While fintechs have disrupted traditional banking, there can be synergy when strategic partnerships are established between nimble startups and incumbent banks.
Syfe, for instance, works with other bigger players in the market – client money is held in trust accounts with various banks, while client assets are held in custodian accounts with regulated financial institutions.
“We’ve always held the belief that it is not fintechs against the banks, but fintechs and the banks joining forces to create impact,” said Arora. “For a business like ours which focuses on digital wealth management, it doesn’t make sense to build our own fund transfer lanes. Therefore, we work with banking partners that have networks and expertise in this area,” he said.
He added that by using solutions from its partners, Syfe is able to lower its cost and focus instead on solving more complex problems.
A 2022 joint study by KPMG and HSBC on the region’s tech-focused startup landscape similarly pointed out that many startups see the benefits of partnering corporates, to address the challenges they face.
“Collaboration is a win-win, with startups gaining access to market exposure and customers, while corporates obtain innovative technology solutions that can help improve their business operations or access new markets,” according to the report titled Emerging Giants in Asia-Pacific.
As companies scale in size and geography, so too will their financial management needs change, necessitating that processes are streamlined for operational efficiency.
In July 2021, Syfe closed its US$30 million Series B funding led by Peter Thiel’s Valar Ventures, bringing its total amount raised to US$52.4 million. Among other things, the company said then that the funds would be used to expand into new Asian markets.
In Syfe’s case, its new digital solution supported the firm’s foray into an overseas market. It was able to launch the same setup in Hong Kong late last year. The fintech currently employs 130 people across Singapore, Hong Kong, Australia and India, with more than half its headcount in Singapore.
Looking ahead, Arora remains optimistic about Syfe’s growth, noting that the startup has added net assets month on month despite challenging market conditions.
“The retail penetration versus our Western peers is less than half, and we’re still at a very early stage of our growth. For example, the top three digital wealth managers’ assets under management combined in Singapore merely accounts for less than 1 per cent of the entire target market,” he noted.
“As users mature on their wealth journey and get more savvy... the aim is for our products to fit into their entire wealth accumulation journey, whether it’s managed fully, fully directed by the individuals themselves, or where we expect – somewhere in the middle,” Arora said.