Week 1 – 3 Update

It’s been a whirlwind first three weeks here at the DBS Accelerator. Following a launch ceremony with warm welcomes from both DBS team and Nest team, the eight startups were then introduced to the various programme partners and mentors. The programme officially kicked off with a 48-hour startup bootcamp, where each company was swiftly brought up to speed in areas such as finance, investments, business strategy and were acquainted with the ins and outs of the Hong Kong startup community.

 

It is commonly acknowledged that the entrepreneurs’ path is fraught with risks and potential pitfalls. Through the DBS accelerator programme, the ultimate objective is to help each of the startups de-risk and be in the best position to take their businesses to the next level. Through programme partners such as Amazon, IBM and KPMG, founders are introduced to experts and consultants to quickly get answers to their challenges and can then scale rapidly.

 

Within the first few weeks of the programme, all of the startups had already started discussing the potential for partnerships with DBS and assessing the scope of projects that could come from working together. Though still in the early stages of discussion, this is an encouraging sign that there are concrete benefits to both parties. As noted in the previous blog post [link here], the advantages of startups working with larger companies, in this particular case banks, is manifold and serves to create a far larger potential market for future.

 

Within these first few weeks there have already been visits and discussions between startups and DBS offices from as far as the US, China, and across Southeast Asia as well. Stay tuned to find out how some of these exchanges proceed!

4 REASONS WHY LARGE BANKS SHOULD EMBRACE THE STARTUP WAVE

THE NEW DAVID + GOLIATH

4 REASONS WHY LARGE BANKS SHOULD EMBRACE THE STARTUP WAVE

 

At first glance, DBS Bank and Hong Kong fintech start-up Monexo seem destined to be mortal enemies. The latter is a peer-to-peer (P2P) lending marketplace that aims to connect lenders and borrowers more efficiently by cutting banks out as the middlemen. Ostensibly, it’s a classic David and Goliath scenario. Why then, was Monexo selected for the DBS 1.0 accelerator programme?

This case of a bank reaching out to work with startups is not unique. A recent study by Accenture found that “venture investment in global fintech tripled between 2008 and 2013 to $2.97 billion and is expected to reach $8 billion by 2018.”[1]

The motivations for banks to engage with startups extend far beyond being simply a profitable investment for their private equity arm. Banks have much to benefit from partnering with startups. Here are four reasons why:

 

REINVENTING CULTURAL VALUES

The corporate culture of banks has become outdated in the digital age.  Innovation is now a necessity and banks are striving to reinvent themselves by eradicating existing legacy issues that hinder creativity. DBS’s interest in working together with startups spurs positive internal changes to its company culture on a fundamental level by altering the disposition of its employees.[2] This is essential in sectors such as retail, where banks are shifting from a one-dimensional transactional mindset to a more consumer-experience-oriented philosophy.

 

MAKING THE PIE BIGGER

Contrary to popular belief, startups often help the entire industry by making the pie bigger, rather than taking a slice of the existing pie. PayPal may have taken some business from Visa when they first popularised online payments. However, they expanded the market dramatically for payments overall and ultimately provided Visa with far more business than it took.[3] In the case of Monexo, the company is not a lender itself, but rather a marketplace. As such, it can be advantageous for banks to partner with P2P lending firms to fund loans and reach new borrowers.

 

STAYING EDUCATED

Banks need to keep up with emerging technologies. Rather than trying to integrate these new technologies internally, or -worse yet- hiring the services of expensive consulting firms to identify the latest trends from a distance, it is considerably more productive for banks to be in the trenches alongside the very individuals who are going to disrupt the industry.

 

PUBLIC IMAGE

It’s been a while since the financial crisis of 2008, however banks are still often perceived as selfish and greedy. On the other hand, startups have garnered a positive and modern image and are perceived as altruistic. The next generation of consumers -millennials- are generally distrustful of banks, lack brand loyalty and are tech savvy. Banks can appeal to this new audience by working together with startups.

 

These benefits are not confined to the financial industry. At the end of the day, David and Goliath are far better off working together as opposed to being at each other’s throats. As such, it’s no surprise that corporate accelerator programmes have been sprouting up all around Hong Kong, including Nest’s own partnerships with AIA and Infiniti.

