Hong Kong FinTech Lab Held Some Surprises For Startups

By April 6, 2015Bitcoin Business
Click here to view original web page at www.forbes.com

The first FinTech Innovation Lab Asia-Pacific held surprises for both startups and banks, said Adrian Seto, who as Accenture’s director for fintech innovation in the region was responsible for the Lab.

“The banks really were surprised by the number of applications and the quality of the startups that came into the program. A few of the banks are in proofs of concept with the startups and some are moving beyond that. The startups were pleased with the amount of validation they received, the feedback they got from people at a very senior level in the banks.”

The Lab was similar to an executive MBA program in the pressure it places on participants, he added. They are required to base themselves in Hong Kong for the duration, and while executives can fly out for important meetings, the companies were asked to keep a senior person available for meetings and Lab activities.

“I saw them working through lunch hours, talking over coffee and tea, jamming everything in. I think they were exhausted after 12 weeks.” (See Rosalind Chen of iDGate on YouTube, for example)

Prashant Muddu, co-founder of the Know Your Customer (KYC) specialist Jocata, said his team benefitted from the experiences of the other participants.

“We learned quite a bit from them, such as how they were managing with leaner teams, fund raising strategies, market penetration strategies — especially from those operating in Asia — and just how they were managing their start-ups overall.”

A few companies found their ambitions to sell to tier one banks were unrealistic. One company decided to shift its focus from B2B in tier one banks to a B2C to prove themselves, and then perhaps return to approaching big banks. Another was directed to focus on SMEs (small and medium enterprises) and not aim so high.

“The CEO was shocked,” said Seto. “It wasn’t what he expected and he had to adjust his mindset. I told him this was a good thing. You don’t necessarily come into this Lab and do deals. It’s great if you do, but that’s not what it is all about. They could have wasted two years learning this, and here they got the feedback in 12 weeks.”

A participant from Taiwan, which has been successful in domestic security sales, quickly realized that regulations differ from country to country and they would need to tweak their protocol for different regulatory regimes.

All of the fintech companies wanted to expand into larger markets, except for the participant from China.

“They said if they could crack the Chinese market they would be just fine.”

Hong Kong
Hong Kong’s energy contributed to the Lab’s appeal.

Seto said Hong Kong itself was an important asset because of its immense energy and the cultural mix. The startups entered Hong Kong on training visas, said Seto. While Hong Kong is great for local startups — new firms can get business registration in a day — a startup coming in from outside to launch a business has to show that it can pay its staff for 24 months, a challenge for a young company. Accenture worked with the government on the visas, which also allowed Lab participants to travel in and out easily.

Jocata’s Muddu said he and the other co-founder, Andrea Weist, stayed in Hong Kong for the length of the Lab, running their business by Skype and conference calls  although he flew out twice for meetings.

In addition to linking tech startups to banks, Accenture brought in business experts to assist them. A lawyer who works with startups explained what to look for in term sheets, consultants specializing in China explained some of the fine points of doing business there, and a communications coach helped them develop their pitches. Accenture consultants discussed the challenges of doing deals with banks, while a venture capital expert talked about how fund-raising differs between the West and Asia.

Seto expects the next Lab will prove a little more adventurous. Some of the banks want to see a company working with an alternative currency like bitcoin, he added.

“I was surprised because they still can’t do anything with alternative currencies, but what it does show is a willingness to learn about these startups, andthe recognition that the technology around alternative currencies is impacting the financial services industry and they need to pay attention.”

“The banks really were surprised by the number of applications and the quality of the startups that came into the program. A few of the banks are in proofs of concept with the startups and some are moving beyond that. The startups were […]

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