Introduction to Fintech

Igor Pesin
Partner, Investment Director @ Life.SREDA VC
Life.SREDA VC Executive summary

Banking on
Life.SREDA I Life.SREDA II Asia Blockchain Fund
2012 2014 2015

Moscow Singapore London

2016

A new venture fund dedicated to

13 investments 7 successful exits
(US, UK, Germany, CIS) 8 investments
(South East Asia)
investing in the blockchain ecosystem

Research & Vision Accelerator in Singapore Bank-as-a-srevice and open API play
Influelce on the whole infustry trough Life.SREDA is supporting a strategic fintech
own blogs fintechranking.com and project: open API Pan-Asian platform BAASIS
semi-anual Fintech research “Money of the Future”
First BaaS-platform for Asia

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 This time has come:
Asia become
the largest fintech market in the world
in 2016
 Fintech before:
disruptors and enablers
Fintech now:
Сreators
Asia is driving the growth of Fintech market worldwide
accounting to almost 50% of global volume

Investments in fintech annually ($B) Region distribution of funding (%)

Other fintech investment

8 Other
VC Backed fintech investments 23,6
20,3
+16%

19,1
EU 8
47
-6%
Asia
12,3 4,5
Ant Financial
38
5,8
6,1 USA
4,4
2,5 2,9
Amount of financing deals (#)
5,5 13,0
14,5 +36% +7%
442 428
0,3 0,4 1,5 410
6,8 398 Q1
2,5 2,9 Q2 378
2,2 366 Q3
Q4 343
2011 2012 2013 2014 2015 2016 Q3
308 Q2
Q4
Q1 2015 2016
Asian market is the main driver for the growth
of global Fintech industry in 2016

9,8
Investments in Asian Fintech by year ($B)

The total invested capital

6,3 in Asian Fintech
continued to grow in 2016,
221 Ant Financial despite few mega deals
DEALS
$4,5B that made >60% of the 2016
257 total;
DEALS
In Asia, almost 70% of dollar
investments in 2016 went to
1,5
Zhong An
Chinese companies;
$0,92B
0,5 156
DEALS
257 deals are counted by
Life.SREDA

2013 2014 2015 2016

Note/source: Source: Mattermark, Dow Jones, Life.SREDA VC analysis

Investments in SEA Fintech dropped by 36%
Total investments and deals number By geography, number of companies funded

Singapore 62%
57 deals 58 60
Despite the decline in
Philippines 12%
9 funding amount, the
Indonesia 8% amount of deals remained
11 2016 on the same level;
Thailand 6%
$245M 9 2015 Singapore leads in invest-
$157M Vietnam 4%
4 ment and deals amounts,
remains to be a region’s
Others 8%
9 leader;
2015 2016
Philippines and Indonesia
TOP 5 DEALS are following the trend,
2015 2016 together hold 1/5 of all
Momo companies funded;
M-DAQ Vietnam $28M
Singapore
$82,5M Cheques are down in 2016
Quoine – growth barriers; investors
MatchMove $30M Singapore $20M are being careful with
Singapore targets.
Omise
GroupLease $30M Thailand $17.5M
Thailand

ItBit Funding Societies

Singapore
$25M Singapore $12.6M
Fastacash MC Payment
Singapore
$15M $8M
Singapore
 Diversity of the market: while China dominate Asian Fintech
market by amount of funding, India is #1 by number
of Fintech deals. Different fintech verticals started to grow.

Investments in Asian Fintech by sector Investments in Asian Fintech by country 3%

(by number of companies funded, % ) (by number of companies funded, %) Korea

23%
21 13 6 5 3 China
13 4 35% 6%
Japan
8 6 5 India 15%
4 Singapore
4%
7 5 Philippines
2%
Lending e-Wallets Big Data Insurance Banking Malaysia
7%
Payments Blockchain For SME Remittance Regtech 5% Others
Indonesia
Investments PFM/PFP Crowdfuning /investing

Lending, Payments, Wealth management India, China and Singapore Interestingly, Pakistan, Laos, Myanmar,
and Ewallets are the top 4 sectors are the top 3 countries, where Bangladesh, Vietnam and Cambodia
that made almost 50% of all investments more than 60% of all fintech together have 8% of the total Fintech
in Asia. investments went in 2016. funded companies in 2016.
Note/source: Source: DJ PRO, CB Insights, Life.SREDA VC analysis, Capital IQ
So what exactly is Fintech?
Best described as…
Fintech Framework
and almost 4.500 fintech startups

