Over the past few years, the innovation and new financial service have made our life easier because they are user friendly and enhance the experience of users or business owners. If looking at the big picture, we will see that fintech helps solve long overlooked structural issue, which is ‘social inequality’.  

The survey in U.S.A. by FDIC on the access to financial service at household level  in 2015 revealed that more than nine million populations do not have bank account while 24.5 million people cannot access the financial service at household level. It is not surprising why fintech is widely supported. 

One of fintech markets that is receiving special attention is ASEAN countries. In the previous year, the investment ratio increased to 29 percent, from 55 deals in 2015 to 71, worth totally 158 dollars. MoMo mobile payment service and e-Wallet of M_Services Co., Ltd. from Vietnam raised the highest fund in ASEAN, which was around 28 million dollars

Not every fintech can win the investors’ heart in both short and long term. So, what opportunity Thai fintech must capture? THE STANDARD invited Polapat ‘Paul’ Arkarapreedee, Managing Director, Corporate Venture Capital, Digital Venture Co., Ltd., which is a subsidiary of Siam Commercial Bank (SCB) dedicated to develop fintech, to share his idea about the investment direction and up-and-coming fintech trends in 2018. 

What is your outlook on ecology of startups and fintech in Thailand? 

I think Thai startup ecology is still in an early stage. Despite rapid growth, it starts from a handful of people. We offer projects that promote innovation in business sector, Accelerator, and Corporate Venture Capital (CVC), which support the ecology growth. 

Besides being the source of investment funds, Thai business is the center of talented minds with management skill and network. This is considered very valuable for new startups that offer outstanding innovation. So, what will large corporates get from this? The companies can build the brand and gain confidence among customers. At the same time, the startups have a chance to develop new products and services while working with other startups and business section. This is aligned with Thailand 4.0 policy of the government. 

In the past few years, the commercial sector and fintech could close many large deals in Thailand. However, to achieve the national reform, which will turn the country into a digital society and improve the people’s quality of life, we need to drive the innovation in all industries altogether such as education, agriculture, medical and manufacturing sector, tourism, and others.

What is the trend of fintech investment? Which area should we pay special attention to? 

Thai fintech tends to slow down a bit and is still behind other countries in the same region, including global trend. I think the eye-catching trend is startups that make use of AI and Machine Learning. Blockchain is another interesting technology. For example, ICOs (Initial Coin Offering) and different types of fundraising started in 2013 but became a bit hit nine months ago. Since the beginning of 2017, more than 1.5 billion dollars have been raised via ICOs.

We hope to see more B2B fintech, especially those providing back-end infrastructure for the banks. That is because B2C often consider the consumer behavior and consumer perspective toward financial aspect in the domestic market. It means the total market size is limited by the population in that market, except the startups find the way to serve the consumer needs in other markets themselves.   

However, B2B fintech may have a chance to expand the market to regional or global level and finally reach the unicorn level. The banks need to adjust the way they work to be aligned with this as well. 

Which technology will become the game changer in financial and banking business?

AI is the key technology that will disrupt all aspects of financial service, including other industries like e-commerce, healthcare, and education. Someone in technology sector said that AI caused the new industrial revolution after the Second Industrial Revolution and Internet revolution. Many claimed that AI was the latest source of electricity power that would drive forward all industries.

In the future, the banks must adapt themselves from ‘wealth manager who takes care of the client’s assets’ to ‘data manager’. At this point, fintech will serve their needs and use AI as the basic technology to support the bank operations in data management, information security, and income generation by using that data. 

Fintech will create a channel for the banks to access and closely engage with the customers. The products will be recommended after AI analyzed the customer profile. AI will be applied in data security and authentication protocol to ensure the efficient financial transactions. 

In the era full of startups, which factors do you use to select them? 

We will focus on the result from technological knowledge sharing between us and funds or startups we invest in.

Our job is to look around the world for technologies and business models that is aligned with and important to the future financial service. To successfully drive SCB through the technological transition period, we will invest in fintech startups and others that can scale up our business and our corporate customers’.

Digital Ventures tries to study and forecast how differently people will live in the future in terms of living, working, playing, and learning to make sure that the financial transactions and saving plan are in line with the changing future. 

We study and predict new technologies that will take place in the future. Then, we search for the startups that develop those technologies to take us to the future. For example, we invest in Ripple, leading U.S. startup in Blockchain technology, and PulseiD, Hong Kong company providing an identity platform that uses geolocation data. They potentially make an impact on financial industry. Moreover, we have our eye on technologies like virtual reality and quantum computing. Even though they may sound like sci-fi, people are now using them in financial service.

Moreover, we focus on supporting Thai startups, in fintech sector and others. Our Accelerator (DVA) educates and invests in them to promote the sustainable growth of Thai startups.