Fintech Startups Are A Threat To Banks. Here’s What Maybank Is Doing
TECHINASIA: When JPMorgan Chase CEO Jamie Dimon told the banks’ shareholders that Silicon Valley “[wants] to eat our lunch” – alluding to how tech startups are slowly taking away business from them – he’s not alone in that belief. Banks are feeling the heat from startups, which are working on various alternatives to traditional banking. Some banks are not taking it sitting down.
Maybank, for one, has partnered with venture capital firm 1337 Ventures for a bootcamp to find promising fintech startup ideas in emerging markets. Maybank is Malaysia’s biggest lender with over 22 million customers across the globe, while 1337 Ventures is one of the country’s biggest accelerators. The partners estimate the fintech industry worldwide to be worth about US$6 billion to US$8 billion today, and US$12 billion by 2018.
Asked whether this initiative was their way of staying competitive against startups offering alternative financial services that are cheaper and more convenient for consumers, Maybank head of corporate development and innovation Amran Hassan told Tech in Asia: “Yes. The evolution of tech companies is a lot faster than traditional banking. If banks sit around, you’re right [they’ll eat into our profits].”
Maybank Philippines president and CEO Herminio Famatigan Jr. echoed Hassan’s view. “There’s this new kind of innovation being demanded of this business. We want to bring the best minds we can find, and the best minds are not necessarily bankers.”
“I heard our group CEO once say that one of his fears is Alibaba becoming a bank. But you see, it doesn’t have to become a bank, it’s functioning like a bank!”
The best ideas
Maybank and 1337 Ventures will hold roadshows for their bootcamp in four main emerging markets – Manila, Jakarta, Bangkok, and Kuala Lumpur.
The top 20 startups with the best ideas will be flown to Maybank’s headquarters in Kuala Lumpur, all expenses paid, to join a three-day idea validation bootcamp from June 13 to 15. The demo or D-day is slated for June 16. The best of the 20 will undergo a three-month on-boarding and pilot testing phase with Maybank to validate the feasibility of the adoption and implementation of their ideas. “It could be one top idea or many top ideas,” noted 1337 Ventures CEO Bikesh Lakhmichand.
Hassan and Lakhmichand said their institutions may or may not invest in these startups. “It depends on what the team is asking for. Some may not need money because they’re bootstrapping. They may need a customer base to roll out to or merchants to partner with,” Lakhmichand said.
Interested startups can register and start submitting their applications on Maybank’s site or during the roadshows. Applications must be in the form of a one-minute video pitch. Deadline for the submission of pitches is on May 29.