Alternative capital
Insurance
4%
Blockchain & 7%
Cryptocurrency 25% Payments
8%

Big Data Market share

10%
& Scoring (by amount of companies),
%

Investment 11% 23% Deposit & Lending

management
12%

Mobile Banking
& e-Wallets
What is Fintech

Payments and deposits

Main Categories:

Online payments

Processing / acquiring

Recurring

International P2P

Merchant acquiring

B2B
What is Fintech

Lending / Deposits
Main Categories:

p2p lending

Loan Marketplace

SMB Lending

Supply Chain finance

Student Lending

Real Estate and industry

specific originators

Marketplaces
 Lending and Payments startups still dominate
the FinTech market, accounting for more than 50% of the industry

Distribution of Distribution of
financing deals M&A deals
(by # of deals, %) (by # of deals, %) Fintech for SME*
3 2
4 7 7 Blockchain
4 7 8
8 8
9 13 Banking*
9 10
11
13 12 Insurance
18 12
15 15 Financial
17
Mangement
19
20 20 23 Capital Markets /
Wealth
24 Management
32
26 25 Lending

2015 2016 2015 2016

Payments

*
Fintech for SME – accounting,
supply chains, security & regtech
*
Banking – e-Wallets,
The distribution of # of financing deal have The shares of sectors by # of M&A deals Bank infrastructure startups

changed significantly from 2015 to 2016. remained stable through 2015-2016, with
Payments is in the top, followed by Lending Payments being the most active area.
What is Fintech

Insurance
Main Categories:

Online distribution

Policy management

Claims Management

Innovative on demands

Data & Analytics

P2P Insurance

Employee benefits

IoT / Sensors / Tele

 535
INSURTECHS
by VentureScanner
 Insurtech market decreased by 34%
in 2016, while the number of deals
increased by 25%
Number of rounds (#) and amount of capital
invested in Insurance quarterly ($B) 157
125
Today, the market consists of <1400
78 82 insurance tech companies, the launching
tendency is decreasing, almost 300 companies

+236%
2510 -34% founded in 2015, 40% less in 2016

In 2015, the pike was mainly because of a large

1650 Chinese deal – Zhong An, that made almost

40% of the whole year’s funding amount

747 1727
There is an increase in investment rounds:
in 2014 – 54 rounds;
Zhong An
-31% +165% $981M in 2015 – 125 rounds;
281 790
in 2016 – 157 rounds.

384 390
311 280
198 189 210 190
114 124
78 110 56
37
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

2013 2014 2015 2016

What is Fintech

Crowdfunding and Alternative Capital

Main Categories:

Crowdinvesting

Reward-based crowdfunding

Crowd-donating

Crowdlending

Crowdinvesting

Angel Networks
What is Fintech

Wealth management
Main Categories:

Robo advisory

Brokers

White label trading platforms

Predictive analytics

Market research

Quantitative trading

AI assistants, bots

PFM
What is Fintech

Blockchain & Cryptocurrencies

Main Categories:

Blockchain tech for finance

Blockchain tech for others

Cryptocurrencies

Smart contracts
Blockchain market
is getting more mature, however it’s still at very early stage (prove-of-conept)

There is a decreasing
Number of rounds and Amount of capital 119 tendency towards launching
new blockchain companies:
invested in blockchain 99
2016 169
2015 221
54
31 2014 233
new companies launched
12
There is an

$458B $542B increase in investment rounds:

$344B 2016 119

2015 99
$3B $83B 2014 54
rounds
2012 2013 2014 2015 2016
There is an even
sharper increase in funding:
Major Acquisitions in 2016 2016 $542M
2015 $458M
undisclosed undisclosed
2014 $344M
invested
undisclosed undisclosed

undisclosed undisclosed
 Blockchain market. Potential and geo

Amount of blockchain related Top funded business models Blockchain companies by geography
companies, %
Note/source: Source: Crunchbase, CB insights, Life.SREDA analysis, Tracxn report, Mckinsey report

