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MDEC Fintech Conference - A Look into Bank's Fintech Initiatives (RHB)

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MDEC Fintech Conference - A Look into Bank's Fintech Initiatives (RHB)

  1. 1. Overview of Fintech & RHB’s POV 5th September 2016 Rohan Krishnalingam Group COO, RHB Banking Group RHB BANKING GROUP
  2. 2. Page | 2 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
  3. 3. Page | 3 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 Biometrics Fingerprint, voice & facial biometric is simplifying digital experience for authenticating & authorizing transactions such as payments.
  4. 4. Page | 4  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 venturecapital 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
  5. 5. Page | 5 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.
  6. 6. Page | 6 Throughout the last 2 years, RHB has been actively involved in Fintech collaboration through our partner Startupbootcamp including organizing hackathons to boost new startups
  7. 7. Page | 7 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 / EquityStake • RHB customer alternative investment model /option • Businessand technology exchange • InnovationAdvisory Panel with key technology& financialpartners 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
  8. 8. Page | 8 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
  9. 9. Page | 9 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)
  10. 10. Page | 10 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
  11. 11. Page | 11 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
  12. 12. Page | 12 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
  13. 13. Page | 13 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

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