Can a FinTech ecosystem improve access to opportunities for startups?

20% of startups fail because they can't beat their competition, 18% fail because of regulatory/legal challenges, and 35% fail because there's no market need for what they provide. If there was a whole ecosystem that fintech startups can leverage on, will more startups prosper?

As the frontrunner in fintech adoption, Southeast Asia is expected to generate more than $38 billion of annual revenue by 2025, more than 3 times of $11 billion in 2019. This continent, especially Singapore, has offered a preferred ecosystem environment, where interaction between the government, financial institutions, and fintech startups has been increasing.

As the Managing Partner of Blockchain Founders Fund, Aly Madhavji has 13 years in the blockchain and finance industry, with experiences in companies such as PwC, Paypal, and INSEAD. In this post-event quickfire Q&A from moderating the keynote panel "Fostering a vibrant ecosystem for FinTech startups in Asia", he answers some questions about technology gap, challenges of a fintech ecosystem, and strength in a community.

Thriving partnerships in fintech to bridge the technology gap with larger corporates

Partnerships in fintech thrive particularly at the intersection of legacy banking infrastructure and innovative digital solutions. By collaborating, large corporates can leverage the agility and innovation of fintech startups, while fintechs can benefit from the established customer base and regulatory expertise of traditional institutions..

This symbiotic relationship accelerates the adoption of new technologies and bridges the gap created by the slower pace of legacy entities. This is particularly important in emerging technologies such as blockchain and AI.

The future lies in innovation and technology, but we need a fintech ecosystem to make this happen. What's one major challenge?

While innovation and technology are indeed paramount, the major challenge in building a robust fintech ecosystem lies in regulation.

A balance regulatory framework is essential, ensuring that new technologies are safe and trustworthy for users, while also providing room for innovators to experiment and scale. Striking this balance is often complex and can hinder rapid advancements.

The stigma of failure needs to be overcome for a true ecosystem to form. Is stigma a hindrance in the Singapore context?

In the Singapore context, there is a historical preference for stability and a proven track record, which can sometimes lead to a fear of failure. This stigma can deter innovators from taking risks.

However, the nation has recognized this and has been actively pushing for a more entrepreneurial mindset, fostering a culture where failures are seen as learning opportunities. This has already led to 20+ unicorns in Singapore and many more to come.

Many fintechs are serving the same customer need. Can ecosystem help in consolidation and reducing duplication?

The ecosystem plays a crucial role in consolidation and reducing duplication by promoting collaboration, knowledge sharing, and interoperability standards. Through industry forums, consortia, and innovation hubs, fintechs can identify complementary partners, integrate solutions, and even consider mergers or acquisitions to provide more holistic and efficient offerings to end-users.

Healthy competition helps to strengthen the economy and provides more choices which leads to consumer surplus.

Aly Madhavji, Managing Partner of Blockchain Founders Fund