boost new startups

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RHB’s strategy includes partnering with innovative start-ups to provide new digital services to our customers…

Regional accelerator

Collaboration / Partnership

Co-Investment

Local incubator

• Business Mentoring

• Start-up Funding / Equity Stake

• RHB customer alternative investment model /option

• Business and technology exchange

• Innovation Advisory Panel with key technology & financial partners to advise & nurture start-ups

Potential IAP members

Online restaurant reservation app

SME retail point of sale solution

Online marketplace for services

Currency exchange rate comparison app

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RHB’s strategy for Fintech is to closely monitor potentially disruptive fintechs and

where relevant, to collaborate or invest accordingly…

FinTech Companies

Providing for unbanked customers

Efficiency / Customer Experience improvements

Disruptive to banks

• Low priority, monitor only

• High Priority - monitor, understand / adapt if relevant for bank or for customers

• Collaborate where relevant

• High Priority - closely monitor and understand impact to us and how to respond

• Determine if equity / investment is required as defensive strategy

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Thus far, RHB has been closely engaging numerous startups across various Fintech areas of innovation…

45 13 4 3

FinTech’s /

Startups

Assessed

Currently in

discussions

with…

Providing

payment

services to…

Formally

collaborating

with…

• SBC Fintech Lounge (6) • SBC 2015 Cohort (10)• SBC 2016 Cohort (10)• Others (19)

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RHB is constantly looking for innovation from Fintech and one of the key problem that we would like to challenge Fintech to solve is..

Via SBC (Startupbootcamp)

Success of Fintech startup products & solution is highly dependent on creating

excellent customer experience & seamless integration with banking services

such as payment. Creating simplified B2B/B2C payment experience is one of

the critical areas of focus for many Fintech app developers

What is an innovative payment API solution that could enable Fintech app developers to quickly integrate with RHB’s payment services to offer seamless & best in class B2B/B2C payment experience for users?

Problem Statement

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RHB is constantly looking for innovation from Fintech and one of the key problem that we would like to challenge Fintech to solve is..

Via SBC (Startupbootcamp)

Banks are increasingly facing pressure to improve quality of service while

controlling cost of operations. One of the innovation that could contribute in

this area is the use of machine learning to improve service & reduce human

dependency.

How can machine learning help in empowering investment advisors and complementing their knowledge with machine generated insights in order to provide high quality investment advise to customers?

Problem Statement

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RHB is constantly looking for innovation from Fintech and one of the key problem that we would like to challenge Fintech to solve is..

Via SBC (Startupbootcamp)

Banks are increasingly facing competitive market and in pressure to innovate

ways to acquire new customers. One of the challenge faced is the regulatory

requirements around KYC & customer verification which is still reliant on

physical methods thus limiting bank’s ability to fully on-board customers

through digital channels.

What are the innovation that can improve customer acquisition methods and enable a fully digital on boarding of new customers while not violating regulatory requirements?

Problem Statement

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RHB is constantly looking for innovation from Fintech and one of the key problem that we would like to challenge Fintech to solve is..

Via SBC (Startupbootcamp)

Banks are increasingly facing pressure to improve quality of service while

controlling cost of operations. One of the innovation that optimize banks

operating cost is blockchain.

Which area of banking operations can be optimized via blockchain and what is the innovative blockchain solution that will increase efficiency and reduce cost of operations in the area?

Problem Statement