YONG HUI YOW: How did you get involved with Fastacash?
VINCE TALLENT: In 2012, I had set up my own investment fund based out of Hong Kong and I was looking for deals to invest. I was approached by Shankar [Narayanan] and Michael [Wee], who are the co-founders of Fastacash. During a trip to Singapore, I met them in the lobby of the Hilton hotel in Singapore. He had just three slides with him. He asked me if I had any kids. I said yes, I have a 17-year-old daughter. He asked me how I communicated with her. I said Whatsapp, Skype. Then he asked me how I gave her pocket money. I said she taps me over the shoulder and asks if she can have two hundred bucks. Then he asked me how cool would it be if I could just Whatsapp it to her? That got me hooked.
YONG HUI: So you invested soon after.
VINCE: Yes, we led the seed round together with a couple of close friends. My fund was called FundingtheFuture. I love the name, by the way. It was a pretty large seed round of about US$1.5 million.
YONG HUI: Why was the strategy to help banks get into social payments?
VINCE: A couple of things happened last year. First, Facebook got a remittance licence in Ireland, which gave them the ability to move money across Europe. That was massive news. Second, Facebook announced Facebook Pay in the United States, so you can move money across Facebook on Visa and Mastercard across the country. Third, WeChat did a billion transactions in one day on Chinese New Year. When you think about these developments, you know the banks are going to be interested. The banks can either not do anything, or they can partner with us. If the banks don’t do anything, the social networks are coming anyway. They will enable payment capabilities on their networks because everyone is on there. Are they going to stop people from using social payments on these platforms? If Whatsapp launches payments... all the 18 to 24 year-olds coming out of school, getting their first pay check. Guess who they are going to bank with? Bear in mind that in India, half the population is under the age of 34. In Vietnam, 70 per cent of its population is under the age of 40.
YONG HUI: How do your partnerships with the banks work?
VINCE: We have a very strong B2B2C model. We embed our technology into the bank’s app, so when you send money using PayLah for example, you do it through one of our partner banks. If you download a bank’s app, say, PingPay in India, you will see Axis Bank as the main brand, and also Fastacash’s logo as the secondary brand.
YONG HUI: How much money is moving through Fastacash’s technology today?
VINCE: We are a private company, so it's hard for me to disclose those numbers, but I will give you some perspective of the market. The global annual cross-border remittance market is US$685 billion. These are moving across Western Union, MoneyGrand, Xpress Money, banks, the smaller guys and so forth. What's the likelihood that one per cent of US$685 billion will move onto social networks? 3.5 billion people are already on social networks of some form, and roughly 1.7 billion of them access social networks via smartphones. If we can deliver that one per cent, we will deliver a ton of value for our shareholders. We also move airtime. India has 900 million people on mobile phones. 98 per cent of them are pre-paid. In Vietnam it’s the same. Out of that US$685 billion, about US$75 billion terminates in India. Another US$65 billion terminates in China, US$40 billion in the Philippines, Indonesia, Vietnam, Thailand ... When you add up all the Asian destinations it’s around US$340 billion. That's why we are here. If we can build an Asian presence around some big banks who are receiving the funds, that will give us a very strong position to go to the originating destinations.
YONG HUI: How much of a cut do you take from the transactions?
VINCE: Normally, the commission is one per cent as a sender fee, and in addition to that, there is the Forex spread, which can be between 2 and 8 per cent; so anywhere between 4 and 16 dollars on 200 dollars.
YONG HUI: How about domestic remittance?
VINCE: Domestic remittance is also a very big market, but that’s more of a volume game, because the margins are quite thin. India has got US$70 billion transacting within the country. Vietnam also is a big market for domestic transactions. International remittance would be our priority.
YONG HUI: How about money coming out of Singapore to say the Philippines?
VINCE: Rather small, actually, as compared to the Middle East to the Philippines. But what’s striking to me is if you go to Lucky Plaza on a Sunday, there are so many people sitting there with a token in their hand, and it takes them four hours to send money home. I was at a meeting with MAS [Monetary Authority of Singapore] and I told them that is a huge problem right there, and that we will digitise the whole lot! Why should you queue up for four hours to send money home? It's ridiculous, and in Singapore. You want to build a Fintech company? If you solve that problem, you will have a Fintech company.
