COPENHAGEN, Denmark -- Startups are likely to pass banks by and lead the way on innovation in Asia—and that could be good news for corporate treasurers.
That was the opinion of one panelist during a session on Asia at the Money20/20 Europe conference Wednesday. During the discussion, experts weighed in on the potential for fintech startups in the region.
Satyen Kothari, CEO and founder of Mumbai-based startup Cube, said that he sees banks falling back on their core treasury management business and leaving anything beyond that to fintech startups. “For example, in India, there’s a perfect storm brewing,” he said. “The political establishment is passing bills to remove all kinds of service fees and taxes on digital payments. The regulator, the Reserve Bank of India (RBI), is doing incredible work to force banks to work together and open up protocols that private companies can use to build layers on top of core cash management. But you can very rarely move up the stack, and the banks are being forced to stay down in that stack, while the innovators are coming out on top and creating use cases. It’s going to position people to work together—forcibly.”
Kothari added that banks will have to play ball in this scenario, because those that don’t are going to be crushed by smart entrepreneurs that are focused on new business models. “A company that comes in and says, ‘This is all I do, and I do it really well’—are you going to go with them, or are you going to call your bank and sign 20 papers to do the same thing?” he asked.
Of course, if there’s one place to fall back on treasury management, it’s Asia. As many companies expand in into the region, many of them have opted to establish corporate treasury centers (CTCs) there, so much so that Singapore and now Hong Kong are seen as treasury hubs . This mass relocation of treasury departments is driven largely by tax incentive schemes; Singapore has been a very treasury friendly environment for some time, while recent amendments in Hong Kong have made it an incredibly attractive destination for CTCs.
Raof Latiff, regional head of product management, Asia-Pacific, global payments and cash management, HSBC, told AFP that companies who are seeking to centralize treasury operations in Hong Kong and elsewhere in Asia really need to think about who their counterparties are, which part of the region their business is really concentrated in, and what currencies they are dealing with.
“What you want to do is move to a location where you are closer to your clients and the currency that your are working with is a lot more fungible and a little less regulated. That will help you at least get the basics sorted around where your location is going to be—whether you want to be in Singapore, whether you want to be in Hong Kong, Japan, China or Shanghai. That’s a decision you make based on who you’re dealing with,” he said.As for banks ceding the payments innovation race in Asia to fintech startups and focusing on treasury management, Latiff wasn’t so sure. “It will be a bit of both,” he said. “Treasury and cash management will always be there; it’s what we do best. But we want to be closer and closer to our clients; we don’t want to just leave it to other channels to dictate how the business is. So in my view, I think we’ll do both. I think we’ll have a broader role to play—not just the treasury piece.