Financial innovation

My fintech story: from blockchain start-up to working with a bank

Financial institutions and tech disruptors are often assumed to be competitors, but they can have a lot to offer each other

The explosive growth of fintech has given rise to a series of new financial services and products that are changing the way consumers deal with banks. This year, a number of new collaborations have marked a major shift in the fintech-bank relationship, with many more partnerships being announced.

For banks, collaborating with fintech firms offers an opportunity to test out new technology quickly. But what do fintechs think about this relationship? We caught up with Edmund Lowell, founder of KYC-Chain, a financial services start-up, to get his thoughts on working with a bank.

Could you tell us about what your fintech does?

In today’s digital world, almost everyone has government-issued identity documents. But very few companies or countries allow for management of this identity in an online context. For instance: how do you set up a new bank account, how do you manage your own digital identity data, and who has access to it? At KYC-Chain, we want to empower the individual to be able to control and manage their digital identity securely, while allowing financial institutions to manage consumer data in an efficient and secure manner.

If a fintech start-up can make their product work with a regulated financial institution, you have instant scale in the hardest customer segment

Using blockchain as an enabling technology, we build ‘know your customer’ (KYC) onboarding software that helps businesses verify the identity of their clients and consumers, process regulatory checks, and onboard clients more quickly. More recently we’ve started to build a digital identity wallet, called SelfKey.

What inspired you to start your own fintech?

I started KYC-Chain because of an itch I had to scratch. I was in a legal tech start-up that helped clients to research, compare and determine their options for incorporating in a new country or jurisdiction. We would onboard our client, perform all the necessary KYC checks, incorporate the company, then introduce our client to a bank. We would often face long delays from that bank, who would do the exact same KYC checks, and take longer to do it. It was a painful experience for both my clients and our team. That was when I knew I had to start KYC-Chain.

You recently started working with us on a project, testing a KYC concept that could work for our clients. What makes a bank a suitable partner?

If a fintech start-up can make their product work with a regulated financial institution, you have instant scale in the hardest customer segment, with resources such as troves of customer data and regulatory experience. The partnership with Standard Chartered has encouraged us to start thinking about things like infrastructure, security, availability and reliability from day one. Speaking frankly: whereas in certain other industries you might be able to ‘hack something together’, you really need to be on point when working with banks.

Regulators are becoming more supportive of potentially disruptive technologies such as blockchain

Could you share a few tips for fintechs that want to work with a bank?

Firstly, it’s important to understand how banks work. Learn to speak the lingo and understand their technical jargon. Get to know the different functions within a department, and always learn from and listen to your customers, because they are the ones whom your product will directly impact.

It’s well known that large financial institutions are not always the most agile of companies, but even if the bank is moving slowly, you as a nimble fintech should be as quick as possible – this is the primary advantage you bring to the table. One of the key things banks gain from a partnership with a smaller company is speed to market. Another is the unique perspective offered by an outsider – you can question how and why things are done the way they are.

Lastly, be sure you stay true to your core values. For us the most important aspect of our product is the concept of self-sovereign identity. We feel very strongly that individuals should own and control their identity data, and we’ve stayed true to this ethos from day one through our current product line.

What has been the most memorable moment in your fintech journey?

I was invited to speak at the inaugural Singapore Fintech Festival last year and it was one of the highlights in my fintech journey. At some point during that festival I had a seminal moment: “Wow, the regulators in this region of the world are really going all out to actively support fintech!” Regulators are becoming more supportive of potentially disruptive technologies such as blockchain, and banks now view innovation, in non-traditional areas such as KYC and digital identity, as worthwhile.

Has anything surprised you about the banking industry?

When you think about a bank, words like ‘traditional’ and ‘processes’ jump out. However, during my time spent with the team at Standard Chartered, I was surprised at how innovative they can and are willing to be. Their level of understanding has made a real difference to our partnership, bridging the gap between the vastly different cultures of a bank and a start-up.

KCY-Chain was one of the finalists in the second iteration of the SuperCharger Fintech Accelerator, which is a 12-week programme, sponsored by Standard Chartered, for early stage and established fintech companies, providing growth tips, mentoring and joint venture opportunities.