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IC Speaks Mins Read

The Revolutionary Road: On What Can Fuel Fintech In the Next Decade


Earlier this year, The Economist came up with an interesting article on ‘The Tech Raid on Banking’. For almost a month since, the article and the jubilant reactions to it were all I saw on my LinkedIn feed.

Two months ago, the MAS in Singapore announced its new digital banking regulations. Before that, Facebook told us it was getting into the crypto game with Libra. Even though PayPal has now announced it is not going to be an investor anymore, Facebook is still on its way to lib(e)ra-ting the financial world with its new venture.


In a world where 71% of the new gen prefers visiting the dentist than walking into a bank, the potential to disrupt is huge. 

Peer-to-peer lending; banking apps like Venmo, Revolut, and N26 are all the gifts of the marriage between technology and finance. MPesa in Kenya is the perfect example of a fintech product that has become a necessity. In India, we have names like Kiva, Milaap, and Rangde that have made social causes ‘cool’. The startup that I am part of, is also possible because of the needs of a generation fed up with endless paperwork, high fees on investment products, lack of inclusiveness and choice, and the ubiquitous red tape. As a Brandwatch social outlook survey shows us, a huge chunk of online and social conversations around the financial industry are in the red due to these very reasons.


Source: Brandwatch


There are some who have decided to alter the status quo though. In the APAC region, which Kristal calls its home ground, DBS Bank is one of the names that has effortlessly made the transition from old-world banking to the virtual landscape. Wallets and digital payment brands like Alipay, GrabPay, and DBS’ own Paylah! have made transactional systems self-serving so that they cater to the DIY generation which loves to have control over its payments. On the global front, companies like TransferWise have upped the level of transparency and real-time tracking users can expect from international payments and effectively cut through the clutter.


These are great names. Does this mean the revolution that we have all been waiting for is finally here?

Despite more than 2,500 fintech startups in Asia, and a combined array of 4,000 brands in the US and UK, the high rises on Wall Street still stand tall. Mayhaps on slightly shakier ground than before, but they aren’t coming down anytime soon.

Is the fintech revolution then more hype than hope? Like most things in our world, the answer lies in a grey zone. As many have rightly said, fintech has not yet had its ‘Uber moment’. I don’t refer to the moment Uber went bust on the IPO floor, but rather when it changed the way the taxi industry operated back in 2009.

For fintechs, this widespread disruption has been delayed in large part due to what I call a ‘process backlog’. There is a cycle which every fintech company goes through; whether you are giving out loans, or helping people invest better. The process goes something like this:

1. Create a user base which you can use to understand your TG’s financial patterns and run analyses on.

2. When you have knowledge of your customer’s needs, you create financial planning products which meet this exact demand.

3. Now, you add a layer of personalisation to your products. In the case of Kristal, we also have our advisory to think of.

4. You create a system for execution and on-going management.


Let’s take the first step in the process: gaining a large user base to understand consumer patterns and offer personalised services.

For any upcoming fintech startup, a data set accurate enough to represent market/consumer views is the first requirement. This is what makes our AI and ML systems ‘intelligent’.

There are two key differentiators that fintech disruption hinges on:

  • improved user experience (UX), and
  • seamless access to better products/solutions.

Improving UX needs access to user data and behaviour, but the data set does not necessarily have to be large. On the other hand, creating new and better solutions is a byproduct of data-driven models. A large user base offers more data points which can be used to curate better and more personalised offerings. With a bigger data set, you can run better simulation models and train your algorithm to make better recommendations.

As you can see from the image below, 56% of customers in a survey said they would trust their financial provider based on treatment alone; hence proving just how important personalised customer experience is. Put in other words, having access to the right data is 56% of the game won.


Source: EY, Global Consumer Survey 2014


When we started Kristal.AI, our data set included friends and family who were happy to help us out. Over the years, we have built a customer base that is 10,000+ strong and our algorithm has gained more grey cells. But the process has been slow and the learning curve is huge. This is where banks come into play.

For a normal bank, investments are a small part of the offerings they give their clients. However, the amount of data they have access to in terms of consumer spending habits, purchasing power, past financial choices and goals, is huge. In an ideal world, investment startups would have ready access to this data. But IP in the finance world is still held behind bureaucratic rigmarole; creating the process backlog I talked about earlier. Simplifying a process as basic as user KYC requires startups jumping through multiple hoops and regulatory sinkholes; which many are not even aware of.

