The rate of change and innovation in the banking industry right now is staggering and in an industry that is going through massive transformation there is no one more ambitious in their vision than Kelvin Tan from Standard Chartered Nexus imagine a world with some of the of the world's largest e-commerce platform, launch their own banking services.
Kelvin Tan is the Global Lead for Standard Chartered nexus, a Banking-as-a-Service proposition. Based in Singapore, Kelvin has been leading the build of the white-label plug and play banking solution with a vision to redefine the banking experience for customers globally by digitally marrying ecosystems to banks. The first market in Indonesia, where the Bank has announced two partners, Bukalapak and Sociolla, with further plans to expand in the region.
Prior to that, Kelvin has held multiple roles in multiple organisations and industries. His roles have spanned consumer finance, transaction banking and FMCG, covering product, analytics, business management and research. He has worked in Singapore, Indonesia and Thailand.
1:56 Glenn: Welcome to Touchpoints. Very very, very happy to have the incredible Kelvin Tan from Standard Chartered nexus with us, who has had a pretty incredible journey to where he's got. And like always, we're going to start off with that very simple question. Give us that two to five minute story, Kelvin, of how the heck you got to this place, because it’s a fascinating space to be in.
2:24 Kelvin: Glenn, I have no idea how I got here. . It's a long history of trying to do something that is atypical. So I started out that's the journey really started in college I'm a political science major, I went to grad school international relations did most of my classes at the business school for some strange reason and decided to have a bit of fun with that.
Wanted a career in the foreign service. I ended up in a management associate program in the bank. And that's completely out of my comfort zone. And I thought that would be fun to try and if you look at my journey professional career, so far it's always been the case of trying' something that I've never done before started out in consumer finance moved into consumer analytics, moved into consulting, moved into corporate banking in the transaction banking side and then came back to retail that could have been for a while and similar this idea about four years ago, before banking as a service was even a term. At that point in time, I called it platform banking in 2017. Right? And effectively the idea was very simple one there are many questions to solve but the biggest question to solve as an industry for the retail and SME banking perspective is how do you create a business model that allows you to significantly scale balance sheet without actually incurring the traditional costs of scaling something that is at operating profit perspective or cost income ratio perspective something below 50%.
Now and the way I thought about it, given the, the circumstances of the time, given the competition and given the images of larger ecosystem not just super apps, why would a bank like Standard Chartered, given that it has 40 markets 40 licenses around the world, not in Europe and that allows for it to really scale create by white labeling itself effectively. Why would you invest some money, build up technology layer that will help you scale that because you know in the banking as a service model, you will need the ability to process tens of millions of concurrent usersm not ten of thousands which traditional banking legacy system have to restrict you to. So why wouldn’t you invest some money, build out the tech capability required to deploy into the bank, leverage the fact that you have 40 licenses around the world and make the bank the largest invisible bank in the world. That really was the genesis. Genesis of the idea went through a long conversation. Obviously, many, many debates in the bank as large and as global as Standard Chartered.
But eventually got funded, built out a prototype, got a partner on board, as you know, we've announced two lives partnerships in Indonesia. We are rolling out to Malaysia we are rolling out to looking at Vietnam and Thailand and also looking at various other markets in Africa and the Middle East now. We anticipate that this will roll out maybe one or two countries a year from this point on and then hopefully we roll out to all 40 markets in the SC networks. That’s essentially the two-minute story of how we started and how we got to where we are today. It was me with five members and a coffee with Bill that started the journey Now we are 250 men and keep growing because we are building multiple systems in multiple countries.
5:48 Glenn: Let’s take a step back because for the 99% of people on the planet white labeling a plug in play banking as a service solution seems unfathomable. So in its most simplistic form, can you explain to us what it’s really doing? And maybe let’s just talk about the example of your Indonesian partnerships to provide some context, because I think that’s going to be where some, some people will actually connect those dots and go, oh, e-commerce integration system ecosystem, that whole service that you’re adding in there, that would be a fantastic place for us to start.