22 2%
Consumer
13%
17 Enterprise
48% 11%
14
Europe
11 11
North
America
11%
Others
8 8
6
3 30%
Global
29% 55%
Technology Financial
Identity
Finance

Government

Rights on ownership

Consumer goods

Healthcare

Securities

Others
Art and Entertainment

services

Blockchain potential by sectors and geo Geo and business models

>80 cases of blockchain usage 55% of capital went to financial services
revealed main fields and scenarios of related blockchain startups;
implementation – Financial services,
Finance optimization North America is dominated
Blockchain market. Investment traction.
Rise of sustainable businesses that raise a large investments

Number of rounds by stage (%) Funding by stage ($M)

In 2016, investments in later stages grew significantly, Amount of funding to later stage companies grew
seed investments decreased in overall funding significantly,shows that seed companies are
from 69% in 2015 to 57% in 2016 showing solid results and get big funding after

60

Late
12 9 13
15 Early
2 50
14 17 Other
12 Seed
22 Series C+ 306
100 Series B
203
72 71 69 Series A 97
57
Seed
9
59 53
8 33

2012 2013 2014 2015 2016 2012 2013 2014 2015 2016
What is Fintech

Big Data & Scoring

Main Categories:

Credit scoring

Big Data

Risk management

Regtech

Machine learning and AI

Security
What is Fintech

Mobile banking & e-Wallets

Main Categories:

Mobile banking

Neo banks

Challenger banks

BaaS & BaaP

e-Wallets
However Fintech is still #1 VC industry with 23% share
in Q4 2016 and it’s growing
Fintech investments, $B $128B -9% in total funding
from 2015

Global investments, $B
$140B
$109B
$23.6B
$20.3B
8,3
$12.3B 6,1 (18,4%)
(13,8%) +5%
4,1 4,1 3,1 4,4 of growth

3,0 (12,3%) (12,1%) 7,0 (9,5%) (12,9%) of fintech share

in 2016
(10,5%)
2,7 (22,7%)
36,7 5,4
2,6 (10,4%) (20,8%) 5,5
(81,6%) (23,9%)
(11,8%) 29,0 29,9 29,6 29,6
37
25,1 23,3 (87,7%) (87,9%) (90,5%) (87,1%)
(86,2%) 23,4
19,4 (89,5%)
(89,6%)
20,6
(77,3%) 17,5
(88,2%) (79,2%)
(76,1%)

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2014 2015 2016

Global financing activity is down. However, looking deeper into distribution, investments into
VC deals activity declined 24% YOY, financial technologies gained its scale within
and financing activity is down by 9% VC investments,
grew to almost 23% (+5% rise) since 2015
 Asian (Chinese) mega deals dominate
the global fintech market
Asia Ant Financial $4,5B B Weidai $153M C
11 companies Lu.com $1,2B B Lendup $150M B
$8.7B JD Finance $1B n/a
Payments
Stripe $150M n/a
Qufenqi $449M Late Hero FinCorp $150M n/a
Lending
North America Oscar Insurance $400M C EDM Group $145M n/a
14 companies Ion Investment $400M PE Insurance Nubank $132M C-D
$2.25B U51 $310M C Wealth XP Investimos $130M PE
management
China UnionPay $296M n/a PaySimple $115M n/a
Europe CommonBond $275M Late Fintech
for SME
MetroMile $103M D
3 companies Fenqile $235M D Kreditech $103M C
Banking
$648M Mosaic $220M Seed Betterment $100M E
HeTai Insurance $218M Seed Big Data Fractal Analyst $100M n/a

South America Payoneer $180M n/a Financial Affirm $100M D

2 companies WeLab $160M B management Avalara $96M n/a
$262M Clover Health $160M C Ygrene Fund $95M n/a

Top 30 companies made Lending While North America saw Blockchain

>50% prevailed in 2016 the biggest number of deals, has not entered the TOP-30
of all fintech funding with 12 deals out of 30 Asia leads largest deals list yet
gone to this field a total funding volume – looking for 2017
Asian Top 7 financing deals in 2016
Key message Capital invested in 7 companies accounts for 78% of all invested capital in Asia

Company Sector Amount Stage Country

Payments $4500M Series B China

Lending $1200M Series B China

=$7,6B
Lending $1000M N/A China invested in top
7 companies
Lending $449M Late China

