Taiger, a Singapore-based artificial intelligence service company, is completing its first financing round in order to grow its staff and open new offices.
Sinuhe Arroyo, CEO and founder, declined to give details about the size or terms of the fund raise, other than it was oversubscribed and involved funds in Singapore, including some backed by governments (although he didn’t say which governments).
This is the first time the company has sought external capital. The business began eight years ago in Austria and Spain, before Arroyo moved its headquarters to Singapore in 2015. It also has offices in San Francisco and Hong Kong, and at the beginning of 2017 opened in Brazil and Mexico. Arroyo is looking to add London and New York either late this year or in early 2018, to ensure the company is present in all major global financial centers. Other locations are being considered if demand warrants it.
Today the Singapore office has fewer than 40 people, but Arroyo told DigFin he expects the number there to be around 60 or 70 people by the end of the year. “Our main cost is people,” he said. “We need the money for human capital and for geographic expansion.”
The one big market Taiger has yet to enter is China, and Arroyo remains wary because he is skeptical the company can preserve its intellectual property there.
However, an individual who is a prominent backer of one of Taiger’s new fund shareholders is from China, and there have been discussions about the conditions required to take the service to the mainland. Arroyo says it is possible that with the assistance of a prominent backer from China, Taiger may be able to provide some of its services there. “But China is about potential; it is not a priority,” he said.
Taiger offers three services to large financial institutions and corporations, derived from knowledge representation and natural language processing (in other words, its software is good at reading and comprehending documents and other information). One is for human-to-machine conversation (chatbots), another is for searching for structured and unstructured data.
The third service – the one that is contributing the most now to the company’s growth – is an information extraction tool. Using a combination of A.I. and machine learning techniques (training a computer to become ever more proficient at a particular task), this extraction helps companies find, read, validate and store all kinds of information, notably legal and financial documents and records that are often written in very human language (such as a power of attorney, which can involve a variety of legal slang).
Arroyo claims the use of these services can help banks and insurers cut operation costs by 80% or more, be eliminating the need for paralegals and other paper-pushers. He says the details of how the system does this is a secret, but he sells Taiger on that 80% number.
According to the company’s website, clients today include AIA, Manulife and Santander.
E-money beating out plastic in Southeast Asia
S&P Global Market Intelligence reports over 10 billion electronic-money transactions in 2018.
Indonesia, Malaysia, the Philippines, Singapore and Thailand have attracted nonbanks to build regional electronic wallet platforms. According to the inaugural 2019 Southeast Asia E-Money Market Report released by S&P Global Market Intelligence, over 10 billion in aggregate e-money transactions occurred in these countries in 2018, with Singapore leading the region and accounting for 34% of total e-money transactions.
The popularity of nonbank-operated e-money products, such as electronic wallets, for small-value transactions is supporting the rise of ride-hailing and e-commerce companies as financial intermediaries across Southeast Asia.
Payments processed through platforms offered by ride-hailing companies Grab and Go-Jek; TrueMoney, a unit of e-commerce and fintech company Ascend Group; and AirPay, the financial services business of e-commerce and gaming company Sea Ltd. amounted to roughly US$30 billion in aggregate annualized transaction value in 2018, according to S&P GMI estimates.
Sampath Sharma Nariyanuri, fintech analyst at S&P GMI, said, “E-wallets aligned with high frequency and scalable use cases like ride-hailing and e-commerce are likely to grow and garner market share across the region. The volume of transactions processed through e-wallets is gaining steam. For example, we estimate that e-wallets’ share of total e-money volumes in Indonesia grew to 36% in 2018 from less than 10% in 2017.”
Non-banks will continue to register higher growth in regions with a larger percentage of unbanked population and greater fragmentation in payments, according to the report. The growing mismatch between the high availability of smartphones and low banking penetration in cash economies such as Indonesia and the Philippines creates a strong potential for e-wallet uptake.