 

 

[1] http://fortune.com/2014/06/26/big-banks-are-shunning-tradition-and-turning-to-tech-startups/

[2] http://www.finextra.com/video/video.aspx?videoid=919

[3] Pg.57, “Zero to One” by Peter Thiel

Bringing FinTech innovation to Banks – A conversation with Ralph Chan

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The banking industry is at the highest risk of disruption,[1] and FinTech startups are paving the way for this change. “There is growing recognition in the financial services industry that FinTechs are not necessarily bad for the industry, that they serve a purpose, and that partnering with FinTechs is a viable option forward for many incumbent financial services institutions.[2]

Banks must embrace FinTech startups and take measures to keep up with the rate of innovation. One bank that has been doing this is DBS.  In 2014, the bank made a commitment to investing SGD 200 million (nearly 1 Billion Yuan) over three years into innovation.[3] They also ran an FinTech accelerator programme in Hong Kong, and are currently accepting applications for the programme’s second iteration.  We caught up with Ralph Chan, Senior Vice President of Technology & Operations at DBS who runs the DBS Accelerator Program and drives the bank’s digital strategy.

Ralph (Centre) hanging out with startup founders at The Vault

Ralph (Centre) hanging out with startup founders at The Vault

Why do you think there is so much interest for FinTech startups in Asia, especially within China? 

In general, Asia is a less mature market and there is a lot of catch up to do as well as an incredibly large unbanked population. These factors allow for faster growth. An added benefit is that there are no existing legacies in place, so when players get moving they can move really fast. Take the mobile payment market as an example. In some developed markets, people are used to using physical checks for fund transfer and payment, therefore the migration to mobile payments has been slow. But in China, the lack of legacy using physical checks allowed users to quickly adopt WeChat Pay or AliPay instead.

 

What are the advantages of setting up a FinTech startup in HK?

Hong Kong is the place where you can test and validate your ideas quickly. This Is due to a number of reasons, including:

  • Banks of every tier have a presence here whether it is global, regional or local
  • Customer segments range from mass market, the emerging affluent to the affluent
  • The sound legal environment means anything developed here is well protected
  • Shenzhen is right across the border for any hardware needs
  • The talent pool is ripe for recruitment. There is a large cultural mix and Hong Kong people are well versed in Mathematics and Science

In fact, one of the DBS Accelerator Batch 1 Alumni, DollarSmart, was based in Thailand when they joined the accelerator. After the programme, they decided to open an office in Hong Kong and enter the HK market due to its high potential.

The Vault - DBS's 5000sq ft private co-working space in Wan Chai

The Vault – DBS’s 5000sq ft private co-working space in Wan Chai

 

What has DBS done to help spark innovation?

Of course we have the accelerator, however our work in innovation goes further than that. For the past two years, we’ve been running a 3-day hackathon with startups.

We also have an alliance with CityU, whom we co-run CAL Talk’s, a TedTalk style event where we invite market leaders to share their innovation journey.

To promote a culture of innovation for our employees we created the DigiBuzz, a weekly YouTube style update sharing DBS’s latest innovation initiatives. We also promote crowdsourcing of ideas through an online portal where any staff member can post their ideas and up vote the ideas of others to help make them a reality.

We also work closely with startups. One of the new initiatives we rolled out in India is Digibank. The platform features a 24/7 virtual assistant powered by AI technology called Kasisto.

DBS Omni, the latest credit card companion app we introduced in Hong Kong, uses a FinTech solution called Moneythoromithon, that provides a contextual marketing solution which can engage customers better.

So I would say a lot of things are happening, the key thing is how we can inject these digital innovations into our bank DNA.

 

Why is DBS running an accelerator program?

DBS truly believes digital will be the future of banking, therefore we have started many initiatives. The accelerator was started specifically because we wanted to be actively involved within the startup ecosystem. It’s not only about startups and banks, but also about how we can help support innovation within the entire community. Through the program, we are able to help startups build their solutions, these solutions can then be provided to our customers who will be happier as a result. Ultimately, we can also help attract talented people to Hong Kong and make the community better for everyone.

 

What piece of advice would you give to a budding FinTech startup?

You need to understand your customer. People often build solutions without first understanding the underlying problems. Think deeply about the customer journey, what problems are the customer facing that you are trying to solve. You need to immerse yourself into the customer, understand their pain points and what keeps them awake at night and build the solutions based on this.