Lending $160M Series B HK

=78%
of all capital
Lending $153M Series C China
invested in Asia
Lending $150M N/a India

Note/source: Source: DJ PRO, CB Insights, Life.SREDA VC analysis, Capital IQ

Interesting top investment deals in 2016
Lending Payments Insurance Banking

Lufax Ant Financial Oscar Insurance Nubank

Headquarters Shanghai, China Headquarters Hangzhoud, China Headquarters New York, USA Headquarters Sao Paulo, Brazil
CEO Ji Kuisheng CEO Jack Ma CEO Josh Kushener CEO Daviv Veles
Founded 2012 Founded 2004 Founded 2013 Founded 2013
Funding $1.2B Funding $4.5B Funding $400M Funding $132M
01/2016 04/2016, 02/2016 12/2016
Lufax announced it had raised $1.2B in completed its Series B at $4.5B; “Oscar” announced it raised $400M Nubank had raised $80M +$52M in a
Series B round; in a financing round led by Fidelity Series D funding led by DST Global +
Last year’s undisclosed Series A
Investments debt;
Valuation is $18.5B, 10B higher than valued the firm at $45-50B;
previous round; Company valuation is $2.7B Nubank was previously valued at
Ant Financial & Alibaba has invested
$500M after it raised $52m in Round C
Ping an Assurance have remained $680M in Paytm, acquiring 40% stake Previous investors:
in Jan’ 2016.
the largest investors in Lufax; in the venture Google, Khosla, General catalyst

Traction Traction Traction Traction

Postponed its IPO to 2017, which 450M users; Currently covering over 40k health Has had 7 million applications, with
could, which could raise as much as providers, 70 hospitals 500,000 applications currently on the
Ant Financial is to go public soon;
$5B in proceeds for the Company Boosted enrollment by almost 300% - waiting list;
58% of all online transactions
from 40k to 150k customers in one year 75 million purchases have been made
happening in China is done via Alipay.
via the Nubank card

Products Products Products Products

Lu: Wealth management solutions Alipay - China’s most popular online Provides health insurance through its A no-fee MasterCard Platinum credit
payment service; online and mobile platform for card managed by mobile phone;
Lfex: Financial advisory services
comparing insurance plans
Micro-loans program and Alibaba’s Real-time spending analysis, personal-
Also offers financial consulting, desing
digital bank, MyBank. Search, compare, and purchase Oscar ized categories for tracking payments
services, financial application develop-
insurance plans, free check ups, etc. and ability to lock the card from the app.
ment and market research, data analysis Sesame credit scoring system

Note/source: Source: Capital IQ, Mattermark, Dow Jones, Life.SREDA VC analysis

 Fintech unicorns: 4 Chinese giants are in TOP5 in 2016
60,0
25 fintech unicorns globally valued at $150B in aggregate value

2015
45,0
24 unicorns
$B Fintech Unicorns Valuation
$112B Total valuation
Disclaimer: Public companies are not included; only $1B>; 18,5
no SaaS, Cloud, enterprise software, hardware etc; only FinTech
accordiing to Life.SREDA 2016

25 unicorns
$150B Total valuation [+$38B] 9,2
10,0
7,4 8,0
5,9
4,8 5,0
4,5
3,6 4,0
new

3,5
2,3 2,4 2,7
1 1 1 1 1 1,1 1,6 1,6 1,9 2,0 2,0 2,3 1,4 1,4 2,0 1,9 1

Lufax
Gusto

Jimubox

Kabbage

Funding Circle

China Rapid Finance

Transferwise

Rong360

Lakala.com

Prosper
Marketplace

Avant

Zenefits

Adyen

Klarna

Mozido

Oscar

Credit Karma

Green Sky

SoFi

PayTM

Qufenqi

JD.com

Zhong An
Online

Stripe

Ant Financial
25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1

Europe USA Asia

Key challenges: how regulators and banks
will approach the Fintech industry
 Banks are getting more and more active in FinTech
Barclays, Goldman, CITI, Santander and BBVA are leading the show
23

15
17 Major Bank Investments to VC-backed Fintech Companies +61%
more companies

Note/source: Source: Mattermark,

-2015 -2016

Life.SREDA VC analysis, Crunchb

13 funded by banks
in 2016
9
8
7
6 6 6
5 5 5
4 4 4 4 4 4
3 3 3 3 3 3 3 3
2 2 2 2 2
1 1 1 1 1 1 1 1 1 1 1 1 1
Barclays

