Fintech redefines the old ways of commerce for a brave new world

Fintech redefines the old ways of commerce for a brave new world

Investing Forward

The economic landscape of today is unpredictable at best and tumultuous at worst, with the rise and fall of numerous financial and economic trends. A growing onslaught of startup’s and small to medium-sized enterprises (SME’s) have taken over the business scene which can be taken as a positive sign that the landscape is ripe to nurture new and burgeoning business however with the added on tools of e-commerce, technological advancements, key data research and the introduction of smarter and efficient systems, the traditional methods of operating a business have become defunct. Growth and change are commonplace in today’s business ecosystem and not adapting to these evolutions could be detrimental to a newer business.

According to a study done by Fundera in 2018, 82% of businesses failed due to cashflow problems. A solution that many turn to is alternative financing and Asian countries like Singapore and China have adopted or created methods that align traditional finance providers with the growing alternative finance industry. Singaporean regulators alone have placed around MYR 932 million aside to fund and develop their local FinTech companies and China building their peer-to-peer (P2P) market to become the largest in the region.

Edward Law, the Chief Executive Officer and Executive Director of Securemetric, Southeast Asia’s leading digital security company, elaborates. “The world has changed the way we usually do business and gain capital. Globally we are moving towards a digital economy transformation especially if we look at Southeast Asia, all the countries are trying to push towards a digital future. While we see many benefits and opportunities towards such transformation, there will always be an increased risk as people, businesses, devices, processes and data are now highly interconnected. It also means higher exposure to cyber attacks as cybercriminals can reach out to them easily. It is important to pay more attention to the area of cybersecurity while delving into the new methods of making capital.”

When asked about the longevity of traditional forms of raising capital, Edward opinion is that, “Traditional methods of making capital will surely be around, at least for a little while longer. When looking at China which has the most used e-commerce market in the world where most people do their shopping and food deliveries online, there are still more and more shopping malls being built across the country. The thing I have noticed about those malls is that they focus less on retail and a lot more into food and beverages to entertainment people whenever they wish to spend their time ‘offline’.”


Before alternative financing, businesses of all sizes and growth had to use the same few capital provides to aid them financially. Thankfully with the gradual adoption of alternative financing, many of these older methods have evolved into a more user-friendly version of their past. Banks are one such major player who help to provide capital and fund businesses, from putting in a loan application to applying for a grant, bank financing was a method that many companies turned to. As diverse as their financial aids are, banks are highly risk-averse and have a history of denying capital funds to smaller and younger businesses unless they come with a strong financial history, good credit and an experienced leader.

Not every startup has the potential to grow to become the next Facebook, LinkedIn or Instagram, hence precaution is taken heavily when dealing with newer enterprises. With banks not being available to meet the financial needs of younger businesses, prior to the rapid growth of alternative financing, venture capitalists and angel investors were the next obvious choice for a smaller business to find funding. Idealised for being able to push a startup to its next stage or graduate a business to its next level, venture capitalists were able to provide both money and expertise however it was usually at the cost of business operations. Many growing businesses were asked to release partial or total ownership of the business to venture capitalists, which can be a taxing deal for any business owner.

Angel investors follow a similar modus operandi to venture capitalists in that the person or network will invest in a company in which they are able to foresee a potential that will allow them to earn high returns from the company. There is no exchange or handing over of decision making powers to the angel investor, unfortunately due to the affable nature of angel investing as a whole, there is usually strict competition present when startups and businesses are in need of one, forcing them to give a quick sales pitch to best position their company and brand to tentative investors.


Still, many of the newer methods have evolved from these traditional modes of funding, ensuring accessibility to businesses at all sizes and stages of growth, connection to the technological evolution of the finance industry as well as longevity to last longer than most archaic systems do. Accelerators and incubators are one such example of how the mushrooming of new businesses have forced organisations to either provide experience or “incubation” to these brands, to help them grow into what will hopefully become a successful operation.

