10 August 18 The Business Times by JACQUELYN CHEOK
A HUGE 1.3 billion population, strong government support for going cashless, and an "existential crisis" faced by traditional financial institutions (FIs), are among the factors that make India a promising land for Singapore fintech startups, The Business Times has learnt.
As many as five Singapore fintech startups have set up shop in India or sold their solutions to companies in India in the last five years, according to Enterprise Singapore, the government agency championing enterprise development and internationalisation.
Aaron Zhang, regional director for Mumbai at Enterprise Singapore, told BT in an interview: "With India's fintech sector at its nascent stage, we believe the market is still big enough for Singapore fintech startups to take a share of the pie."
Highlighting the word "still", Mr Zhang said that even as India-based startups enjoy home ground advantage in local expertise and knowledge, Singapore startups are credible and capable of delivering good service, having built up "good track records in various regions".
He said there is demand in India for fintech solutions in the areas of data security, cross-border transactions, automated branches and artificial intelligence. However, he urged Singapore startups to form partnerships with India companies that are looking to enhance their systems, rather than "attempt to manage end-consumers directly".
MatchMove - a Singaporeheadquartered startup that offers mobile wallet and payment card solutions - has for instance partnered several banks in India to roll out white label services. In November 2017, MatchMove announced a collaboration with Federal Bank, a private sector bank in India, to digitise payments for the bank's various enterprise clients.
Kumar Srinivasan, chief of Matchmove India, said clients such as Federal Bank would integrate MatchMove's payment solutions into their own platforms so as to have end-to-end control of the customer experience from shopping to payment. "While there are many third-party payment solutions out there, more businesses are interested in having their own branded payment solutions for customer data and loyalty."
Mr Srinivasan said MatchMove ventured into India over three years ago, attracted by the country's fast-growing consumer base and tech savviness. Since then, MatchMove India has grown from a one-man show to a team of 60, excluding "many more on an outsourced basis".
Meanwhile, Singapore digital security startup V-Key has partnered DBS India to secure digibank, an app that allows customers to open bank accounts or perform banking transactions entirely on their smartphones. Launched in 2016, digibank is said to be India's first mobile-only bank.
V-Key's VOS technology reportedly safeguards the digibank app from man-in-the-middle attacks and phishing, while its Smart Token OTP technology turns the customer's smartphone into a device for second-factor authentication (2FA), which is believed to make it harder for an attacker to impersonate a customer and access his accounts.
Vinod Shanmugam, director for regional sales at V-Key, told BT: "The Indian government, being pioneers of the digital economy, do realise the importance of having it secured. They actively look for solutions to strengthen their national systems against emerging cyber threats. They are also supportive of new ideas and innovation from Singapore."
Rajashree Nambiar, chief of non-banking financial services company Fullerton India, added that FIs in India have also been aggressively pushing for new avenues of business and growth, as well as ways to enhance customer service or automate processes "at the lowest possible operating overheads". To do that, more of them are partnering fintech startups, both local and global.
Mr Nambiar said: "Fintech startups, with their specialised solutions in their respective domains, have been successful in developing plug-and-play products which all FIs can leverage." He noted that the sudden spike in alliances between fintech startups and FIs is driven by an "existential crisis faced by traditional FIs" due to changes in the digital ecosystem and fierce competition.
Competition also exists among fintech startups in India, said MatchMove's Mr Srinivasan. "The fight for talent is a top issue. However, early entry has allowed us to hone our recruitment strategy over time and we now have a competitive advantage, as local candidates are looking for opportunities with global companies that have a local presence like ours."
He added that traversing India's diverse and complex corporate landscape is a difficult task for startups in general. "A local once told us that India is not one country but 99 countries all rolled into one. The number of languages, dialects, cuisines and cultures makes India fascinating as well as complicated."
A vast population of the underbanked or unbanked is a major reason behind India's fintech opportunity. Enterprise Singapore's Mr Zhang said: "The lack of credit and debit card adoption means that the underbanked or unbanked consumers are more inclined to apply for an e-wallet or leapfrog to the newest fintech innovations as an alternative payment mode."
India's government has also been "pivotal" in fostering fintech adoption, he said. It developed the Unified Payments Interface that allows for the seamless transfer of funds using mobile devices, and launched Jan Dhan Yojana, a financial inclusion programme aimed at bringing everyone into the banking system and that ensures every household has a bank account.
Mr Zhang added that India is seeing a rapid penetration of smartphones, with the rate expected to double from 18 per cent in 2015 to 36 per cent by 2018; India is also ranked 14th globally with a 4G penetration rate of 86 per cent in 2018.
Fullerton India's Mr Nambiar said: "There is a lot of scope for mature and developed fintech startups to invest in India. While most fintech startups in India are under three years old, the ones with sustainable business models have already taken off. Our advice would be to enter the Indian market with innovative solutions backed by a sustainable business model."