YONG HUI: Do you find it a hurdle that the sender’s family may not be savvy enough to use the app?
VINCE: If you use Whatsapp and you have family in the Philippines, what do you tell them to do?
YONG HUI: Download the app.
YONG HUI: Exactly. Unless they don’t want to talk to you, they will. Now if you tell them to download the app because you need to send them money, what do you think they are going to do? They’ll go: oh shit, I need the money, so I’d better download the app and figure it out. Have you ever seen a single advertisement from Whatsapp? That's the beauty of this.
YONG HUI: It's kind of how PayPal did it.
VINCE: You're absolutely right, but PayPal took a very long time to build out their customer base because they went for a B2C business which needed licenses. Our model is to partner with the licensed players so it's a lot quicker.
YONG HUI: So having a standalone app solely for sending money makes much less sense than having it as a layer on top of messaging.
VINCE: Correct. The social guys have a big role to play in this shift, and WeChat has set the standard. They now have a banking license in China. They are the first messaging channel that has become a bank, and there is a reason for that. They can see the behaviour of their users. They know people will move money if you make it easy for them to do so.
YONG HUI: What about money laundering concerns?
VINCE: That’s always a concern, and that’s the first thing DBS Bank asked me when I met them - KYC [Know Your Customer] and AML [Anti-Money laundering]. But remember, Fastacash is a technology partner; KYC and AML are the bank’s business because they got the licence. That's the beauty of our model. Let me draw an analogy with SAP. They sell a lot of technology to the banks, but they don’t have a banking license. Likewise, we are a technology partner which enables a social layer for the banks. When you get issued a card, who issues you the card? The bank! It's never Visa or MasterCard, so the bank has to do the KYC. If something goes wrong with the transaction, who do you ring?
A lot of people are looking at us, and saying: can this company really do what they say they are going to do?
YONG HUI: Do you see an application in payrolls?
VINCE: I totally agree. That’s huge, and it's on our radar screen. Payrolls will migrate to social over time. Why can’t I send you your payslip over Whatsapp? Already as a company, we don’t use email; everyone just Whatsapps me. Fastacash has twelve verticals we want to go after, but we are focusing on two verticals for now: remittance and airtime.
YONG HUI: How does airtime work?
VINCE: In India, the use case is simple. If I'm the father and you’re the son and we are chatting on Whatsapp. If you run of data, I can send you 300 rupees to top up your mobile phone. We launched that through PingPay, with Axis Bank, one of the largest banks in India.
YONG HUI: Can users deposit money to their bank accounts?
VINCE: Absolutely. There's no stopping you from using your digital wallet to bring funds in. Certain banks do allow what you are saying. It's going to migrate towards people using their digital wallets to pay for things without using cards.
YONG HUI: Are Visa and MasterCard threatened then?
VINCE: Huge point. There is a big industry push right now where the banks think they can use digital wallets to bypass Visa and MasterCard. They are saying: let the consumers choose. Over time, I can see DBS’s PayLah being used widely because there will be a whole merchant ecosystem on the platform. In India for example, you can pay for a movie with your Oxigen Wallet. Oxigen is one of our partners in India. You don’t need a card, so people will make their choice. We also have a partnership with Visa Europe, and they want to embed the Fastacash technology into 3,700 member banks in Europe. That’s a big deal for us. Visa considers social to be a very important component of card-to-card transfers. Visa has got 2 billion cards worldwide. The integration work has already started. So what you're alluding to is coming. Visa and MasterCard are stepping into the space.
YONG HUI: Will PayPal get into social payments too?
VINCE: They have reached out to us and we are talking to them to see how we can enhance their products using our technology. Their legacy systems are based on email. If you look at how friends and family communicate these days, it’s not email; our communications have moved onto the messaging layer, but transactional capabilities have not. Our role is to enable that move to happen. We are taking the payments industry and putting it onto the social layer. Financial transactions are usually very cold experiences. We are trying to make it cool and social.
YONG HUI: Why did it take the social networks so long to do this?
VINCE: Yeah, that's interesting. There are two reasons. First, the whole focus has been to acquire users. Monetisation was less on their radar screens. Second, from a social perspective, payment is naturally not the obvious priority. But eventually, they will do it.
YONG HUI: If you do an IPO, might it be in Singapore?
