New fintech startups challenge Asian private bankers

UBS employees demonstrate how their eye movements are being tracked to provide feedback on the interface design of a banking application on a tablet computer at their innovation center Evolve in Singapore March 17, 2016. REUTERS/Edgar Su

Scanning a bank statement into a computer may not sound particularly high-tech, but it’s unsettling some of Asia’s private bankers.

By aggregating all the monthly statements mailed to high net worth individuals on the multiple accounts they hold at different institutions, Singapore start-up Mesitis offers clients a single window on their holdings.

“There’s a need for this,” says Pooja Gurbani, a Singaporean in her 30s who handles tens of millions of dollars of family money. “It makes us see more, it makes us more intelligent investors.”

With 4.7 million high net worth individuals – typically those with $1 million in liquid financial assets – Asia-Pacific is the largest and fastest growing wealth region, according to Cap Gemini and RBC.

But its private banking industry is only slowly waking up to the demands of a new, tech-savvy generation of wealthy clients and family offices, creating opportunities for financial technology, or fintech, start-ups.

Gurbani said she was so impressed with the Mesitis service that she ditched her private banker and even invested in the firm, one of a handful of start-ups across Asia looking to disrupt the traditional wealth management business.

For sure, sending statements to a third party and viewing holdings online won’t appeal to everyone, especially ultra high net worth individuals – those with at least $30 million of investable assets – and Mesitis says it is not regulated.

DIGITAL INTEGRATION

Feeding paper statements into a scanner may seem low-tech, but it gets around the lack of application programming interfaces (APIs) that many banks and financial institutions in the United States offer to allow third-party access to data.

That level of digital integration hasn’t taken off in Asia, prompting regulators such as the Monetary Authority of Singapore (MAS) to prod banks to do more.

“You don’t really have a choice because we’re already here,” Mesitis’ co-founder and CEO Tanmai Sharma told a recent banking event hosted by the MAS. “This is do-able and absurdly easy.”

Sharma’s company is now running trials at three private banks to integrate its software into their systems, but he says most of his firm’s business is directly with banks’ clients.

Private banks are cautiously taking note. Clients in Asia are digitally tuned-in and the region’s billionaire wealth will overtake that of the U.S. within a decade, a UBS study predicts.

UBS, the world’s biggest wealth manager, is evaluating Mesitis’ Canopy service, Ketan Samani, chief digital officer at UBS Wealth Management APAC, told Reuters.

Indeed, UBS and others such as Standard Chartered are building their own fintech teams. Inside a colonial-era building that once served as the British military headquarters in Singapore, UBS is lab-testing new technologies to serve its wealthy clients in Asia. Credit Suisse has a mobile app tailored for its Asia-Pacific private banking clients.

Samani sees the main threat from so-called fintech disrupters in payments, lending and credit cards. “All those are under attack now. Non-traditional players have come in and the barriers have lowered to some degree,” he said.

But UBS and other private banks hope their core advisory business – built around face-to-face meetings – will escape the onslaught.

“We are moving towards being paid for advice, with new products coming in regardless of the number of transactions the clients are making and so on,” said Geoffroy De Ridder, operating head for UBS Wealth Management in Asia Pacific.

CHIPPING AWAY

Offering advice may not, however, be as safe as it looks.

So-called ‘robo-advisers’ automate wealth advisory roles, calling into question the value of traditional banker/client meetings, and potentially threatening an important source of bank income.

Some Asian bankers are dismissive. “They’re kind of just algorithms in the sky, they’re pretty dumb,” said Neal Cross, chief innovation officer for DBS, a Singapore bank which spends close to $700 million a year on technology. He was speaking in December.

Mesitis’ Sharma, a former managing director at Deutsche Bank, believes the opposite. He says start-ups will chip away at both businesses by aggregating customers’ data and offering smarter insights on their investments.

“Robo is a logical offshoot of the aggregation business we do,” said Sharma. “We have the data anyway, so using that data to make efficient investment portfolios is a logical next step.”

Also read:

Fintech here to complement banks not compete, Indonesia startups say

Singapore’s NRF, MAS to set up Fintech Office to handhold startups

Global regulators edge closer to regulatory framework for fintech sector

Reuters

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.