Goldman Sachs

Citi Group

BBVA

Wells Fargo

Commerzbank

Morgan Stanley

HSBC

Credit Suisse

BNP Paribas

Mitsubishi UFJ

Mizuho

JP Morgan

Capital One

China
Development Bank

UBS

China
Construction Bank

Credit Agricole

Societe Generale

ICICI

Siam Commercial Bank

OCBC

Mandiri Bank
Santander

Sberbank
Leaders are Top South-Asian banks are starting to follow ~30% banks
mainly from developed Chinese/HK/Japanese/Korean megabanks invested via their own
fintech regions with playing active role in FinTech: DBS, OCBC, UOB, Siam Commer- venture instruments
US, UK, Europe. cial Bank, Mandiri, RHB, MayBank, CIMB, KasikornBank and others – VCs, accelerators, incubators
laucnehd a bunch of initiatives related to fintech
 Banks’ partnerships with financial technology start-ups
are developing, however partnerships in 2016 seemed to be safer
and more convenient for banks

An extensive interest was shown

by banks and financial institutions
partnering with robo-advisors,
Automotive pricing and information Offering investing advice and Enable Citi card members to use their digital wealth managers;
website for car buyers and dealers data-driven recommendations Citi Cards with PayPal online, in-app
and in stores In addition, there is a growing
tendency by banks to partner with
crowdfunding companies
(Santander, UOB, Belfius Bank, Alfa
Online wealth management P2P payments, provides making P2P-lending. Enables local SMEs to
Bank, etc);
platform payments via the social networks borrow short-term business loans
Asian banks are widely partnering
with Fintech accelerators in order
to pilot new products with fintechs
residents;

Offering its clients access to equity Study and test blockchain technology Provides direct financing to SMEs Many pilots were initiated in 2016
crowdfunding opportunities to enable payment transactions  between blockchain companies
and banks worldwide
(SG, SCB, Barclays, etc)

Use Fincast to advise customers on To contribute to the acceleration of To offer a TD and Westpac
the types of financial products they the rollout of its digital strategy branded spending app
need to meet their investment goals
Venture/debt investments and acquisitions from banks

Q4 $100M

Q2 D $75M

As mentioned earlier,
Q2 $56M partnerships and investments are
closely linked, however,
Q2 D $33M investments primarily focused on
realizing returns;

Q3 $19.67M
Investments generally go from
venture instruments of banks:
Q2 A $14M VCs, accelerators, debts financing;

Q3 undisclosed
Asian banks are getting involved
and investing through
Q3 A $8,3M the partnerships with accelerators
(StartupBootCamp Fintech, Nest, etc.)

Q4 A $8,3M

Q4 D N/A
 Regulation activities in Europe
Key message Most of activities are focused on controlling
and regulation of existing regimes

Open Banking
EMEA
e-Invoicing
UK sets out open banking API Introducing a European
framework Standard for e-Invoicing
Aimed for the creation of an open banking standard The European Commission announced the
that makes it easy to share and use financial data, e-invoicing directive require all 28 EU member
arguing that the move would improve choice for
customers, promote competition; states to use specific e-invoicing standards for all
#regulation #bank #UK
B2G e-invoices by November 27, 2018. Europe’s
current e-invoicing adoption rate of 24 percent is
expected to rise to 95 percent by 2024 and accrue
The cohort of the regulatory Sandbox savings of approximately 64.5 billion euros ($72
billion) per year for businesses.
sandbox closed Controlling & Regulation
69 firms from a diverse range of sectors, geogra- #Announcement #e-invoicing #EU #2018
phies and sizes have been accepted. 24 applications
met the sandbox eligibility criteria and were
accepted to develop towards testing
#regulation #opportunities #UK

Insurance
Solvency II is a programme

Payments
Standardized mobile and
A specially created internet payments (PSD2) in EU
Banking

for insurance regime

“Fintech” licence  PSD2 enables bank customers, both consumers and It introduced a new, harmonised EU-wide insurance

