Global financial hubs are slowly paying heed to challenger Fintech startups as they disrupt every sector in financial services. The traditional asset and wealth management industry is also seeing a major shift with new technological innovations and business models from startup WealthTech companies.
In this session, the senior management of two exciting growth companies in the Fintech space, Endowus and iSTOX, will talk about the major shifts in the industry. They are the rare breed who have successfully made the jump to Fintech, leveraging their extensive experience and successful careers in two of the biggest names globally in this field - Morgan Stanley and UBS.
Oi Yee Choo, Chief Commercial Officer of iSTOX and former Head of Investment Banking for UBS, and Samuel Rhee, Chief Investment Officer of Endowus and the former CEO & CIO of Morgan Stanley Investment Management, has discussed the following topics:
03:36 Oi Yee and Sam journey from banks to fintech
14:49 Cost of traditional banks
20:35 Oi Yee's motivation to jump to fintech
25:19 Introduction to fintech
30:35 Understanding digitised securities
36:14 What is iSTOX?
47:25 About Endowus's journey
Excerpts from the session
What are your thoughts about the high costs of traditional banks? (14:49)
Oi Yee: In my 20 years in banking, I observed that there is a lot of regulatory burden that crept into banks, be it in wealth or investment banking. Traditional banks also find it challenging to manage the costs of IT systems.
This leads to higher costs of providing services, and banks are forced to have a higher entry barrier into private banking services. This is especially so for private market access whereby the nature of the products are higher risk, too bespoke to offer for smaller clients.
Sam: The private banking is used to sell products, push leverage, rather than provide advice. There is an inertia to change the way they operate because of the high fees they are earning. With clients getting more sophisticated and educated, and with better options available, there is a greater interest of non-traditional banking products.
What are some examples of private market investments? (39:21)
Examples of private market investments include private equity investments, investing in private companies like GoJek, hedge funds investments. Many of these are bespoke by nature, with different investment time frames, investment holding structures. These make standardization of the assets difficult and giving access to investors inefficient. Institutional investors often have full access, family offices have some access, but HNWI may not have access. The risk profile and liquidity of these private market products make it difficult.
iSTOX wants to be the platform that gives access to bespoke product to HNWI and family offices as well. We have listed digitized bond, and 3 fund offerings trading on iSTOX.
What were your motivations joining with a startup and fintech (55:28)
OI Yee, in a large organisation, there is a big team for everything; PR, digital marketing, legal. The issue is that with such clearly defined machinery in place, the organisation is used to not asking the "whys" and carry on functioning inefficiently. In a startup none of that exists, we would be able to solve any problem creatively.
While it would be difficult to encourage change the mindset traditional players, we would need to be patient and be guided by the vision of the company.
At Endowus we also work with traditional financial services companies, such as UOB Kayhian and the fund managers. We talked about how the SGX T+2 settlement does not make sense in the day and age when Netflix is on demand. There are a lot of inertia to change with traditional companies, which is why companies like iSTOX and Endowus want to disrupt and make changes in the industry. Why should institutional share class products have to be only accessible to big institutional investors? Why can't we buy private market investments?
Investment involves risk. The value of investments and the income from them can go down as well as up, and you may not get the full amount you invested. Past performance is not an indicator nor a guarantee of future performance. Rates of exchange may cause the value of investments to go up or down. Individual stock performance does not represent the return of a fund.
Any forward-looking statements, prediction, projection or forecast on the economy, stock market, bond market or economic trends of the markets contained in this material are subject to market influences and contingent upon matters outside the control of Endow.us Pte. Ltd (“Endowus”) and therefore may not be realised in the future. Further, any opinion or estimate is made on a general basis and subject to change without notice. In presenting the information above, none of Endowus Pte. Ltd., its affiliates, directors, employees, representatives or agents have given any consideration to, nor have made any investigation of the objective, financial situation or particular need of any user, reader, any specific person or group of persons. Therefore, no representation is made as to the completeness and adequacy of the information to make an informed decision. You should carefully consider (i) whether any investment views and products/ services are appropriate in view of your investment experience, objectives, financial resources and relevant circumstances. You may also wish to seek financial advice through a financial advisor or the Endowus platform and independent legal, accounting, regulatory or tax advice, as appropriate.