The DBS accelerator batch 2.0 is now open for applications. If you are a FinTech startup interested in accelerating your business, please apply at: https://www.dbs-accelerator.com/zh/

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The 8 FinTech startup teams from Batch 1.0 at Demo Day

[1] http://www.millennialdisruptionindex.com/

[2] http://www.enterpriseinnovation.net/article/dbs-bank-what-incumbents-can-learn-fintechs-81585543

[3] https://www.dbs.com/newsroom/DBS_Private_Bank_is_worlds_most_innovative

DBS Alumni: Checking in with DollarSmart, Monexo & Currenxie


 
It’s only been six months since Demo Day 2015, and we’re already seeing incredible things from our previous cohort. Here’s a quick look at a few of the DBS Accelerator alumni – DollarSmart, Monexo, and Currenxie – who have been making waves in the press and in Hong Kong.
 
DollarSmart
 
Last month, DollarSmart, the currency exchange disruptor, officially launched in Hong Kong as HKDSmart. HKDSmart’s currency rates undercut most traditional players in the market, providing lower costs and commission fees than banks and exchanges. The key to their platform is the peer-to-peer exchange, as users are essentially buying currency from one another within the HKDSmart system. DollarSmart has already captured 10% of the remittance flow between Australia and Thailand, and one can only imagine the possibility in Hong Kong, where there is a $712 million remittance flow out and $372 million flow in. For perspective, DollarSmart Global already moves about $3.5 million each month.

Read the full story on Forbes.
 

 
The FinTech50 – Monexo & Currenxie
 
In the inaugural FinTech50’s selection for Hong Kong & Asia, not one but two of the DBS alumni were selected in FinTech50’s picks for HK Top 20! Both Monexo and Currenxie were listed amongst their FinTech peers in Hong Kong, and were two of the three P2P platforms selected.
 

 
The potential for FinTech in Asia is unmatched, as Forbes points out, thanks to the rising consumer class, a huge unbanked population, and high mobile penetration. Especially in large markets such as Indonesia, China and India. Both Monexo and Currenxie target niche markets in FinTech, respectively, a peer-to-peer lending for SMEs and tailored, transparent FX services for businesses.

In terms of P2P, Asia has lagged behind western markets, leading to an offspring of numerous platforms only beginning in the past two years. As the China market opens up further and becomes increasingly regulated, Monexo predicts a slimming of platforms and a trend towards more affordable credit and transparency.

The FX market, on the other hand, has been dominated traditionally by banks who are not transparent with the costs and fees associated with each transaction. In this handy blogpost, Currenxie helps you breakdown and calculate potential savings that could be made by going with a platform such as itself. For SMEs with smaller transactions, bank rates tend to be worse and even higher.

For further reading:
The full FinTech50 report here.
Follow along on the Currenxie blog for more FX insights.
More on the P2P market in Hong Kong, and Monexo here.

 

The 2016 DBS Accelerator is accepting applications until June 5th. Apply to join the 2016 cohort here.
 
 

Week 11 – Pitching

Monday Speaker Session

An Angel Investment Group had the privilege of being one of the first parties to see the DBS Accelerator founders practice their pitches. Based on this ‘Pre-Pitch’ session, the representatives from the group invited a handful of the startups to pitch their businesses to the wider Angel Association as a whole.

Pitch Training

Nest’s Chief of Investments Jennifer Carver, in her capacity as the head of the Nest Investment Committee has seen her fair share of investment pitches. She went through what constitutes a ‘Minimum Viable Pitch’ and the essential information investors need to know in the first 5 minutes in order to hook their interest. The companies were reminded that everything in a pitch presentation should be  information that the startups already have at hand, and is simply a matter of clarifying the messaging to make it an unmissable opportunity.

Throughout the week, each team began their first ‘dress rehearsal’ presentations with Jennifer and Peter in preparation for Demo Day.

Week 10 – Funding

With Demo Day just around the corner, founders at the Vault are starting to prepare for the conversations that will come up around investments and funding. At such early stages, each of the founders will need to understand what investors are looking for when they invest in angel or seed rounds, as well as how best to structure agreements most to cater for future plans.

Invest HK – Investment Support & HR

On Monday, the startups met with the team from InvestHK to hear about the types of funding and support available to early stage companies in Hong Kong. In addition to funding, the teams will have to be thinking about future hires as their companies continue to grow, which prompted discussion on the legal responsibilities they have as employers. This was practical advice for the founders based in Hong Kong but also a useful lesson in the types of issues overseas founders should be thinking about when they return to their home markets.

KPMG – Funding & Structuring

The DBS Accelerator founders then learned about funding from a more practical and technical point of view from Nest mentor and KPMG’s head of M&A.

