[MONEY20/20] Open banking eases regulatory hurdles in fintech
[THE INVESTOR] SINGAPORE -- Small banks, not to mention early-stage startups, still have limited access to fintech innovation largely due to regulatory hurdles for decades.
One of the key topics at this week’s Money 20/20 Asia fintech trade show is also the so-called open banking that allows more flexibility when these small players in the market launch their own financial services.
It is long since an established bank has shared its license and regulatory expertise through an open platform based on application programming interface, or API, but related technologies are thriving recently along with the fever for fintech across industries.
JB Financial Group CFO Lee Jae-yong (left) speaks at a panel discussion on the sidelines of Money20/20 Asia in Singapore on March. 14.
“We do not look at banks as our enemy,” Joey Kim, CEO and founder of PeopleFund, a Seoul-based peer-to-peer lending startup, said of the firm’s partnership with Korean banking group JB Financial Group.
“As a small startup, we need to follow strict regulations. But established banks have resources that we can leverage on.”
PeopleFund that participated in JB's hackathon event in 2015 has drastically reduced regulatory costs by using the financial group’s lending and investment platform, while JB is also attracting new tech-savvy customers. PeopleFund’s accumulative loans have reached almost 200 billion won (US$188 million) now.
“The concept of modular banking allows us flexibility, especially when we go overseas,” Kim added.
Southeast Asia, a burgeoning fintech market, is also pinning high hopes on open banking as regulators in the region are introducing new rules to support the fintech industry.
“Open banking is the most ideal model in Indonesia where there are thousands of micro-financing firms,” said Roberto Akyuwen, senior executive analyst at the Financial Services Authority, or OJK, in Indonesia.
He said thousands of rural banks that are also micro-financing firms for the nation’s sprawling middle class are collaborating to optimize their financial platform to better serve the soaring demands, rather than competing individually against a big bank.
Kiriroth Sim, CEO of BanhJi, a Cambodia-based startup offering an accounting platform for smaller firms, also offered an upbeat outlook for the role of open banking in his country where the government is making a big push on fintech as the nation’s new growth engine business.
The industry experts were speaking during a panel discussion titled “Using open banking to launch into new markets and collaborate with startups” on March 14 on the sidelines of the Money 20/20 Asia event. JB Financial CFO and CSO Lee Jae-yong was the moderator.
By Lee Ji-yoon (firstname.lastname@example.org)