We recently connected with Kelvin Tan, CEO of audax, a corporate venture backed by Standard Chartered Bank.
Before transitioning to a full-time career as an entrepreneur, Kelvin held multiple roles at Standard Chartered Bank — from Transaction Banking to Retail Products and Payments to Strategic Programs, between 2012 and 2018.
audax was born out of Standard Chartered nexus, which Kelvin conceptualized, built, and led for years prior to the founding of audax. Under Kelvin’s leadership, SC nexus has redefined the digital banking landscape in Indonesia, doubling Standard Chartered’s retail and SME customer base in the market within months at a fraction of costs through its strategic partnership with Bukalapak, one of the country’s largest e-commerce platforms.
audax Financial Technology is a comprehensive digital banking solutions provider empowering banks and financial institutions to scale and modernise at speed. audax Financial Technology has enabled new business models and revenue streams for Standard Chartered under the SC nexus proposition, becoming the first global bank to provide Banking-as-a-Service in Asia.
Our conversation with Kelvin Tan is shared below.
Crowdfund Insider: Could you please give us a brief introduction of yourself and audax?
Kelvin Tan: Before becoming audax’s CEO, I held various roles at Standard Chartered, focusing on Transaction Banking, Retail Products, Payments, and Strategic Programmes. My journey at Standard Chartered culminated in conceptualising and delivering Standard Chartered nexus, our groundbreaking Banking-as-a-Service (BaaS) initiative in Asia. This project notably transformed Indonesia’s digital banking landscape through a digital banking service BukaTabungan developed in partnership with all-commerce unicorn Bukalapak, which tripled Standard Chartered’s customer base in Indonesia within six months of launch at significantly reduced costs.
audax is a natural evolution in terms of the business challenges as we realised very quickly the value of the technology that we had built beyond the business model that is Standard Chartered nexus. At audax, we empower banks to rapidly modernise and scale cost-effectively.
We provide the end-to-end digital banking platform to enable banks and financial institutions across three use cases: i) Digital Banking ii) BaaS iii) Modernisation of infrastructure — all while maintaining compliance with the strictest security and regulatory standards. Our goal is to equip financial institutions to excel in dynamic markets, enhancing agility and fostering innovation. This commitment positions audax not just as a service provider but as a vital partner in the financial sector’s ongoing evolution.
Crowdfund Insider: How has your background at Standard Chartered shaped your approach to leading audax in today’s evolving Fintech landscape?
Kelvin Tan: My tenure at Standard Chartered was instrumental, providing me with critical insights into the intricate dynamics of traditional financial institutions and their legacy systems. During my time there, I observed the robust yet sometimes inflexible systems that, while dependable, can pose challenges when integrating modern Fintech solutions. This knowledge has been crucial in my role at audax.
Leveraging this deep understanding, our team at audax develops solutions that allow banks to adopt a dual-mode evolution, where we progressively construct a new digital core with novel products and channels while optimising the legacy core’s value. This enables the seamless integration of the agility of modern technology with the established robustness and stability of traditional finance. Our strategic approach ensures that our technologies are cutting-edge and fit effortlessly within existing financial frameworks, promoting widespread adoption.
The blending of institutional know-how and emerging technologies empowers audax to drive a more fluid integration between conventional banking and Fintech, fostering an environment where innovation thrives without disrupting the foundational aspects of traditional financial services. By harmonising these worlds, we are setting the stage for a financial revolution — transforming challenges into opportunities for growth and redefining the future of finance.
Crowdfund Insider: Beyond the Money20/20 discussions, what specific trends are you seeing that indicate a shift in focus within the Fintech industry?
Kelvin Tan: In recent years, we’ve observed a significant shift in the Fintech industry, moving from competition with incumbent banks and financial institutions to collaboration and partnership. This evolution is driven by the recognition that both Fintechs and incumbents have unique strengths that, when combined, can deliver enhanced value to consumers.
i. Leveraging trust with consumers: Traditional banks and financial institutions have built substantial trust and credibility with their customers over decades. This trust is invaluable and difficult to replicate. Fintechs, on the other hand, bring innovation, agility, and cutting-edge technology to the table. By partnering with incumbents, Fintechs can leverage this established trust to introduce new solutions more effectively and gain quicker acceptance from consumers.
ii. Integrating customer-centric solutions: The core strength of Fintechs lies in their ability to develop and deploy innovative, customer-centric solutions swiftly. By integrating these solutions into the traditional banking infrastructure, we can offer a seamless and enhanced customer experience. This integration enables banks to provide services that are more tailored to individual customer needs, leveraging data and technology to create personalised financial products and services.