6:36 Kelvin: Thanks Glenn. I mean, I’m a simple guy, so I speak in simple terms. It’s very simple, Banking as a service really is the ability to allow anyone to turn themselves into a bank without the heavy lifting of becoming a bank. Anyone from your favorite e-commerce retailer to your favorite social media site, to your favorite whatever fintech player? And what we provide is the ability that comes with a full banking license and the tech that comes with it effectively any kind of financial services product that would be embedded in the user journey. So the customer journey of anyone. So today, if I us
Amazon, I order from Amazon, I buy stuff on Amazon, and I check out. It’s the end state of this is that Amazon Bank becomes live, on the back of this, and there’s a new button on the app or companion app depending on the execution requirements of Amazon and Amazon bank is live powered by Standard Chartered. And Glenn opens an Amazon bank account takes on an Amazon bank loan, takes an Amazon Credit card at the merchant on Amazon take in the Amazon bank corporate account and so on and so forth. So effectively it is bringing banking to you rather than you having to come through the bank, at scale, Yep.
7:55 Glenn: So for those large e-commerce players,what is the big drawcard for incorporating banking into service into their offering?
8:03 Kelvin: It’s the same reason why so many of these players are moving to financial services. One is the alternative revenue stream, which is great, but more interestingly, obviously is the fact that creating financial services as part of your ecosystem creates stickier customers effectively. Customers who do more to transact and generate more data on your platform that allows for you to find new monetization opportunities. From the platforms, perspective, it makes a lot of sense. From the banks perspective, it makes a lot of sense. In fact, the reason why we call nexus, I called it nexus four years ago is the fact that it ticks off all the boxes of all the key players in the ecosystem. It ticks off the boxes for the bank because it is a very relatively cheap, scaled way of growing the balance sheet. But the ecosystem players it accounts for the ability to create stickier ecosystem without having to go through the pain of applying for a banking license and the capital requirements around that for regulators, they’re awesome because now the bank is actually at the back of it, which means that the regulators don’t need to change the way they regulate the system. They don’t need to go after the fintech players and all the ecosystem players. The banks anyway know exactly what the regulator wants and how to deal with it. And for the end consumer is fantastic because once you have something like this, the better experience will also allow for the fully hyper customized offerings, right? What Glenn does on Amazon what you buy, how you buy it. And what that information will do in terms of your next purchase and your next process and then better underwriting because then going your repayment, your repayment tendencies, will allow for you to get better pricing on goods, for example. All of that ticks many, many, positive boxes, not to mention financial inclusions, right, reaching out to people that banks otherwise would not be able to reach out to. So that’s why we call it nexus, ticks off all the four key players in the ecosystem. It’s a nexus of interest.
9:59 Glenn: So Kelvin, you say you’re a simple man and you speak simple languages but getting this off the ground has to be an incredibly complex challenge, especially when you’re breaking ground in areas that, if not nobody, very few have embarked on before. I know there are some other players out there at the moment, but what are some of the complexities that you’ve had to deal with and the challenges as an organization to be able to actually deliver this in market
10:33 Kelvin: Well, not many people, I don’t think anyone has actually done this inside a large global banks that that’s a first for us. But the key challenges are multiple right? The biggest challenge is the fact that something like this requires so many stakeholders to pull off, not just internally but also externally. You need the partner. You need to do the right ecosystem, and you need to partner with the right kind of cultural institutions to do to have this conversation with and close that out. Plus, you need internal support those you need to explain the concept to multiple stakeholders in the bank. Right, for treasury to risk, to finance, to legal, and given number of contracts that are required across all of these things. Now, well, all I can say is the bank and Bill in particular have been massively supportive. They’ve managed to, Bill and Judy who is the head of retail and SME for Standard Chartered Bank and Alex Manson from SC Ventures. They’ve been massively supportive and what they have done is they took my advice and they created and insulated, basically by my team from most of the bank, we have our own technical team, we have our own operations team, we have our own product team with the ability to socialize with the bank, but more or less making dependent decisions. I forgot to mention Andy as well who is the CFO who’s been massively supportive because obviously the funding comes from that. So yeah. It’s been a massive journey and I mean, yes, it could have been faster if you did it outside the bank, but you wouldn’t then you wouldn’t actually have the access to the licenses and the ability to scale this globally. So it’s a trade off and I think we’ve managed the trade off decently well. The proof in the pudding now is how fast can we go to ten markets, twenty markets, in the next 5 years.
12:17 Glenn: So talk, talk to me about Bukalapak, I mean 100 million customers, 13 million sellers. What does it mean for them? It must be a game changer for them.
