Asia fintech hubs: Head start

For Lattice80, see Stone & Chalk. The former is Singapore's recently launched co-working space, a 30,000 square feet facility close to the central business district; the work of local investor Marvelstone Group, it has already signed up 20 tenants exploring technologies ranging from blockchain to trading systems. The latter is Sydney's equivalent financial technology hub, which launched last year.

Both represent attempts by established financial centers to ensure a long-term future in the face of intensifying disruption. Indeed, the Sydney initiative in part arose from a government-backed report that warned the city must act now to stay competitive because Australian start-ups were already being encouraged to relocate elsewhere. The financial sector accounts for 9% of Australia's GDP, 18% of corporate tax receipts, and 420,000 jobs, most of them in Sydney.

Financial institutions in each market have already moved to shore up their positions. National Australia Bank established NAB Ventures last year with a A$50 million ($36 million) captive fund to be invested in start-ups that enhance its product offerings. Westpac Banking Corp. and AMP entered the space even earlier, with Reinventure - the Westpac-backed unit - launching its second A$50 million fund in August. Superannuation funds are even playing a role, with First State Super agreeing a partnership with local fintech investor H2 Ventures.

In Singapore, DBS is one of the most active market participants, having set up a variety of programs on its own or in partnership with third parties. These include DBS HotSpot, a three-month pre-accelerator program aimed at very early stage start-ups. The bank offers a S$25,000 entrepreneur award, workspace and access to industry mentors including angel investors and DBS executives. Candidates are not required to have an existing prototype or commit to giving up an equity stake to DBS.

Speaking at official launch of Lattice80 last week, Tharman Shanmugaratnam, chairman of the Montary Authority of Singapore (MAS) and deputy prime minister, noted that "the Goliaths of the financial world have become more nimble-footed, and are both competing with and partnering the Davids." This remark implied that the corporate and start-up segments of the industry can co-exist, but there was a sense from his broader statement that Singapore wants to do more to help the start-ups.

There are an estimated more than 300 nascent fintech companies in the city state, while global banks and insurance companies have established local innovation labs and research centers. To this end, the MAS is endeavoring to make it easier for venture capital firms to back these start-ups, with promises of shorter and simpler registration processes and exemptions from certain business conduct requirements. Specific VC incentives will also be considered.

However, arguably the most significant contribution is Lattice80 itself. Not all co-working space business models are successful - much rests on execution ability of the people on the ground in terms of providing mentorship and other value-added services. For fintech hubs specifically, a key component is connections with the traditional financial services industry.

For established financial services centers, cultivating a fintech industry is essentially a question of talent management. They are home to plenty of skilled professionals and have much to recommend themselves to others. But the key is providing infrastructure and support to people - coming from academic institutions, other markets or the local industry itself - who are pursuing opportunities outside of the established order.

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• Topics
• Southeast Asia
• Australasia
• Financials
• Early-stage
• Regulation
• Singapore
• Australia
• seed