Lattice80’s office on the edge of Singapore’s downtown financial district is a modest set-up - the buzzing lower level houses most of the fintech start-ups, centred around ample plush sofas and coffee tables, while the upper level is smaller and quiet, with a more corporate tone.
Joe Seunghyun Cho, CEO of Marvelstone Group, set up the not-for-profit project in November 2016. Within two months, it was full to capacity, and houses 85 companies at the vanguard of Singapore’s emerging financial technology, or fintech, sector.
‘My assumption was that in one year, if I work really hard, I may have 50% occupancy. But I was completely wrong,’ he told Citywire Asia.
The waiting list for space is long, and Cho is already considering expanding into other recently vacated floors of the Robinson Road building. A former quant hedge fund manager, Cho is subsidising the space, running on approximately $3 million of losses per annum. He hopes to monetise the space through branding and events.
Singapore’s authorities are pushing hard to turn the Lion City into a hub for fintech through a combination of financial backing and regulatory support. The Monetary Authority of Singapore has set aside SGD 225 million ($164 million) to grow the fintech ecosystem by 2020, and has proposed loosening regulations for technology start-ups to allow them to compete with traditional players. The regulator appointed its first ‘chief fintech officer’ in 2015, and is exploring using a distributed ledger – the technology that enables bitcoin – to perform interbank transfers in the Singapore dollar.
Deputy Prime Minister Tharman Shanmugaratnam attended Lattice80’s launch, calling it an ‘important addition to this ecosystem for fintech’.
It is this environment, along with the country’s solid legal structure and geographical location, that attracted Cho. ‘Where else do you have English-based common law structure in Asia that can give access to different places, and yet is China-friendly?’ he said.
Ketan Samani, chief digital officer at UBS Wealth Management, said that support from the regulator has been crucial for the emerging ecosystem, as has the country’s strong intellectual property code.
‘We felt that where you have the ecosystem, where you have complete buy-in from the government and all policies and the incentive programs to encourage us to invest, it cannot be a better partnership,’ Samani, said on the sidelines of the UBS Future of Finance Challenge 2017 – a competition coincidentally held at Lattice80.
‘We enjoy the partnership with MAS. They give us a lot of guidance from the licensing, regulatory and legal perspective.’
Disrupting wealth management
One of Lattice80’s tenants is Bambu, which offers robo-advisory services to private banks and high net worth individuals.
‘What’s great is that all our potential clients [private banks] and investors want to come and see Lattice80 so they are always there. From a start-up point of view, that’s different and it’s great. Lattice80 is a focal point,’ founder and CEO Ned Phillips told Citywire Asia.
Robo advisory is one of the emerging innovations that is ready to disrupt the private banking industry, especially through products catering to the underserved high net worth market, some of which are being developed under Cho’s roof.
With a huge generational shift underway in Asian wealth, and regulatory changes adding to the complexity of cross-border wealth management, Cho believes that the time is right for a major technological disruption in the industry.
‘Sitting here in Singapore, I’m dealing with 30 countries and their tax systems, which are changing every quarter. How will I know everything? You need systems. You need [algorithms] and systems where you get updates from everywhere. Inheritance, tax planning, legal and accounting can all be digitalised. Trust structuring as well,’ he said.
The challenge for Cho is to turn his hub’s popularity into a sustainable business. In March, Lattice80 signed its first memorandum of understanding to expand outside Singapore and establish a base in Vizag, India.
Cho wants to launch in 38 countries, he said, but will look for backing from governments or property developers to help him set up.
‘If I have 10 or 100 start-ups in my space per city, by having 10 cities, I would have physically hosted 1000 start-ups in my space,’ he said. ‘That’s about 5-10% of the global supply. And monetising this branding and community traffic to cover the cost, I don’t see any problem… making money, no way.’