Financial Technology (FinTech)

What is FinTech and why does it matter?

What is FinTech?

FinTech is an abbreviation of Financial Technology, a phrase that is widely seen in a lot of media and in Technology circles. It has grown explosively since 2010 starting from the giant payment system, Paypal which is developed since 2001. The financial solution such as accounting software, mobile payments, peer-to-peer lending, crowdsourcing, money transaction across the borders, etc. had changed how people live and how companies do business.

FinTech has a lot to do with regulatory and it varies from country to country. It is important for FinTech startups to know about its regulatory framework by the Bank Negara Malaysia (BNM). The regulators mainly serve as a protection purpose for both parties, FinTech companies, and their consumers. In other words, it gains trust for the consumer while using FinTech products and services. This is the regulatory sandbox released by BNM on 29 July 2016.

Why does FinTech matter?

FinTech matters because it impacts hundreds of millions of people by solving pain-point problems faced in the world. Its innovation is cost and time efficiency compared to the traditional way of doing things which requires reams of paperwork. Crowdsourcing and money transfer are the best examples to show the way they help users to do business at a lower cost. FinTech made a change because it reduces the traditional lengthy process, it has better transparency and easy accessibility. It creates more business opportunity for entrepreneurs because it’s easier and cheaper to set-up a business these days.

Now that FinTech is expanding rapidly, a lot of banks are starting to notice the potential startups in the market. This is where collaboration occurs, there are 3 leading banks in Malaysia that are highly active in FinTech which are CIMB, RHB and Maybank which is the largest bank in Malaysia. They are seen partnering with several startup Bootcamps, accelerator programs, and also organising hackathons.

What are the local FinTech companies? 

MoneyMatch

is a peer to peer lending, which abbreviated as P2P lending, an online match-making platform that connects borrowers and lenders directly and bypassing the traditional financial institution. MoneyMatch is a platform that allows buyers and sellers to conduct currency exchange directly without going through banks or money changer enabled by blockchain technology.

iMoney

is an online comparison platform on personal finance such as loans, credit cards, broadbands, etc. It is launched in 2012 and allow users to compare of 50 financial institutions across 6 different countries until now. These countries include Malaysia, Indonesia, Philippines, Singapore, Thailand and Hong Kong.

How do Bootcamps and accelerators come in the picture?

Business opportunity among FinTech is growing and there are more entrepreneurs venturing their ideas into FinTech. Therefore education towards the nation is one of the crucial parts in developing FinTech businesses . Besides, not to forget to have its own eco-system. Here comes Next Money, the fastest growing FinTech collaboration platform built by a global network of innovators, communities, events, and programs.

FinTech in Malaysia is still very “fresh” in the market, it also means that the opportunities are very large now. While all the hype is going on, threats are also equally important for startups to look into. These threats are seen as a FinTech Gap according to Next Money. In this article, “The banks who will fall through the FinTech gap – and never return”, they share about what are the 10 root causes the FinTech Gap.

One of the biggest challenges in startups is being very competitive with each other. It is crucial for startups to grow fast and Application Program Interface (API) is the answer to that. Most tech companies will prefer to run their product using cloud computing service to easy access API data. Braintree Partner’s APIs allows users to sign up seamlessly from within applications and get instant approvals so merchants can easily receive the credentials on a user’s behalf, basically, everything required to process a transaction. The best examples of the startup using Braintree are Uber and Airbnb.

In Second Startup, we believe that partnering with Next Money and Braintree is our greatest pleasure. Given that their guidance and support in each of their expertise will drive the early stage startups further and stronger rapidly.