12:41 Kelvin: Yeah, I mean, they’re very excited right? They did an IPO last year and they are looking forward to becoming a full fledged financial services provider. I mean they already have something on it they so some, if I’m not wrong some wealth, stock trading, and this effectively ties it up for them right, allows them to offer deposit accounts, loans and credit across their user lifecycle, both sellers and buyers. I think the partnership has been a very good one. Teddy, myself, Willix. We’ve been in close collaboration. Teddy is the president, and Willix is the current CEO so it’s an exciting journey. And the same can be said for Sociolla in Indonesia, which is the second partner which will come online not long after Bukalapak is up, we are actually in beta. We are live in production. We are just waiting for final regulatory approval to open the flood gates effectively.
13:35 Glenn: So what will the Bukalapak customers able to do?
13:39 Kelvin: In the first instance, they’ll be able to open a Buka Tabungan bank account Buka Tabungan is the brand that Bukalapak has chosen. Buka Tabungan bank account will be a full fledged CASA account with no caps, no limits on payments and interest bearing, and the interest bearing and the interest I believe that value proposition ties into how much you spend in Bukalapak. So the idea always is to support the partner’s value proposition.It’ll come with a debit card, a fully digital debit card. The onboarding process will be the first in Indonesia, it’s completely digital. There’s no WhatsApp call back via call center. Our current record is 2minutes 35 seconds from clicking. Yes, I would apply to actually having a live account and transacting. So that’s our current record.We hope to beat it in the near future. Then then that’s what you’ll get at the first instance. Then the next iteration will be loans, which will come sometime this year, followed by cards, which will hopefully also come sometime this year and SME accounts. So that simplicity and ease of use.
14:42 Glenn: Must be a massive thing for them in and around creating their sticky customer.
14:47 Kelvin: That’s right. And it helps that we have a good partner in Bukalapak. So effectively when you say you want to sign up for a Buka Tabungan bank account, it effectively allows you and you say, yes, to the T’s and C’s, the data sharing between Bukalapak and the bank happens, and changes the way you onboard and underwrite customers.
15:07 Glenn: So you you’re looking at some of the other Asian countries in regards to the next steps,Vietnam, and the suchlike
15:16 Kelvin: That’s right.
15:16 Glenn: Are there any different like regulatory challenges that that really make it a struggle to open in any of these markets? Or is it that the reason you’ve chosen these markets because you know them better it be easier to get things off the ground.
15:33 Kelvin: No, ah, I have a history of picking the toughest battle and making it work right and so so we chose Indonesia firstly because there is a great partner there that we found that was very advanced and we got that and more importantly, the regulatory environment in Indonesia, while challenging, will also provide a great litmus test. If we can clear it in Indonesia, I think the rest of the ASEAN countries will become hopefully a better and simpler conversation. We also have great the bank has a great regulatory relationships given its footprint in all of these countries. So that that for us is what we leverage on with the local teams.And the next country we will roll out in is Malaysia. We are very close to signing the first partner. We have three or four partners in the pipeline there and two or three partners in Vietnam. A couple of partners dispersed across, like I said earlier, Thailand, potentially India and some parts of Africa and the Middle East. We have prioritized them, of course. I mean even the 400 man team, can’t do more than one at any one time.
16:31 Glenn: So that must and you want to create some challenges that are around scaling. Well, you can scale the infrastructure. It’s the onboarding of the partners that can create not just not just backlog, but headaches as well.
16:43 Kelvin: Yeah. Actually the biggest problem is not interest from partners, It’s plenty of interest from potential partners, and we will chase them and we will go through, there’s a process and we will run through that. We’ll probably end up with one big partner in each country in the selection of medium sized partners around them. Right, so you have like five or six partners in each country. But what what’s most challenging really is scaling up at a cost efficient manner. The technology resources required to deliver them right. So obviously we are looking at the usual places – Vietnam, Philippines, India and we have, like I said, 250 people today dispersed across multiple countries as we go, each time we have a new country and new partner, we’ll need at least another 30 engineers right, and how, when we find them even if we can engineers putting up all of those are the key, key challenges that we will face, I mean, especially in COVID as well. While it is a boon for work from and people working it is also difficult from a visa perspective if we want them to be looking at this.
