Challenge is to navigate global fintech regulations and scale: Finastra’s Nadeem Syed

Nadeem Syed, CEO, Finastra

Nadeem Syed, who heads mega fintech firm Finastra, believes regulators worldwide will need to evolve guidelines for the emerging sector  (fintech) but the challenge for many financial services firms would be to navigate the new environment and also scale services.

Finastra came into being earlier this month when British banking software business Misys merged with D+H, both owned by private equity (PE) firm Vista Equity Partners. Syed, who was heading Misys, is now the chief executive of what the company claims is the world’s third largest fintech company after US fintech firms FIS and Fiserv.

“The financial services landscape, not just in Asia but globally, has seen a lot of regulators becoming more and more receptive to new technologies – distributed ledger technology, artificial intelligence, P2P lending and so on,” Syed said in an email interaction last week with DEALSTREETASIA.

On the potential for a public listing as the company matures, Syed said, “Finastra is privately held and our current focus is on integrating the businesses and making sure our customers receive continued high levels of service.”

Misys had listed in London many years ago but got delisted in 2012, following a £1.3 billion buyout by private equity firm Vista Equity Partners. In October 2016, the company tried coming back to the exchange but scrapped its IPO plans, which many claim was due to unfavourable market conditions in the wake of Brexit.

Edited Excerpts

Post-merger, how have the firm’s priorities changed? At Finastra what are the areas that are being focused at the moment and how has the consolidation worked till now?

We will continue to pursue a progressive vision of innovation, striving to unlock the potential of people and businesses by creating a platform for open innovation in financial services. Both businesses are highly complementary in terms of software solutions and geographical footprint.

D+H’s strengths in payments, lending and retail banking solutions in North America, combined with Misys’ global strength in capital markets, corporate banking, and retail banking will result in an even broader and more complete solution portfolio for customers.

What are your plans in Asia Pacific in terms of expansion and growth after the merger and how has the journey been in Asia so far in terms of revenues and capturing markets?

We have long been committed to Asia Pacific and continue to see great opportunity across the region with double-digit growth rates. Developed and growth markets of Asia Pacific are successfully riding the digital wave especially with the tremendous opportunities that lie ahead of us in Indonesia, Myanmar, Thailand and China to name a few.

Most recently we’ve announced wins with AYA Bank and First Private Bank. Players need to evolve to capture new opportunities and meet new regulatory requirements, by separating what’s genuinely disruptive from what’s merely an unnecessary distraction, to ultimately deliver value to both end-users and all who are active in the digital payments ecosystem.

As the third largest fintech company globally, we continue to be one of the only firms able to guide such decision-making at every level and with the breadth of functionality to support subsequent transformation.

Misys has over 400 customers that cut across from Japan to Australia and we see tremendous opportunity to leverage our strength in the region to bring the D+H products to market, especially payments and cash.

Over the years, how have you seen Asia’s competitiveness in fintech being transformed? Has that been affected by the rivalry between region’s financial centres – Singapore and Hong Kong?

The financial services landscape, not just in Asia but globally, has seen a lot of regulators becoming more and more receptive to new technologies – distributed ledger technology, artificial intelligence, P2P lending and so on.

In Asia, this openness has led to many home-grown fintech companies being set up, as well as many global Fintech companies wanting to operate in Asia. In the payments space, for example, we have seen a lot of players enter to meet the rising demand for real-time and digital payments.

The challenge for all financial services companies is to navigate each jurisdiction’s new or upcoming regulations on fintech while translating their various innovations into services that can be scaled up and rolled out in a safe and reliable manner.

Adding to that, which among these nations do you see emerging as a fintech powerhouse in the coming years and what are the chances of us seeing a regional fintech leader in the future?

Financial centres around the world have each introduced a variety of initiatives to attract and nurture fintech firms, from regulatory sandboxes to incubators and grants. At this stage it is anybody’s game as regulators are still working to establish regulatory regimes that strike the right balance between customer protection and innovation.

Those who get ahead will be the ones who manage to innovate and provide even faster, more secure and more reliable real-time payments and digitalization.

What kind of competition do you see from the internet giants like Baidu or Alibaba are fast emerging as fintech players worth noticing. What future do you see for Chinese fintech industry?

China’s internet giants are increasingly looking at fintech as it is a complementary sector that helps create a tighter online ecosystem for their customers. They are mostly focused on personal banking and payments solutions, which means traditional banks need to concentrate on evolving their own digital and online presence.

Competition is fierce as efficient and effective solutions are quickly rolled out to consumers but this level of intensity means the fintech industry in China looks to be on its way to be very competitive on the world stage.

As the fastest growing region, do you see Asia emerging as a digital champion anytime soon. If yes, what will help to bring it and where are the major challenges?

Emerging Asian markets are unencumbered by legacy technology and can leapfrog the developed markets by going ‘outside-in’ and focusing on a digital-first strategy. Our work at AYA Bank is a strong example of this.

Many countries in Asia are seeing exponential growth in the number of Internet and mobile device users – this has a direct correlation to the boom in digital or online banking, as well as other services being carried out online. Digital platforms mean that rural populations now have easy access to services previously unavailable to them, but the challenge is always how to ensure these platforms are safe and secure as cyber criminals get more sophisticated.

Now that you have created the world’s third largest fintech, are we going to see bolt-on acquisitions coming up in future. If yes, what would be a worthy candidate that prompts Finastra to make an acquisition and possibly what region could it be ?

Our focus is integration for now, but we have big ambitions for the business – we have a broad portfolio and are building a robust operating platform. We have more than 4,000 engineers and will continue to drive innovation both organically and inorganically where it makes sense.

Also Read:

Singapore: MAS to streamline regulations to spur Fintech innovation

Fintech turns hottest global bet with VC deployment doubling to $13.8b in 2015

State Bank of India floats $30m fund to support fintech startups

India Digest: ISME lauches fintech accelerator; Keiretsu Forum plans Delhi chapter

Fintech startup LoanTap raises $4m from Kae Capital, India Quotient, others

Beijing and Shenzhen drive Chinese fintech: Ning Tang, Creditease

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.