In less-cash economies such as Singapore, Thailand and Malaysia, banks are reasserting dominance through implementing interoperable systems that enable instant small-value transfers between bank accounts using mobile phones.
Cloud, A.I. and new possibilities for finance
Incumbents are starting to get the hang of this fintech thing.
For many financial institutions – the incumbents – the tech wave has often seemed overwhelming. And the pace of breadth of change is unprecedented. But banks, asset managers, brokers and, insurance companies are increasingly finding opportunities.
New business models are creating new opportunities to massively expand the pie, with cloud computing among the most vital of these foundational technologies. Here is a sample of some of the most interesting updates DigFin caught during Day Three at the Singapore Fintech Festival.
Wholesale markets going digital
Kate Birchall, head of Asia Pacific at clearinghouse LCH, says technology is now taking over from regulation as the main driver of change in interbank markets for derivatives and finance. Post-2008 financial crisis, banks have been consumed with new regulation, but now they are implementing new technology to comply more efficiently. “Banks keep cutting costs in processing and in reconciling trades. Tech is now at the forefront of trading at the institutional level much more cost-effectively.”
Kelvin Tan, head of innovation for treasury and markets at DBS Bank, said, “One of the least value-added activities banks do today is reconciliation.” Right now the focus is on deploying artificial intelligence to improve the situation. Over the longer term, institutions may adopt blockchain to eliminate reconciliation altogether, or at least standardize processes to make them manageable.
More technology companies such as SmartStream Technologies are providing services to help financial institutions grapple with the challenges of reconciliation.
SmartStream offers its TLM OnDemand, the market-leading functionality of its TLM solutions through secure, resilient, cost-effective and fully managed web-based services. “TLM allows middle and back offices to process transactions,” said Haytham Kaddoura, SmartStream’s CEO. “Clients gain a lower total cost of ownership for their operations, while at the same time improving risk control throughout the transaction lifecycle.”
BNP taps IBM for hybrid cloud
Bernard Gavgani, group chief information officer at BNP Paribas, says the bank is working with IBM to find a path to migrate what it can to the could while also continuing its legacy systems work. “My challenge is running legacy system with cloud, securely,” he said.
Migrating to cloud is not as cheap as advertized for banks that need to keep using their mainframe servers; instead it’s an added cost. And having some data computed on prem and other data with a vendor can leave banks exposed to attack, as happened earlier this year to Capital One. So in summer 2020, BNP Paribas will go live with part of its data on IBM’s public cloud but with the servers on the bank’s premises. So the bank benefits from having a big tech vendor, as it continuously upgrades its cloud security and service, while also keeping client data protected internally.
Mark Johnston, head of security and networking specialists in APAC at Google Cloud, says financial institutions are becoming savvier users. “The industry is moving beyond cloud as ‘infrastructure as a service’ to a ‘platform as a service’,” he said.
For example, one institution is using Google Cloud computing to reduce calculating daily liquidity positions from eight hours to 30 minutes. If more banks follow suit, it creates a seachange in how they can manage their liquidity risk as well as report it to regulators, especially once they add data analytics on top.
Alan Jones, business solutions director at SmartStream Technologies, says as banks continue to embrace cloud computing, it brings down the costs of difficult manual work such as corporate actions processing.
Standards, standards, standards
As banks and fintechs innovate, they are creating new complexities. Competition is good for the end user but it also creates so many platforms, protocols and networks that innovation can be at risk if the industry doesn’t develop standards for interoperability and benchmarking.
“Collaboration requires open, interoperable standards, with so many new players in the payments industry,” said Chris Clark, regional president at Visa.
Johan Toll, head of digital assets at Nasdaq, noted his company delivers its technology to over a hundred markets. “How to increase interoperability among them?” he asked. Two solutions: moving more services and data into the cloud, and using A.I. to improve how firms view and analyze that data.
David Hudson, J.P Morgan’s global co-head of digital and platform strategies, said adopting such technologies aren’t really about cost savings, but to enable big institutions to be agile and to drive standardization. “There’s always a ‘new something’ so our ability to move fast with the times is essential,” he said.