I know from personal experience that bankers are wary of startups and have strict protocols to vet Risk vs. Returns on any partnership. Banks always aim to onboard new bands with a proven track record but when you are a fledgling company, how do you prove you are worthy? And if you do not have access to credible consumer data, how does your company then train its algorithm to become better? Classic Catch 22.

While tech startups try to bring innovation to the financial domain, roadblocks like lack of access to credible data, or having a ‘proven’ track record only reduce the speed and extent of innovations. An idea that is not executed well is, after all, just an idea.


So, what does fintech really need to grow?

Fintechs are bridging the demand-supply gap and bringing more inclusion in the financial world than what customers have historically been provided. Since I have already asked the question about what would help fintechs do better things faster, let me try and provide an answer.

Here’s a three-pronged approach which I believe can help fintechs break barriers:


1. Open APIs for reliable data sharing

As I pointed out earlier, data is the backbone of every tech-based investment startup. When you rely on user-generated data only, you have a very slow process of data aggregation and evolution. Unverified data also has its own problems – and many startups have no way of vetting a user’s financial transaction data without bank or government assistance.

The concept of ‘open banking’ does exist in certain spaces – mainly Europe and UK – and we are waiting to see the API-enabled market experiments our European fintech cousins come up with. The account aggregator system ‘Sahmati’ which is currently WIP in India is also a good example of the kind of safe processes we need to share user data with proper consent and privacy. More of such initiatives would help fintechs gather reliable data to finesse their risk-profiling and recommendation models.


2. Lower costs of services

Startups can only provide to their customers what the banks offer them in terms of costs. There’s only so much that you can subsidise with VC money.

At Kristal, for instance, we wanted to make international trading extremely affordable. We knew our clients would be happy making payments in SGD, but they would find USD payments extremely expensive due to high transaction costs. So, we had to go back to our banking partner and find a way wherein we could offer our products (especially the Kristal Investment Account which is free of cost for investments upto USD 50,000) without asking our customers to pay high transaction charges.

There have also been instances where we have had to discontinue certain ETFs on our free Kristal account because the transaction costs just did not compute favorably. If banks are ready to lower their service charges then startups, too, would be better positioned to improve exposure for their clientele.


3. A mindset change in the banking sector from ‘Competitor’ to ‘ Infrastructure Provider’

Source: EY Banking Barometer 2019

Research shows that world over, consumers are losing faith in the traditional banking system.

There’s a palpable aura of distrust, and in my opinion there’s a very easy way for global leaders to give their business a facelift – by partnering with upcoming startups to revamp banking services and bring back transparency and trust in the process.

An EY report states that about 66% bankers feel to some degree that fintech pose a ‘threat’ to their market position.

If bankers could only move away from the mindset of ‘competition’ and look at upcoming startups as collaborators, a lot could be achieved in a smaller amount of time.



Startups are nimble by nature, allowing us to move with changing customer needs, and build on-the-go; something a vast enterprise may not always be able to. Banks have the data, while we have the technological wherewithal.

The end goal for both is the same: create a financial system that is robust, foolproof, trustworthy, and which, above all, is not classist. And as we move into a new decade, it is important not to lose sight of this.

Change never occurs in silos. 2008 gave us the era of robo advisors. In the coming years, as digital investments grow bigger, the call for financial inclusion is only going to get stronger. And to answer it, both banks and startups have to work together – if not as comrades, then at least as symbiotes working harmoniously to improve the financial ecosystem they coexist in.

And then, maybe we can go all Che Guevara and talk revolution. 




The materials and data contained herein are for information only and shall in no event be construed as an offer to purchase or sell or the solicitation of an offer to purchase or sell any securities in any jurisdiction. Kristal Advisors does not make any representation, undertaking, warranty or guarantee as to the update, completeness, correctness, reliability or accuracy of the materials and data herein. All opinions, forecasts or estimation expressed herein are subject to change without prior notice. Kristal Advisors and its affiliates accept no liability or responsibility whatsoever for any direct or consequential loss and/or damages arising out of or in relation to any use of opinions, forecasts, materials and data contained herein or otherwise arising in connection therewith.


This blog article has not been reviewed by the MAS. It is prepared solely for information purposes and does not constitute an offer or solicitation for the purchase or sale of units in the funds. This does not constitute any form of investment advice and Kristal Advisors (SG) Pte Ltd does not take into account your personal investment objectives, specific investment goals, specific needs, or financial situation and makes no representation and assumes no liability to the accuracy or completeness of the information provided here. The information and publications are not intended to be and do not constitute financial advice, investment advice, trading advice or any other advice or recommendation of any sort offered or endorsed by Kristal Advisors (SG) Pte Ltd.

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