SFF 2024 | Unlocking Financial Access: Boost’s Transformation From E-wallet Into Digital Bank

Summary

In this insightful talk at the Singapore Fintech Festival, the speaker shares the journey of Boost, a fintech platform that evolved from a payments provider to a digital bank. Emphasizing the importance of adapting to market needs, they discuss lessons learned, including the necessity of having a separate identity from a Telco brand, pivoting to small business lending, and the success of embedding finance into daily user experiences. With a focus on digital banking and embedded finance, Boost’s strategy highlights how fintech startups can thrive by enhancing existing business models and seamlessly integrating financial services into users' lives.

Takeaways

• 😀 Boost started as a telco-based fintech platform in Malaysia and expanded regionally to markets like Indonesia and Cambodia.
• 😀 The initial focus was on payments, but the company pivoted to lending as payments became commoditized and merchant relationships proved more valuable.
• 😀 The move to digital lending, targeting small businesses with limited access to credit, was a defining moment for Boost's business growth.
• 😀 The team behind Boost came from diverse backgrounds, primarily tech startups, rather than traditional telco or corporate roles, fostering a more agile and innovative culture.
• 😀 A digital banking license was crucial for Boost to address funding gaps and scale its lending business effectively.
• 😀 Boost leveraged its telco parent company’s large customer base but soon realized that separating the fintech business from the telco brand was key to success.
• 😀 Boost adopted embedded finance, integrating its services into familiar customer workflows to increase adoption and ease of use, like allowing retailers to toggle between paying with cash or credit.
• 😀 The company emphasized building an ecosystem of integrated products, from wallets to lending and digital banking, which created a seamless customer experience.
• 😀 Boost’s success lies in its ability to collect and process vast amounts of transaction data, using this data to underwrite loans for businesses that otherwise had no access to credit.
• 😀 The company learned that being adaptable and willing to pivot, based on market conditions, is essential for long-term success in the fintech space.
• 😀 Entrepreneurs should focus on how new services can enhance existing business models and always prioritize embedding their offerings into customers' existing routines and platforms.

Q & A

What is Boost's core business and how has it evolved over time?

Boost originally started as a payment platform in Malaysia but evolved into a digital lending business using alternative data. Later, it transformed into a digital bank after securing a digital banking license in Malaysia.

What was Boost's initial challenge when trying to leverage its Telco heritage?

While Boost initially tried to use its Telco brand and customer base to launch its fintech services, it realized that leveraging a Telco brand alone was not enough. The solution was to separate the fintech business from the Telco mothership, creating a distinct brand and identity.

Why did Boost decide to focus on small businesses rather than consumer lending?

Boost chose to focus on micro and small businesses (micro-SMEs) for lending because they believed the productive use of money (for business growth) would deliver better returns than the consumptive use of money (consumer spending). This strategy has proven successful.

How did Boost address the challenge of funding its loan book?

Boost realized that to grow its loan book significantly, it needed to solve the funding side of the equation. This led them to apply for a digital banking license, which allowed them to gather deposits and strengthen their lending operations.

What strategy did Boost use to connect its payment and lending business?

Boost built a strong lending engine and created a pseudo-deposit base through its wallet service. By acquiring a digital banking license, they were able to offer interest on deposits and better connect the two sides of their business—lending and deposits—creating a more sustainable funding model.

What was Boost's approach to embedded finance, and how did it improve adoption?

Boost embedded its banking and financial services into existing platforms and customer journeys. For example, retailers could toggle between paying cash or credit directly through their existing ordering systems. This approach made it easier for customers to adopt Boost's services, leading to significantly higher adoption rates.

What does Boost's success teach us about the importance of brand identity in fintech?

Boost’s experience highlights that while leveraging a strong brand presence is valuable, creating a separate, distinct identity for fintech services is crucial. Customers need to feel that the fintech service is standalone, not just an extension of the Telco brand.

Why did Boost focus on small merchants and how did this align with their thesis?

Boost's thesis was that there was an underserved segment of small merchants who lacked access to formal credit. They focused on this group because small merchants, particularly those transitioning from cash to digital payments, could benefit from access to lending services, which boosted their business potential.

How did Boost adapt its business model as payment services became commoditized?

As the payment sector became increasingly commoditized with QR codes and wallet interoperability, Boost pivoted towards lending. They recognized that building stronger merchant relationships through lending could provide more sustainable growth and value than continuing to compete in the crowded payments space.

What is Boost's current status in terms of deposits and loan book size?

Boost launched its digital banking operations six months ago, with approximately $1.88 million in deposits and a loan book of about $30 million, which is showing strong growth.