Uber. Airbnb. Facebook.
They've not just disrupted so much as reinvented the entire transportation, travel and media ecosystems respectively.
The world of finance is ripe, ready and it's next.
Already, fintech (financial technology) trends like blockchain, mobile wallets and robo advisers are no longer just buzzwords, but very soon will become fundamental technologies that will be used to manage the flow of money and assets.
In the first part of our series on Digital Trends that will impact jobs of the future, we focus on the rise of fintech.
Later this month, and under the stewardship of Singapore's central bank, Singapore will host the inaugural, week-long Singapore Fintech Festival, a global gathering of financial start-ups, investors, financial institutions and researchers. Further afield in Asia, Hong Kong, China and India are also playing their part in building the foundation of a digital cashless economy.
Here are the four fintech trends across Asia that will underpin the beginnings of this cashless economy — and the jobs that go with it.
Imagine an online digital ledger where users make and verify transactions instantly on a network without a central authority. This goes against the current mode of trade financing which relies on a cumbersome letters-of-credit system guaranteed by banks. This distributed database maintains a continuously-growing list of data records secure from tampering and revision.
In Singapore, local start-up Attores, is working on a blockchain system that could revolutionise trade finance, which is still paper-intensive. For example, as goods move from overseas exporter to port to importer, each party has to transfer vast amounts of paper and information at each stage. This includes financing and insurance documents, as well as cargo information itself. By moving to an impartial blockchain system, any party who needs access to the data can get it online, when and wherever they need it.
Earlier this year, IBM also opened its first Centre for Blockchain Innovation in Singapore with the the aim bring together numerous technology pilots within the trade and finance industries.
With blockchain technology, demand for relationship managers, wealth management advisers, finance and stock analysts will gradually transition to a greater demand for compliance, regulatory and finance policy specialists as well as accounting and tax professionals.
2) Robo advisers
Robo advisers are a type of automated investment service that manage stocks and bonds for you, at a fraction of the price that wealth or relationship managers typically charge. Computer software recommends investments based on your risk profile, goals and income level. It then is able to continually rebalance your investment portfolio for a fraction of the fee charged by banks. While a relationship manager at a private bank typically spends US$3,000 to US$7,000 on a variety of activities from wining and dining to win over a new customer, a robo adviser offers the same service at a fraction of the cost, can work for you 24/7 regardless of time zone and is free of emotional or irrational bias.
Two start-ups in Hong Kong demonstrate this “democratisation” of wealth management. 8 securities provides users with a mobile app (8Now!) that lets them trade over 15,000 US and HK stocks and index funds for no commission. Based in Hong Kong, its target group is hyper-connected millennials. Meanwhile, Quantifeed is a B2B fintech company targeted at financial institutions in Asia that uses investment models and cloud-hosted technology to deliver affordable online wealth management services that require no minimum wealth amounts.
Eddie Cheng, senior consultant (Financial Services), Michael Page Hong Kong, said, “Many Hong Kong banks are setting up innovation labs and fintech incubators because fintech is such a sexy space to be in. But in fact, insurance companies are a lot more innovative because they have no legacy system to worry about. A senior leader with a global insurance company even told me blockchain is the biggest threat to the insurance industry because an online ledger platform will make everything transparent and remove the need for intermediaries, overheads and commissions.”
“The biggest challenge right now to support HK growth and challenge Shenzhen and Singapore as a fintech hub is the shortage of talent. Software engineers, mobile front and back-end developers, behavioural researchers and even cyber security professionals are heavily in demand. Most of the people being recruited into the fintech space are actually pulled from the retail, logistics and other commercial companies,” he added.
3) Mobile wallets
Banking is already shifting from online banking to mobile banking. And here, China is leading the way in the mobile wallet space. While Apple, Samsung and Huawei have also launched mobile wallet services this year and are quickly building their ecosystem of partnerships with banks and vendors, two players dominate now – AliBaba's AliPay and TenCent's WeChat.
What currently underpins the innovation and disruption in this space is the competition for talent in China.
“Between the two giants, AliPay has got more momentum as they evolve their mobile payment service into a full-service financial investment platform where consumers can invest in a range of products. WeChat, in comparison, is the dominant chat app in China but is still more of a social networking platform,” said Shao Yang, manager (Technology), Michael Page China.
“For candidates, software, front and back-end mobile app developers, are in very high demand because traditional financial institutions and banks are starting to develop open platforms and investing more in digital. It’s a war for talent,” he added.
“Cloud/big data scientists and user interface/experience designers are also in very high demand. I know of one candidate who turned down a chance to work for TenCent to develop the WeChat application for Android and went to one of the traditional Chinese banks because they were more stable, offered better work-life balance and paid a very competitive salary.”
4) Peer-to-peer lending
Peer-to-peer lending, also known as P2P lending, matches lenders directly with borrowers. Since P2P lending companies offering these services operate entirely online, they can run with lower overheads and provide the service more cheaply than traditional financial institutions.
India's premier P2P e-lending platform, Lendbox, cuts down interest rates for borrowers and increases investor's yields by eliminating mediators like commercial banks and depository institutions. Buddy, a Bengaluru-based student microlending startup, enables college students to buy e-commerce products via short- and long-term payment plans, which they otherwise would be unable to purchase.
Nilay Khandelwal, regional director, Michael Page Singapore, said, "For smaller lending operations or start-ups in India, it's easier to get a licence and government has been more open to giving them to local players vs foreigners. These start-ups target the more rural areas where penetration of full-fledged banks is much lower, and focus on micro-lending to small businesses as their main target clients. In terms of hiring, we work with fintech start-ups who engage us for senior level roles. The startups are targeting maybe a No. 2 or 3 in the bigger, multinational banks to lead the start-up as they have a good understanding of the loan, credit and payment system as well as regulatory frameworks. Other skills in demand are data scientists who worked in data labs for banks and credit card companies and who have a sound understanding of analytics and consumer behaviour.”
But Khandelwal also had some advice for professionals already working or thinking of joining the fintech space.
“The last thing you want to do is rush into the fintech space just because it's the need of the hour. Step back and assess what areas you want to go into. A lot of banks getting into fintech aggressively, and we have large symposiums being organised by the Singapore government, a lot of these are being done to knowledge share. Learn from the experience of others, good and bad, before you get into it... it's very easy to lose the plot. Once you decide the space you want to get into, have the right strategy which can be executed, hire the right talent instead of a lot of talent, and then know how to execute on that strategy.”
More on our Digital Series: Part 2: 6 trends that will change the future of retail
Four fintech trends across Asia are changing the face of recruitment. Do you have the right job and skills required to go with this new digital and cashless society?