MAS works with industry for AI rules
Monetary Authority of Singapore is developing a framework with financial institutions for promoting responsible adoption of artificial intelligence and data analytics.
The framework is called Veritas, and will let banks, asset managers, insurers and others benchmark their AI and data solutions against MAS’s principles of fairness, ethics, accountability, and transparency. That in turn will drive trust in big data and A.I.-driven solutions.
Digital payments to the fore in Singapore
Google Pay, NETS, SmartStream and MasterCard announce new efforts at Singapore Fintech Festival.
One of the biggest themes at the Singapore Fintech Festival is digital payments. It’s a field full of innovation from fintechs, Big Tech, and lenders. DigFin presents some of the biggest announcements.
ATM for rides
NETS Group runs Singapore’s payment rails. The company has a track record of innovating: it was the first in Asia to adopt an electronic debit network, even while global payment companies like Visa and Mastercard still relied on franking. (Franking is referring to postal stamps to confirm a payment was sent by mail.) Other “firsts” followed.
Today the company is now helping Singaporeans use their bank debit and credit cards to pay for transportation, says Jeffrey Goh, group CEO. It has just introduced NetsClick, the first ATM card tokenized for taxi rides, with the user’s bank account debited for the journey. And it just followed this up with allowing bank customers to use contactless ATM cards to pay for rides on the city’s MRT subway system.
OCBC partners with Google
OCBC Bank has entered a partnership with Google to reintroduce the Google Pay app to Singapore. Starting in January 2020, OCBC customers will be able to make C2C or C2B transfers between mobile phones using Google Pay.
Bank customers won’t need an electronic wallet to make mobile payments, says Ching Wei Hong, the bank’s COO. The bank is using the partnership to boost users of Singapore’s new PayNow digital payments network.
Users of Google Pay can also earn rewards when they use it for transferring money or making payments, which go directly to the user’s OCBC bank account.
Google Pay offers a similar feature in India, where it gained rapid adoption on the back of India’s interbank payments system, United Payments Interface (UPI). PayNow, which went live in Singapore in 2017, is a similar peer-to-peer transfer service. The Association of Banks in Singapore estimates the first half of 2019 saw 28 million PayNow transactions worth S$4.6 billion. With Google Pay now supporting PayNow-based payments, the company expects volumes to grow rapidly.
Adding A.I. to payments
SmartStream Technologies is developing artificial intelligence solutions to improve banks’ digital payments capabilities, says Andreas Burner, chief innovation officer.
The technology company is applying machine learning and neural networks to identifying patterns in the data that banks already possess. Banks hold the lion’s share of customer data, and SmartStream is helping them access it and make sense of it.
Digital payments solutions enable acquirers, card networks, issuers, gateways, ISOs and others to get a holistic view of their payments. “Our innovation lab is working with banks to understand how to apply machine-learning tools to payments innovations,” Burner said. “Volume, velocity and variation in digital payments is changing at an unprecedented rate.”
The company has established a dedicated practice to collaborate with all participants in a client’s digital payments world, creating innovation solutions to bridge the gaps in the areas that matter to end users – and to build models that can handle exceptions workflows that kick in when a payment fails or doesn’t go as planned.
All aboard the express
Mastercard has launched Fintech Express, a program to work with third-party fintechs to support them as they help grow the digital payments world, says Rama Sridhar, executive vice president for regional digital partnerships and new payment flows. Mastercard’s first partner is Rapyd, a fintech that uses APIs to provide customized payment solutions to regional and global e-commerce companies, among other corporations.
The partnership gives Rapyd access to Mastercard’s product, partnerships, licensing and legal teams, and helps Mastercard service Rapyd’s corporate clientele. This gives the fintech fast licensing as a card issuer, integration into the Mastercard network, and advice. Rapyd will be able to quickly issue cards for its corporate clients in Asia Pacific. Mastercard hopes its Fintech Express platform will attract more payment-oriented fintechs.