We’re seeing numerous examples of these partnerships yielding fruitful outcomes. For instance, banks are adopting Fintech-driven platforms for faster loan approvals, personalised financial advice, and improved user interfaces. These collaborations are not just about technology integration; they signify a broader shift towards creating a more cohesive and efficient financial ecosystem. Moreover, regulatory bodies are increasingly supportive of these partnerships, recognising the potential for improved financial inclusion and better consumer protection. This regulatory support further facilitates the collaboration between Fintechs and traditional financial institutions.
The trend is clear: the Fintech industry is moving towards a model where collaboration, rather than competition, drives innovation and growth. This partnership approach enables us to harness the best of both worlds – the trust and reliability of traditional banks and the agility and innovation of Fintechs – ultimately leading to more robust and customer-centric financial solutions.
Crowdfund Insider: How can Fintech companies demonstrate both scalability and sustainable growth in this new environment that prioritises practicality and value?
Kelvin Tan: In the current Fintech landscape, demonstrating scalability and sustainable growth requires more than innovative ideas; it necessitates a robust approach to security and compliance. Data is crucial for Fintech operations, and for financial institutions to share their data confidently, Fintech companies must prioritise stringent security measures. Establishing themselves as compliant and secure can position Fintechs as reliable partners within the financial ecosystem, fostering trust and collaboration.
Another key strategy is the development of modular and interoperable platforms. These platforms are designed to be easily adopted by financial institutions of all sizes, allowing them to integrate specific functionalities without the need to overhaul their existing systems. This approach facilitates smoother transitions and reduces the risk of disruptions, enhancing the appeal of Fintech solutions due to their adaptability and ease of integration.
Fintech companies should also focus on scalability by designing interoperable solutions that seamlessly handle increasing loads and expanding functionalities. Proving scalability without sacrificing performance or security under varying operational demands is critical to business sustainability. This demonstrates to potential partners and investors that the Fintech’s offerings are built to last and can grow with their needs.
Finally, we must also not ignore the value of a customer-centric approach. Fintechs must focus on solving real-world problems, enhancing user experiences, and driving adoption through intuitive and user-friendly solutions. Demonstrating a tangible impact on efficiency, cost savings, and customer satisfaction can significantly elevate a Fintech’s value proposition. By implementing these strategies, Fintech companies can effectively showcase their potential for scalability and sustainable growth, aligning themselves with the industry’s shift towards practicality and value.
Crowdfund Insider: What strategic approaches can Fintech companies leverage to capitalise on the AI/ML boom and stay ahead of the curve?
Kelvin Tan: The recent surge in financial backing for AI and ML ventures has expedited the onset of a Fintech spring.
AI and ML enable Fintechs to offer hyper-personalised services and products by making granular, AI-driven decisions and performing advanced data analytics throughout the customer lifecycle. This level of personalisation not only enhances customer engagement but also fosters loyalty, maximising customer lifetime value and propelling industry growth.
However, the enthusiasm for AI/ML must be tempered with strategic planning. We must recognise that the effectiveness of AI and ML technologies hinges on the quality of the data they process. Fintechs must secure access to high-quality, reliable data, often facilitated through strategic partnerships with banks and investment in robust data management systems. These collaborations not only improve the accuracy of AI models but also enhance their effectiveness, providing a competitive edge in the marketplace.
For example, the digital banking service Bukatabungan, powered by audax, leverages AI and ML to recommend more relevant financial products to customers based on their buying behaviour on the e-commerce platform Bukalapak. By analysing purchasing patterns, we can tailor financial solutions that meet the specific needs and preferences of our users, resulting in a more engaging and satisfying customer experience.
Moreover, as AI/ML models become more complex, the imperative of explainability becomes more important. While these technologies can drive innovative solutions, they also introduce complexities that can lead to concerns about data privacy, algorithmic bias, and transparency. By ensuring that AI-driven decisions are understandable and transparent, Fintechs can maintain user trust and differentiate themselves in a competitive market. This focus on transparency mitigates regulatory risks and empowers users, fostering an environment conducive to adopting advanced AI/ML solutions.
Crowdfund Insider: Are there any potential drawbacks or challenges associated with the heavy focus on AI and ML within Fintech?
Kelvin Tan: While AI and ML technologies offer significant potential to revolutionise the Fintech sector, they also come with substantial challenges that must be carefully managed. One major concern is the lack of a single, universally accepted regulatory framework governing the use of AI/ML. This regulatory ambiguity can create uncertainty for Fintech companies, potentially complicating compliance efforts across different jurisdictions and stifling innovation and global market expansion.