17:43 Glenn: So there’s one thing I’d like to go back to and touch on because I think it’s a fascinating enhancement to the experience that people at organizations are going to be able to rollout. And you mentioned something along the lines of interest rates will be tied to spend on the platform. So data must be playing a massive massive part in this and how these massive e-commerce platforms can actually utilize even more data to make better decisions. To make stickier customers and to increase the frequency and volume of purchases on their platforms.
18:26 Kelvin: Yeah, and it’s data usage on both ends. Right for us well in terms of how we onboard how we underwrite how we actually create a better most customized financial services experience for the customers. So yes, data sharing is key. We obviously abide by all the regulatory restrictions around data sharing. And where there are specific use cases that make a lot of sense and that do not compromise against those. We obviously have the right conversations with the regulators to get it through. So yeah absolutely. The whole idea is for the end to end experience for the end user.
19:02 Glenn: It would be it’s, I think it’s going to be a really, really interesting space to watch them. When these e-commerce giants have access to additional incentives to really make these customers more sticky and become those brand champions of themselves. And through the simple action of providing these services and having access to that additional layer of data which must put a massive drain on resources in regards to data centres and just the sheer cost of hosting and analyzing that data must be incredible.
19:42 Kelvin: It’s not that bad, most of the stuff that we do, where allowed by the regulators, is on secure public cloud and we work with the cloud provider. So it’s not terrible from a cost perspective. And we are also very cost efficient in terms of how we deliver the platform. It’s not a whole bunch of other vendors that essentially get signed on and melded together. It really is quite a bit of IP builds on the side of the bank from open source so it’s but we’s obviously upgraded because we wouldn’t be able to move into production without clearing every single security requirement of the bank which is onerous.
20:18 Glenn: And you know, with that in mind, it’s also thinking about those markets and what you need to do to have that infrastructure in each of those markets, data sovereignty is that an issue that you’ve had to overcome in regards to where that data is stored and what you do with it?
20:34 Kelvin: Yup, so different markets will have different approaches to data sovereignty. Vietnam would probably have less issues with big business current regulations. Indonesia obviously has a significant focus on data sovereignty and we comply.
20:46 Glenn: Pretty hard to pretty hard to argue with isn’t it? It's a deal or no deal. Yeah excellent. What’s next for you in regards to what we’ve got coming up over the next six months? You’ve got those big deals coming coming through. Are there any iterations in and around the service in regards to the service that you’ve got to focus on? And we’ll finish up with that because there is you’ve unpacked a whole heap of great stuff here.
21:17 Kelvin: Yeah. I mean, this year focus is executing Indonesia well and the roadmap that I talked about earlier in terms of product and partners and then signing Malaysia and deploying for Malaysia, hopefully we can go live by the end of this year, no latest and starting the journey with Malaysia as well, theoretically it should be much simpler given that this stack has been built and its a matter of deployment and integrations and testing. But we’ll find out, I guess, when we actually go on that journey. I’m not going to pretend that we can foresee everything.
21:49 Glenn: If you’re not breaking anything, you’re not growing right? You’re not learning.
21:53 Kelvin: Yeah, and something will screw up as I’ve learned every day something will screw up its riding the wave. I think the challenge for what people call intrapreneurs like me is learning to be resilient and ride that wave when things screw up either if it’s a system screw up or if it’s a technical screw up, it’s actually much easier to deal with when it’s people who I don’t know who, Who are outdated or who don’t understand the new world of data and digital. And that becomes a bit more frustrating process.
22:27 Glenn: That’s great, thanks Kelvin look from a personal perspective I have been absolutely fascinated and loved following your journey. I think it’s just such a great example of you never know your limits unless you push past what people believe as possible.
22:48 Kelvin: Yeah I mean, everyone should give it a shot, right? What’s the downside? Like most people wonder how I actually pitched this. I said I sent an email to Bill Winters, it’s public knowledge what his email address is. All right, and what’s the worst case that could happen? The worst thing that could happen is he forgets, he thinks it’s a stupid idea and he forgets my name 30 seconds after meeting me.
23:12 Glenn: Yeap! I struggle to see how anyone is going to forget the name Kelvin Tan over the years to come.
Where to find Kelvin:
Standard Chartered nexus: https://sc.com/scnexus
SC Ventures LinkedIn: https://www.linkedin.com/company/scventures/
Kelvin Tan LinkedIn: https://www.linkedin.com/in/kelvin-tan-6990844/
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