Fixed INcome TECHologies (FINTECH) Rejuvenating the Bond Market

During the Fintech session at The Asset 12th Asian Bond Market Summit, the panel of speakers discussed how technology is rejuvenating the market with applications ranging from bond syndication to execution. BondIT’s Duncan Klein spoke about how our portfolio optimisation and idea generation engine clutched the pre-trade workflow. Find out more in the full article by Janette Chen of The Asset

Fintech accretive, not disruptive

By Janette Chen

SINGAPORE – Fintech in Asia is more “accretive than disruptive”, according to a panel of experts at The Asset 12th Asian Bond Market Summit held at the Conrad in Singapore. However, in terms of market penetration, Asia lags behind the US and Europe.

The public tends to think of fintech as a disruptor. “Fintech companies are not disruptive, we’re accretive,” says Paul Durrant, managing partner at Conduit Securities. “We’re bringing solutions to jumpstart many years of inefficiency of investing,” says Duncan Klein, head of outbound product management at BondIT.

With the fintech startups emerging in Asia, traditional financial institutions are starting to innovate, either by collaborating with fintech companies or bringing forth new ideas themselves. “The early adopters of e-trading in Asia are private banks,” says Klein. “Aspiration for fintech is not just within the private banks. This is what the end client is asking for,” he adds.

“Independent financial advisors are starting to see how we can build new technology in the current ecosystem,” says Klein. “Latest adopters are asset managers. They are adopting the execution desk style,” he adds, labeling the private asset management companies as the “non-adopters”.

Twenty years ago, equities trading was on the floor of the exchange and it is now electronic, says Rahul Banerjee, founder of Bondevalue. The significant changes in the landscape in this sector happened during the past few years.

“Electronic bond trading is pretty well adopted globally. Asia has been embracing it in the last five to seven years,” says Klein.

Singapore is seen as a hub for fintech. Their government has been targeting fintech as their core development strategy, providing a supportive environment. In October this year, the Monetary Authority of Singapore launched a transformation map for the country’s financial industry, highlighting continuous innovation and technology adaption.

However, compared to the West, Asia falls behind regarding market penetration. “The markets in the US and Europe are much bigger than Asia for fintechs,” says EK Ong, CEO and co-founder at Bondlinc. There is up to 50% non-bank financing in US; in Asia, the figure is only 5%, according to Durrant.

From a positive perspective, this indicates huge market potential in Asia. As for banks, a good first step for getting involved with fintech is use open APIs, Ong suggests. Looking at what Singapore has achieved during the past few years, the general outlook for fintech in Asian bond market is positive, says Banerjee. In addition, the rising second and third generation of wealthy individuals in Asia are already turning to fintech for investment solutions, says Durrant.