The accuracy and fairness of AI models are also contingent upon the quality of the data they use. If the training data is biased, the AI systems will likely perpetuate and amplify these biases in their decision-making processes. This can lead to serious ethical issues, such as unfair loan denials, inaccurate credit scoring, or biased investment recommendations. While AI can automate numerous financial processes, the necessity for human oversight remains crucial. We must have mechanisms to review and correct biases, ensuring that AI-driven decisions are fair and equitable.
In addition to regulatory and ethical challenges, there is also the issue of public trust. The increasing reliance on AI can raise concerns about privacy, data security, and the transparency of algorithmic decisions. To navigate these challenges effectively, Fintech companies must prioritise transparent operations, invest in bias mitigation strategies, and engage actively with regulatory developments. Only by addressing these issues head-on can Fintechs harness the full potential of AI and ML while maintaining the trust and confidence of their customers and stakeholders.
Crowdfund Insider: Looking ahead, what are your predictions for the overall trajectory of the Fintech industry in the coming years?
Kelvin Tan: The Fintech industry is poised for an era of profound transformation and strategic collaboration. The integration between agile Fintech companies and well-established financial institutions is set to deepen, leveraging the strengths of both sectors. This synergy will enable traditional banks to adopt and scale innovations more swiftly while Fintechs gain from expanded market access and enhanced credibility. This collaboration is expected to enhance the agility and efficiency of financial services, broadening their reach and impact.
As we enter this new era, the convergence of technology and traditional banking is no longer just a trend but, in fact, the birth of a new financial paradigm that promises to democratise access to financial services. This paradigm promises to democratise access to financial services by embedding them into everyday digital interactions. The collaboration between banks and Fintechs will be crucial in creating this new reality, combining the reliability and trust of traditional financial institutions with the innovation and agility of Fintech companies.
This is not mere evolution but a Fintech revolution, and I am excited to see the industry rewriting the rules and extending the boundaries of what is possible in financial services. Embedded finance will play a pivotal role in this transformation, fundamentally changing how consumers access and use financial products and services, making them more accessible, convenient, and integrated into our daily lives.
Crowdfund Insider: How will potential changes in regulations around data privacy, cybersecurity, or cryptocurrencies impact Fintech innovation in the second half of 2024?
Kelvin Tan: The second half of 2024 is poised to be a defining period for Fintech companies, testing their adaptability and resilience in the face of potential regulatory shifts. Enhanced data privacy regulations akin to GDPR and CCPA are likely to bolster consumer confidence, yet they pose significant challenges for developing personalised financial products. Meanwhile, stricter cybersecurity protocols are expected to increase operational costs for Fintechs as they scramble to bolster user security and maintain compliance.
Navigating these regulatory waters will require a delicate balance. Overly stringent regulations risk stifling innovation, whereas lenient policies could erode consumer trust. The key for Fintechs will be to demonstrate agility and commitment to transparency in data handling. Those who can adapt quickly and continue to foster responsible innovation within these constraints will survive and thrive, turning regulatory challenges into opportunities for growth and enhanced customer trust.
As we move into the latter half of 2024, it’s clear that Fintechs will need to be as innovative in their compliance strategies as they are in their product development. The ability to swiftly adjust to regulatory changes while focusing on security and customer-centric innovation will separate the leaders from the followers in the rapidly evolving and highly competitive Fintech landscape.
Crowdfund Insider: What strategies can Fintech companies employ to increase consumer trust and adoption of their solutions, particularly in a post-pandemic world?
Kelvin Tan: In the post-pandemic landscape, consumer apprehensions about data privacy and security are escalating as reliance on Fintech solutions surges. To navigate this environment successfully, Fintech companies must prioritise building trust and fostering user adoption. The foundation of this strategy is clear communication. Fintechs must be transparent about their data collection practices, explicitly detailing how user data is acquired, utilised, and safeguarded. User interfaces should also be intuitive and user-friendly, allowing individuals to comprehend and manage their data-sharing preferences easily.
Robust cybersecurity measures are a non-negotiable. Adopting multi-factor authentication, regular security audits, and using advanced encryption techniques are critical steps that demonstrate a Fintech’s dedication to security. Such measures not only secure user data but also enhance user confidence in the Fintech solutions.
Strategic partnerships with banks and financial institutions can play a crucial role in building consumer trust. Banks and financial institutions have established long-standing trust with consumers due to their history and regulatory compliance. By partnering with these trusted entities, Fintech companies can leverage this credibility, reassuring consumers about the security and reliability of their solutions.
Fintech companies have a role in creating a secure and trustworthy environment that promotes broader adoption of their solutions through a blend of transparency in data practices with stringent security protocols and proactive user education. This comprehensive approach to building trust is vital for the continued growth and acceptance of Fintech in a post-pandemic world.