NEST – Pitching

Finally, Nest founder and CEO Simon Squibb joined the teams at the Vault to go through how the startups should hook investors in with their pitch presentations. With his extensive experience as a angel investor and pitch judge both in HK and globally, the insights he shared were unique and can help each of the founders gain the funding that they seek.

Funding for the Future

Midweek, Emanuel Breiter joined the cohort and went through the considerations each company would have to take after they raise their first couple rounds of funding. His experience across the entire life cycle of companies from seed to Series C got the founders thinking about their longer term plans and aspirations for their companies.

Thomson Reuters – Big Data

Finally at the end of the week Gautam Verma, Head of Enterprise Capabilities, Thomson Reuters came to discuss Thomson Reuter’s big data enterprise solutions.

Next Bank – Future of Wealth

Instead of the usual Friday Drinks at the Vault, this week the DBS Accelerator cohort welcomed the Next Bank Future of Wealth event at their space. This meetup showed how digital, design, user experience and innovation strategies have removed the need for high-cost and low tech in-person financial advisory. The leading figures in this field in HK who joined the panel discussion included Stepane Dubois (Xignite), Mathias Helleu (8 Securities), and Julian Shillinger (Privé Financial), James McKeogh (KPMG), Dave Wallace (HeathWallace) and David Lynch (DBS).

 

Week 8 – Operations

With the startups currently focusing solidly on building products and demos for DBS, the founders now need to be armed with skills to build a sustainable business entities around the technologies and products that they have developed.

The first speaker this week was James McKeogh, a management consulting partner at KPMG. As a specialist in Data & Analytics, Digital Commerce and Payments, James provided a lot of insight into how companies in this field can sustain growth and manage operations in a way that will enable them to scale.

Later in the week, the teams headed to the newly opened KPMG Insights Lab in Central. Following a tour of the space and its Data and Analytics capabilities, the teams were given Pitch Training by KPMG’s Innovation Partner Edge Zarrella. A regular figure at pitch events and the startup ecosystem both in Hong Kong and globally, his advice to the DBS cohort proved invaluable.

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With only 4 weeks to Demo Day, this talk was a strong incentive for the founders to begin working on their investor decks and start practising for the presentations of their lifetime.

Week 4 – Strategy

31 August 2015

Four weeks in and the programme is heating up. The startups are taking advantage of all the resources that are now available to them and  mapping out what they have to achieve in the eight weeks before Demo Day.

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Week four kicked off with a visit from Chief Operating Officer from Nest, Lawrence Morgan, who presented to the entrepreneurs on the principles of strategy. The session included advice on what they need to think about to develop a solid strategy for their business, how to add value to startup that future investors will recognise and also how to evaluate and utilise the existing skill sets within a business so that appropriate new hires can be made.

He also touched upon how to target specific customer markets, a skill that is becoming increasingly important as FinTech moves away from a traditional banking model. 

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As someone who is well-known in the business for his ‘structured logic’ approach Lawrence also gave the entrepreneurs insight into how to approach problems and then make appropriate decisions. 

The week also included time with some of the programme’s invaluable mentors. The group sessions offer entrepreneurs the opportunity to really drill down into niche areas that are pertinent to their business, while one-on-one time allows them to get to know some of Hong Kong’s most influential industry leaders and benefit from the knowledge.

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Week 3 – Lean Concepts

24 August 2015

Working smarter rather than harder, eliminating uncertainty from your business and creating a minimum valuable product should be on the mind of every entrepreneur. This week the 10 startups were joined by Nio Liyanage from StartUpRight.net  who presented to them on how to keep a business lean.

On Friday the startups headed to one of the DBS offices in Island East for a speed dating session with a difference.

DBS

David Lynch, Managing Director of DBS HK and Mainland China and senior leaders from within the bank sat in a room to hear pitches by each of the startups on the programme before engaging in a quick-fire speed dating session.

David Lynch at speed dating

The idea behind the event was to engage employees of DBS and help them to get a better understanding of what the startups in the programme are all about. In addition to being a networking session it was hoped that the leaders from within the business would be given some insight into the most relevant new technologies that might one day come in to change the future of their product or department. It was also a good opportunity for the entrepreneurs to practice and refine their presentation skills in front of a critical but friendly audience.

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After the formal proceedings many of the entrepreneurs where able to open up further discussions around collaboration with the DBS employees.

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