iFAST CEO: Development of Fintech is still in early stages

Lim Chung Chun Co-Founder, Chairman and CEO of iFAST Corporation Ltd. (SGX: AIY)

Financial technology or Fintech is often viewed as a disruptor of financial institutions, and iFAST Corporation Ltd (iFAST) is one perfect example. 18 years into the local financial scene, ShareInvestor caught up with the CEO of iFAST, Mr Lim Chung Chun to understand the organisation’s strategic direction as we head into 2019.

Fintech is now the buzzword within the financial industry, and you co-founded iFAST as a financial technology company in year 2000, even before the term was created. What is your view on this fast-growing sector moving forward?

My view is that the Fintech sector is still in its early stages of growth. The financial sector has been slower in embracing the full power of the Internet because financial institutions tend to be unable to innovate as fast as other industries in terms of business models. This is because the financial sector is heavily regulated, and compliance and risk management considerations tend to slow down the pace at which innovative business models can be introduced to the market.

I believe that the key Fintech players of the future will be companies that have sufficient licenses (e.g. capital markets licenses) to ensure a robust revenue model, have strong IT capabilities as core internal capabilities, and have the agility to embrace new business models. Fintech start-ups that shy away from obtaining, or are unable to obtain the appropriate licenses, will not be key players because the revenue streams will not be robust. Traditional financial institutions that are unable or unwilling to have strong internal IT capabilities will similarly not have a bright future in the Fintech space because they will move too slowly.

I also believe that in the wealth management Fintech space, convergence and cross border Fintech opportunities will be important trends in the next few years. Convergence refers to the integration of the business models of the different categories of wealth management products – unit trusts, exchange-traded funds (ETFs), stocks, bonds and insurance. Cross border opportunities require that the Fintech companies have the capabilities to handle the different regulations, compliance, IT and operational requirements of different countries.

What is the greatest challenge you have encountered with the company?

The biggest challenge was during the initial few years of the company’s existence, during the period from 2002 to 2003. At that time, the challenge was to show that the business model works, and to generate enough scale, when the global stock markets were going through a bear market. In the end, unwavering perseverance and conviction in the long-term business model are key factors contributing to the success of most companies.

FSMOne.com was launched two years ago in December 2016, and it has since owned a strong presence in the investment space within such a short time frame despite the competitive landscape. In your opinion, what are the factors that contribute to its success?

The key factors are the right business model and the right execution. The business environment is changing fast, and it is important that companies position themselves well for the future. In the investment industry, certain business models that used to thrive two decades ago are now increasingly struggling. Companies that are not able to evolve fast enough will find it difficult to remain relevant going forward.

The right execution depends on quite a number of factors. One of the keys is strong internal IT capabilities. At iFAST and FSMOne.com, we have focused on ensuring that IT capability is one of our core internal capabilities. This has ensured that we are able to evolve in the business world rapidly, and at costs that are often much lower than most other financial institutions.

With a global presence across Singapore, Hong Kong, Malaysia, China and India, what will be your company’s development plans in the coming years?

In the next few years, our focus is on ensuring that in each of these five markets, we strengthen our overall market presence. This will be done by constantly improving on the services that we are able to provide to our customers, both in the Business-to-Business (B2B) and Business-to-Consumer (B2C) space.

One of the key aspects of the service improvements that we will be seeking to achieve in 2019 is to bring true Fintech capabilities to our various B2B partners, including empowering them to have B2C capabilities with real-time online transactions. We would also want our B2B partners to acquire these capabilities at costs that are well below most existing financial institutions.

What advice would you share with the retail investors for 2019?

Do not be distracted by all the negative noises in the financial markets, such that you give up on the equity markets at the wrong time.

Always remind yourselves that fundamentals will eventually prevail. That means understanding that most Asian equity markets will likely reach new highs in the next few years, because aggregate corporate earnings will be hitting new highs and share prices will eventually follow.

 

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