Not to be mistaken for one another, accelerators fast track the growth of an existing company either a startup or an established business looking to break into the next level of growth. Accelerator programs are structured around a timeframe where companies work with mentors to avoid problems and concoct a new business plan. Startups and younger businesses are able to benefit from accelerators as they can access a large mentorship network, gain an in-depth insight into their industry of choice via experienced leaders, and some even provide a small seed investment. Malaysia hosts a plethora of venerated accelerators that have aided our economic growth from SuperCharger and Khazanah Neo to Hong Leong Bank Startup Accelerator and the Selangor Accelerator Programme by SITEC.

“Working with Supercharger was a great experience for all of us at Curlec. It was the first time we have ever participated in an accelerator program, and what we particularly enjoyed about it was the practical focus of it. Rather than teaching you how to run a business, they were super focused on making introductions to potential partners, investors and clients. The fact that the accelerator was focused on FinTech companies was also a major plus for us as we got to spend time with a lot of great companies from around the world who we learned a lot from and in some cases, have gone onto work with,” said Zac Liew, Co-Founder and Chief Executive Officer of Curlec, one of the fastest growing startups in Malaysia.

“The practical focus of the program had a great impact on our business and it resulted in a number of new clients and partnerships. In addition to this, SuperCharger boosted our company profile and handed us some great PR. We were introduced to big industry players and were also given exposure at the Security Commission’s annual SCxSC FinTech conference where we presented,” continued Zac.

Incubators truly tend to the startup businesses and entrepreneurs who are ideally trying to get a feel of their chosen industry and need a helping hand with getting their foot through the door. Run mostly on sponsors, incubator companies are a lot less rigid with a timeline and will offer burgeoning companies a refined business plan, a network in their favoured industry, identification of intellectual property and contacts and connections within the local or international network. If accelerator programs were to get a business breaking through the glass ceiling, incubator programs are mainly used to get a younger business back on their feet. These programs ready a business to enter a phase where they may begin the search for acquiring capital and monetary aid either from investors or venture capitalists.

Born from the technological era and the mother of several business titans, crowdfunding has emerged as a unique form of alternative financing that relies more on the donations of the general public than it does on an institution such as banks. Formlabs 3D Printer, the virtual-reality headset Oculus Rift, to the Pebble Time smartwatch of 2015 and even the fidget cube are just several of a long list of the most funded campaigns on crowdfunding platforms such as Kickstarter, Indiegogo and Malaysia’s own Pitch Platforms. In a study carried out by PricewaterhouseCoopers in their ‘Financial Services Technology 2020 and Beyond: Embracing disruption’ report, 81% of banking CEOs are concerned regarding the speed of technological change, more than in any other industry sector. This rings especially true now that technology has helped in creating tech giants from merely connecting a product with potential to the appropriate parties who believe in it.

With SME’s making up 97% of business establishments within Malaysia and the governments aim to event push their GDP contribution from 37% to 41% by 2020, Malaysia has pushed to utilise a form of alternative financing that has cropped up in recent time, Peer-to-Peer Lending (P2P). Branching off of crowdfunding, P2P connects a business seeking capital or financing to put forward an investment opportunity onto a P2P online platform and from there investors can choose establishments that they would like to fund or invest in. This works both ways as it allows interested investors the option to search for projects that they might be interested in pursuing, and it allows smaller businesses the opportunity to cash in where they might not necessarily get the chance to with banks and other established institutions. Appointed by the Securities Commission of Malaysia some official P2P platforms are B2B FinPAL, ManagePay Systems and Ethis Kapital.

Despite all that, Malaysia is continuing to do to support startups and SMEs. “I think over the last few years we have seen a greater acceptance of startups across Malaysia and ASEAN, with the rise of regional unicorns such as Grab and Go-Jek definitely contributing to this. However, I still feel more can be done from a policy level. In particular, more can be done to help startups gain access to funding when they are at their early stages. In addition to this, ensuring that there is a big and strong enough talent pool to recruit from has to be looked into and improving education levels throughout the country must be a priority.”

Technological advancements and alternative financing systems are a constantly changing macrocosm with new methods of financing being developed on the daily. By 2020, there are definitely bound to be more effective ways to finance smaller-scale businesses and startups as whilst the archaic methods will slowly grow defunct if they are unable to adapt. FinTech is spearheading the direction of business models now more than ever, so even if money does make the world go round, there are a lot more ways for it to get to where it needs to be.

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