Source: Fintechranking.com
businesses, to use third-party providers to manage regulatory regime. The Solvency II programme is
Plans to encourage crowdfunding and the market their finances. In the near future, customers may be divided into three areas, known as pillars: Financial
testing of new technologies. FinTech firms, with a using Facebook or Google to pay bills, making P2P Requirements (Capital Requirement and etc),
minimum of $300k in capital, are allowed to accept transfers and analyse spending, while still having Governance & Supervision (Own Risk & Solvency
funds from clients, up to $99m, which remain money their safely placed in current bank account. Assessment) and Reporting & Disclosure (Insurers
outside the depositor protection scheme and are required to publish details of the risks facing them).
not subject to the same regulations, auditing and the
capital requirements applied to banks. 
#Implementation #Switzerland #EU #2016 #Announcement #Payments #Global #2017 #Implementation #Insurance #EU #2016
Challenges for Fintech evolution in Asia
Difficulty to launch financial services and products in cooperation
with traditional banks

Spend 80% of their

resources to be launched
80% In Asia In the US/UK
20% Spend only 20% of their
resources to be launched

1+ year 3-6 month

Negotiations with banks to be

licenced and integrated to back-end

Direct integration
“ In developed markets, fintech
innovations are primarily aimed
at improving the user experience
to the banking back-end (pain!) for tech- and financial literacy
advanced people. But, for the
For banks: billions around the world with-
- not main KPI’s
- not safe & secure out access to traditional financial
- not fast & cheap & easy services, fintech innovations
- do not have ability to work go well beyond convenience.
with many startups
Fintech could be their ticket to
in tne financial inclusiveness and
US/UK membership in the global digital
US / UK economy.

Asia
Going to BaaS platform
or using open APIs 80%
to business
development
 Startup’s pain
6-12 months-to-market +6 months
Long & expensive
$200-400K-to-market
direct integration
with bank back-end

3 months Head of IT
Negotiation with bank

Head of Business +3 months

Negotiation with IT-depatment
Startup
Challenges for Fintech evolution in Asia
Difficulty to scale geographically due to differences in regulations and infrastructure

In each country you have to 1. Easy regulation

In Asia In the US/UK
start from scratch: 2. Easy integrations

1. New regulation
2. New integrations

Recognizing the importance

of financial inclusion for EUROPE
the global population, various
international structures are
investing efforts into developing
strategies for facilitating
financial inclusion “ Unbanked markets always
loose competition for attraction
of attention of the best talents &
startups to deploy their cutting
US edge technologies for somebody
who really need it
Market size and opportunity:
Who needs banking infrastructure in Asia?
(top-down calculation)

USA Europe Asia Pacific

50 + 1000 + 30 + 300 + 5+
The best and the biggest Fintech startups Telecoms Large e-commerce, Messengers
fintech services, retail corporates and social
networks
which want to expound to Asia which want to launch & scale which wants to deliver fintech services
for their customer base

Currently existing demand from non-banks for banking infrastructure

in Asia Pacific is estimated at $1-1.5B USD in 2016
 E-wallets

Neobanks

mPOS

Online
acquiring

Cash register
POS solutions

Crowdfunding

Crowdinvesting

Online lending
for individuals

P2P loans

SME Lending
Banks’ pain: With whom to work?

Online
scoring

Trading

Wealth
management
(about 5K fintechs total)

Remittances

Price
comparison

PFM/PFP
and more than 20 leaders in each vertical

InsurTech
There are more than 20 verticals in Fintech

RegTech

Acounting

Blockchain
Bitcoin
How to connect?
 Fintechs
for SME for retail

mPOS

Operation
Banks’ pain

Online acquiring

Online lending for individuals

P2P loans

How to integrate?
Remittances

Who will control and develop?

Price comparison

it is expensive it takes time it is not main business / KPI

PFM / PFP

E-wallets

Business
Neobanks

Cash register / POS solutions

Crowdfunding

Crowdinvesting

SME Lending
Who will possess clients / startups?

Online scoring

Trading
Value

Wealth management
How to invite foreign projects?

InsurTech
to other markets?