VINCE: It is one of our options. We started in Singapore, and I would love for it to be here, but there are a lot of other options. We have everything here: the technology, product, and the intellectual property. I was at MAS, telling them it is really hard to scale a business here because talent is really hard to find. So we might think about India, Vietnam, and the Philippines. It's quite funny because our sales team is in India while development team is in Singapore. Usually, it's the opposite.
Financial transactions are usually very cold experiences. We are trying to make it cool and social.
YONG HUI: What do you think of Bitcoin?
VINCE: Personally, I think it's a good thing, but the market will tell you in time. I'm a big believer in letting the market decide. If you put something out, and they use it, it means they like it. If they don’t, it’s telling you something. Bitcoin is unregulated now, which worries me a bit. But we can and will move anything of value. We can move dollars, pounds, tokens, coupons, airtime, and crypto-currencies. That's how we have designed the technology. You can attach any form of value to it to be moved. Why can’t I send someone a discount coupon over Whatsapp, or over Facebook Messenger? Maybe even a song or birthday greeting. It's very rich in terms of what it can carry from a technology standpoint. The possible applications of what we have built are enormous.
YONG HUI: What does the future hold for fastacash?
VINCE: We have quite a large capital base for the size of the company. We have raised US$23.5 million. A lot of people are looking at us, and saying: can this company really do what they say they are going to do? Our vision is a very big one. Whilst we are growing quickly, we have to be disciplined around how we execute. Our investors expect milestones and deadlines to be met. I'm not sure the co-founders thought it would become this big either; it happened so quickly. It went from two guys with an idea to a real company now.
YONG HUI: What is this very big vision?
VINCE: Phase I: I cannot send money to my daughter over Whatsapp; that needs to change. Phase II: If I'm on Whatsapp, and she's on Viber, and I cannot send her money; that needs to change too. That's the vision. It's becoming a reality – you can feel it.
YONG HUI: Is it the end of the bank branch?
VINCE: You know, my daughter is 22-years-old, and she's never been to a bank branch. DBS bank is investing 200 million dollars to enter India – zero bank branches. Just think about that. That answers your question. It doesn’t make sense to have a branch anymore. And the amount of money banks are spending on digital strategies is huge. It's coming like a steam train. Axis bank in India is spending US$60 million to digitise loans, investments and insurance. BBVA, a very large Spanish bank, acquired a digital design firm, Spring Studio, for US$55 million. That is unheard of! – a bank buying a design firm. It shows you what the banks are thinking about. The reason banks are focusing so much on digital technology and design is because if they don’t get the user experience right, no one is going to use their app.
YONG HUI: Do you find that being older is an advantage in Start-up land?
VINCE: I'm 48 years old, by the way, just to give you some context – old, relatively to the usual start-up. Many start-ups have founders who are in their late 20s and early 30s. If you're building a social company, that’s totally fine. But in the payments industry, where you need to deal with the banks, experience makes a big difference. The banks will be reluctant to deal with a 27 year-old who goes in there to sell a payments technology. On our product and design side however, we have got some amazing young talent.
We are the bridge between the two worlds of social and payments.
YONG HUI: How large is your team?
VINCE: Currently, we are just nearing 50, and will cross 50 in the next couple of months. We want to bring in more satellite teams to scale our sales capabilities. Currently, it's two or three guys who are doing most of the selling, including me. The challenge also comes on the engineering side. The more customers you have, the more you need to build out your engineering, so we might need offices in India or Vietnam.
YONG HUI: What would you say is your management style?
VINCE: My style has always been open and transparent. Having been in big companies, mid-sized companies, and smaller companies, I can say that for the latter, it is hugely important for people to know, very clearly, exactly what the objectives are, and what you are trying to achieve in the short-term and long-term. There has to be no ambiguity. In larger companies, that tends to be lost. There should be no cracks between management and employees. When you see cracks between management and employees, that's when execution does not happen. But it can be fun as well; it's not work all the time. We try to organise events every now and then. We try to keep our people incentivised and focused on our mission.
YONG HUI: Overall, are you saying that even if the social platforms add payments, the banks may not necessary trust them, but would prefer Fastacash as the go-to guy?
VINCE: I love how you put it. Yes, we are the bridge between the two worlds of social and payments. There is a role for us to play here. We are excited about what we do, and I think people are starting to listen.