French Fintech and Malaysia
As a speaker at the Smart Showcase Series – The Future of Fintech in ASEAN conference, organised by CIMB ASEAN Research Institute (CARI) in August, I realised that cooperation between France and Malaysia on financial innovation could certainly be promoted a bit more forcefully. Here is why and how.
Fintech in France
France’s Fintech grows on quite fertile soil. First of all, France is the world’s sixth largest economy, fully integrated into the EU single market. There is a strong banking and insurance industry, with five French banks among the 10 largest in Europe. Thirdly, it houses a dynamic environment for tech innovation and start-ups with abundant talents in engineering, sciences and business administration. Fourthly, there is a mature network of incubators including the world’s largest, Station F, in Paris and lastly, France is now the top destination in Europe for Foreign Direct Investment (FDI) in research and development (R&D).
Boasting apart, the French Fintech ecosystem was not an early starter. It took a joint effort by business associations, government and financial regulators to adopt a radical change of policy in order to promote financial innovation. The result, today, is a very active sector, fast-growing, and nurtured by robust public-private collaboration. Public funding is abundantly available for Fintech start-ups, notably through the public investment bank BPI France. We have specialised incubators such as The Swave, a public-private Fintech-only co-working space, or Le Hub (at the French Federation of Insurance) and of course, incubators/accelerators within major banks, such as BNP-Paribas or Credit Agricole.
Fintech in France now counts around 500 companies, employing 10,000 people, who are 31 years old on average. Seventy-five percent of the founders of these start-ups have prior experience in the financial industry – and they are also often serial-entrepreneurs. They raised €370 million (US$406 million) in capital in 2018 and generated over €1 billion (US$1.1 billion) in revenue. They cover all sectors of Fintech, from green finance to Initial Coin Offering (ICO), artificial intelligence (AI), blockchain, InsurTech, RegTech, cybersecurity, big data or internet-of-things (IoT). Some of the already well-known names are October (SME Financing), Lydia (innovative payments), Ledger (crypto-currency security), Qonto (online banking solutions for start-ups) or Alan (insurance), among many other sizable players.
How can we develop cooperation in finance innovation between France and Malaysia?
Well, we are not starting from scratch. Our annual “French Tech Tour ASEAN” which introduces the most promising French start-ups to this region has brought Birdee (an automated saving app) to Malaysia this year.
In 2017, a French start-up, Neuroprofiler was selected as one of the 10 finalists of the Malaysian Fintech accelerator program, Supercharger. They assess investment profiles through behavioural finance to improve compliance and client insight. Julien Revelle, founder of Neuroprofiler remarked the friendly Fintech environment in Malaysia.
This is especially true when both our central banks, Bank Negara Malaysia and Banque de France, are receptive to this fast-changing landscape. The French central bank is now equipped with a Chief Digital Officer and an innovation lab. Bank Negara Malaysia, on the other hand, also sees Fintech as a means to enhance competition, increase productivity and fundamentally change the way institutions provide financial services.
We also have our well-established banks, insurance and asset management companies already present in Malaysia such as BNP-Paribas, Société Générale, AXA or Amundi. They also serve as a channel for cooperation in financial innovation.
Lastly, our two governments are jointly supporting a study on the implications of Fintech development for the financial industry in France and Malaysia, conducted by International Islamic University Malaysia (IIUM) and University of Limoges. We must build-up and enlarge the impact of these existing channels.
We should also mobilise three new tools
First, is a dialogue between regulators. For example, the model of the dialogue on finance innovation taking place since 2017 between France and Singapore. Second, extend the French Tech Community Malaysia – our platform for tech innovation exchange – to Fintech. Third, encourage Malaysian finance players to board a plane to Paris and attend the next Paris Fintech Forum (28-29 January 2020) as well as the major start-up get-together VivaTech Show (11-13 June 2020) – nothing can replace first-hand contacts, and a trip to Paris is always profitable in many ways!