RegTech

Acounting

Blockchain
How to help partners to expand
Key areas of development in a traditional retail bank

Mobile and digital Value Added Services

Digital customers are already there (New revenues)
Technology is accessible to all
Services based on customer behavior:
Focus is to attract new young generation
Prior to payment transaction (predictive)
At the moment of transaction (instant)
Key Areas for Retail After payment transaction
BANKS
Data monetization New Business Models
Development areas
and analytics Partnering with Big-tech?
Partnering with Schemes?
Data-rich solution:
Partnering with Fintech?
Dynamic business steering
Joint venture with GP
Behavior-driven marketing
Data-rich consumer and applications

P&L - Internal Processes

Operational excellence and digitalization
Cost reduction and optimization
Areas of synergy
Banks and Fintech. For what reason?
Fintech offers banks access to technologies, brings new ideas to market at speed,
enables to add value from bank’s data and changes bank’s culture

Why banks need FinTech? Why FinTech need banks?

Acces to ideas Acces to customers - trust, inertia
Acces to new technology Acces to clearing and Central Bank
settlement
Acces to agility: speed to market Successful Acces to in-depth payments expertise
Acces to expertise around data
Exposure to different culture Partnership Acces to data
Avoidance of regulation

Clearly, not all of today’s banks will survive. The survivors will be those that reimagine
relationships with their customers and partners.
 Layers of BaaS platform

“
The real impact of fintech in developed countries will be felt in the
back office, where new efficiencies and technologies, and improve-
ments to know-your-customer processes, have the potential
to transform some banking operations for the better.
Fintech-startups do not
need to spend time,
money and human
resources to be integrated
Ecosystem in each Asian country

100+ fintech-startups

Bank-as-a-service Middleware
based on 40+ universal APIs provide for them
universal APIs

Banks do not need to

Banks spend their time and
money to create new
Licensed and regulated APIs and to communicate
banking back-ends (belongs to banks with all startups all over
the world
in each country in Asia-Pacific region)
 Banking API‘s and overall concept delivery

Widget based Native FinTech

FinTech Apps A holistic, digital marketplace
banking ecosystem with a set of services
for Fintech companies to connect to and
integrate into the platform
Integration of web based Fintech
Widgets and native Fintech Apps through
Required audit logging, user tracking,
multi-layer Digital Banking Hub
statistics and appropriate administration
tool functionalities
Orchestration API for collaboration and
communication with Fintech

Connecting Blockchain application securely

to the platform

Billing and charging engine

Sustainable and extendable platform, Appropriate subset of APIs and common

easy to connected to different bank’s data used by Fintech
core systems
 Regulation activities in the APAC and Asia
Key message Most of activities are focused on establishing
an early stage infrastructure and development

APAC
Establishing an infrastructure

South Korea

Singapore
South Korea permits for MAS establishes
banks to invest in Fintechs a dedicated Fintech Office
Currently financial laws, financial institutions are MAS and the National Research Foundation opened
allowed to buy stakes only from companies in the a dedicated FinTech Office to serve as a one-stop
same business sector. The FSC have included
fintech companies in the scope of the financial virtual entity for all FinTech matters and to promote
industry. Singapore as a FinTech hub. 
#banks #2016 #opportunity

6 P2P Lending Licenses

Malaysia
P2P Firms Regulation

Indonesia
Granted in Malaysia in Indonesia
Six P2P lending licenses were granted in Malaysia The draft regulation proposed that a Fintech

Malaysia
recently, making them the first authorized platforms
in the ASEAN region.
company is required to have Rp. 2 billion in working
capital and is required to show Rp. 2.5 billion
Malaysia issues the Fintech
#p2p lending #license #2016
applying for a business license. Regulatory Sandbox
To experiment with FinTech solutions in a live

Singapore Hong Kong

controlled environment which is accompanied by
Korea has launched Hong Kong to launch
South Korea

the appropriate safeguards

a platform for banks banking fintech 'sandbox' #opportunity
The platform allows financial institutions to build To help maintain Hong Kong's competitiveness as
services that automatically populate financial a financial hub by supporting the development of
information for new customers.

