Start-ups should focus on the business product, not the money
Financial technology is the buzzword in Asia right now – from Hong Kong to Tokyo, Singapore to Australia, start-ups are looking to grow new businesses, financial institutions are looking for innovative ideas and governments are hoping the marriage between the two spurs new business.
Fintech investment in Asia-Pacific is on the rise. Last year’s record investment in China – pushed by a wave of “blockbuster deals” including US$4.5 billion raised by Alibaba Group Holding’s finance affiliate – was more than three times the US$2.97 billion logged in 2015, according to an Accenture statement that cited analysis of CB Insights data.
But while fundraising is important, the founders – the management teams – of start-ups shouldn’t focus only on the money. The primary focus should be the product. This is a version of ‘build it and they will come’: build a good product and the money will flow.
Accenture has been running the FinTech Innovation Lab Asia-Pacific in Hong Kong for four years – indeed we call for applicants to this year’s Lab at the end of the month – and during this time we have helped nurture fintech start-ups.
Most journalists ask: “How much funding have they raised?”
But the more important question is “what product have they developed?” This is what management should concentrate on. It seems self-evident, but history teaches of technology bubbles where start-ups have come and gone in a flash because the focus wasn’t on a product but rather a quick buck.
Increasingly, the criticism we hear from venture capitalists and large financial institutions looking to invest in or partner with start-ups is that there is an abundance of good technology, but not necessarily good applicability. If the product doesn’t have a tangible use for customers, or isn’t easily applicable to existing technology in companies, it may be a genius idea that never gets implemented.
In our Lab, we have mentored companies who have kept their eye on developing a product that is useful to customers and realistically implementable.
Take Hong Kong-BitSpark, a 2015 alumnus of the FinTech Innovation Lab Asia-Pacific. Its business concept is to offer a low-cost remittance service that uses blockchain technology. Since its participation in the Lab, it has extended its services from Hong Kong, the Philippines, Indonesia and Vietnam to include Malaysia, Nigeria and Pakistan as well. Last year it also launched a blockchain payment mobile app called Sendy for individuals that requires no knowledge of blockchain technology to gain access to cheaper remittances and country options.
Another start-up example is Sydney-based Moroku, which was also a 2015 alum. It has been developing a gamified application platform, GameSystem, with a suite of apps on top to make banking more engaging. Since participating in the Lab, Moroku has delivered a mobile banking application aimed at parents and kids, ChoreScout, and licensed the technology to Misys, the London-based financial services software company, thus helping to educate the next generation about money management.
Misys has integrated GameSystem into its digital platform. The rationale? Research suggests that consumers spend more than a billion hours a month playing mobile games, so the case for gamification in helping banks to attract, engage and retain customers is compelling.
Moroku and BitSpark are on one level developing vastly different types of fintech solutions –BitSpark isn’t quite competing with banks, who typically don’t operate in the low-cost remittance space – but it is offering a banking service. Moroku is unequivocally collaborating with banks, offering a fintech solution that is designed to enhance their banking service.
Both are arguably operating in a socially responsible space, with Bitpsark trying to reduce costs for people who historically are gouged by moneylenders, and Moroku trying to help people do the hard work with their money and encourage banks to compete on purpose.
Not all participants are trying to change the world. We have had start-ups focused on developing better charts, others on fraud detection and back office services, for example. But they all are focused on developing a solution that can change financial services.
The management takeaway lesson from these start-ups are they focused first on building their business offering. This doesn’t mean you don’t take fundraising seriously, but rather that fundraising shouldn’t be your sole aim.
Adrian Seto is Accenture’s director of fintech innovation in Asia-Pacific