Source: Fintechranking.com
fintech in the banking sector

Hong Kong
#banking #2016 Hong Kong establishes
a Facilitation Office
Singapore

MAS established Financial Sector Technology HK Monetary Authority established the FinTech
Facilitation Office to facilitate the healthy develop-
a regulatory sandbox. & Innovation scheme ment of the FinTech ecosystem in Hong Kong and
to promote Hong Kong as a FinTech hub in Asia.
To allow more flexible application of the regula- MAS committed $225M ($166.48M USD) under the
tions, while maintaining safeguards to protect “FSTI” scheme to provide support for the creation of #opportunity #2016
consumers and the wider financial system. a vibrant ecosystem for innovation.
Key initiatives in bank-as-a-service
and open banking areas
Startups and tech companies Banks Government initiatives

Bancorp – industry leading US-based In 2H 2016 BBVA launched its API market- The UK government in 2016 has set up the
largest bank-as-a-service platform, hosting place, aimed to offer other companies a Open Banking Working Group (OBWG) in
100+ non-banks with processing volume of way to leverage BBVA’s capabilities to build order to create an open banking standard
$200+ billion USD annually. Different their services. Fintech startups has an that makes it easy to share and use financial
clients of different size, including google access to such APIs as PayStats, Connect, data. It includes development of open API to
wallet, PayPal, T-Mobile, yodlee and others Accounts and Cards enable services to be built using bank and
customer data

In 1H 2016 was launched solarisBank, In 4Q 2016 Citi launched global API In 4Q 2016 The Monetary Authority of
banking-as-a-platform startup with a full Developer Portal aimed to open architec- Singapore (MAS) published 12 sets of data
banking license in Germany. It provides ture to facilitate collaboration with FinTech from MAS’ Monthly Statistical Bulletin as APIs.
account and transaction services, compli- companies. APIs includes account MAS is encouraging financial industry players
ance and trust solutions, working capital management, p2p payments, money to publish open APIs on their datasets, to
financing, and online loans for fintech transfer, rewards, investment purchases allow users to connect information and offer
startups. and account authorization. innovative solutions

BAASIS, launched in 2016 in Singapore,  is Otkritie, the biggest privately-owned bank In Q4 2016 the Korean Government
an open-API Bank-as-a-Service platform, in Russia, through the process of integrat- launched an open banking platform for
aimed to connect banks and FinTech ing with leading digital bank for SMEs financial institutions (16 banks) that will allow
startups across Asia Pacific region. Currently Tochka, developed its own modern them to build services that automatically
is in integration phase with several banks on API-platform, that was later used to populate financial information for new
different markets. integrate with fintech startups, including customers. The platform will essentially serve
mobile bank for retail clients Rocketbank. as database of consumer financial informa-
tion that is accessible via API.
I. Open banking and API are all the rage

The hype around banking APIs will increase, even overtaking cryptocurrencies.
Major banks will launch public API platforms Shamir Karkal, Head of Open APIs at BBVA

APIs are arguably one of the biggest topics in the industry. Simon Taylor, Co-Founder of 11:FS
The business model for profiting as a platform is key here, and many are still struggling with it

Global regulators will embrace fintech competition and regulatory concessions …

Africa will embrace APIs … financial inclusion will become a mainstream and actionable topic …
and the US will embrace change in the regulatory and political system David Brear, CEO and Founder of 11:FS

2015 was all about blockchain. 2016 saw an explosion of interest in machine learning and artifi-
cial intelligence. 2017 will be the year of open marketplaces and platforms.
Platforms support the rapid cycle deployment of microservices into a financial marketplace...
any bank with old legacy technology will start to look like a dinosaur
Chris Skinner, Author and CEO of The Finanser Ltd

APIs and Open Banking will start to shift the banking landscape with more traction in Europe and
Asia, but we’re likely to start seeing the gap between leaders and laggards widen
William Sullivan, Head of Global Financial Services Intelligence for CapGemini
BaaS for banks as Amazon Web Services for e-commerce

Traditional
bank
2015

customers 67%
product
Amazon’s profit
New fintech comes from AWS!
players
marketing

support

? human resources

To fight with - complience

- processing center
IT-guys to support
and manage servers
or to earn with - card issuing 2006
- money storage
Creation
of AWS for
new players

License Servers

You may write off infrastructure investments or use them as new revenue streams
 going to market.
fintech development

as well as optimizes time

It enables banks to evolve
and vital for fintechs as a helper

and money consumption before

in overcoming regulatory barriers
is very necessary for the future

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First BaaS-platform for Asia

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www.
fintech-research
.com
 Thank you

Igor Pesin
Partner, Investment Director @ Life.SREDA VC
[email protected]