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Hi everyone, I’m Jitendra, CTO at Helicap, and I am super excited to convene this roundtable discussion with two industry leaders: Andrew Vranjes, Head of Startup Ecosystem, ASEAN at Amazon Web Services (AWS) and David Z Wang, our Co-Founder and CEO here at Helicap.
Over my 15-year career in building technology, I have witnessed first-hand the evolution of computing infrastructure from on-premise bare-metal machines to virtual servers on private clouds, to the current full scale adoption of public clouds – even in highly regulated industries like Finance. It is fascinating how smooth, efficient, and cost-effective it has become to lay out the required infrastructure for building and scaling a tech product globally using public clouds today.
AWS has been at the forefront of this evolution, driving a lot of the innovation and adoption of public cloud services across different industry verticals.
The relationship between AWS and Helicap began when my team and I were looking for a cloud solutions provider for our proprietary data-heavy credit analytics, portfolio management, and investment platforms. During our evaluation, we found AWS to be well aligned with regulatory requirements while providing a very supportive ecosystem for the needs of FinTech startups. Hence, we decided to build on AWS, and the relationship has since evolved into a close partnership.
Given the phenomenal growth and innovation we are seeing here in ASEAN, especially in the FinTech space, I have asked Andrew to join Dave and me at this roundtable discussion to help the FinTech community in the region understand how the landscape is evolving from a cloud service provider’s lens. We will also learn from Andrew how AWS is supporting the region’s startups from a product roadmap, geographical outreach, and regulatory compliance perspective.
Thank you both Andrew and David for joining me at this Helicap Roundtable Discussion. I would like to kickstart this conversation with Andrew and ask you to provide us with a quick overview of the AWS business in Southeast Asia today. How are your services expanding with the growth in the region’s FinTech scene and how are you differentiating yourself from other cloud providers?
Thanks for having me, JJ. AWS has been serving ASEAN-based clients since 2006. Startups have been our earliest adopters and we’re very proud of the role we have played in supporting so many startups grow into unicorns and decacorns like Grab, Tokopedia, and Traveloka.
We saw a significant acceleration and customer diversification with our first Singapore region launched in 2010, and since then, we have opened up offices in seven cities across six countries, invested in building local infrastructure with Edge locations in Philippines, Vietnam, and Thailand and also announced that a new region in Indonesia is coming up later this year.
Given our heritage here, we truly understand the importance of local nuances and preferences. As a result, we have made the effort of localizing for the region – for example, Amazon Translate and Amazon Transcribe are localized for Thai, Bahasa, Malay and Vietnamese speakers. The list goes on – but as we say in Amazon, it’s still Day 1 for us in ASEAN because we see so much potential coming out of here.
We are also proud of the community we have built in the region over the years – we have a strong AWS Partner Network that helps our customers get to market faster, scale, and innovate better. One great example is Visenze, an AI-powered visual search solution provider built on AWS’s infrastructure that is also a fantastic SaaS provider for other AWS customers as well.
While I have the mic here, I also want to ask you David, what are the main trends that you have seen taking place in the alternative lending space since the outbreak of the pandemic in early 2020 and until today? And how has Helicap adapted its lending model and technology accordingly?
Well, clearly most segments of the real economy were impacted, and Small and Medium Enterprises (SMEs) here in Southeast Asia were particularly hit. Getting access to banking facilities, which was already challenging pre-pandemic, became even more difficult due to growing liquidity challenges and delayed receivables. Facilities from non-bank originators were also hard to get as alternative lenders took swift action to curb the impact of COVID-19 on their loan books, imposing strict underwriting criteria and prioritizing collection efforts.
These developments led to a liquidity crisis for the weaker digital lenders with lower quality loan books, and several were forced to cease operations and exit the industry. Consolidation also became inevitable in an uneven industry as smaller platforms were acquired.
On the other hand, larger originators with strong balance sheets and proactive risk management measures were able to tide through the pandemic successfully, and they have strengthened their leadership positions and improved their internal processes.
At Helicap, we have had direct insights into the loan books of the region’s top originators, and we have taken this time to further strengthen our credit analytics and risk management capabilities.
I want to give the floor back to our CTO and convener JJ here who has seen the data come through our Credit Analytics Platform, and he can give us much more informed insights. JJ and his team have been busy building our risk management framework and integrating Artificial Intelligence and Machine Learning solutions to further optimize our credit analysis.
I would say that Covid-19 and its impact on the alternative lending space – on both borrowers and originators – was an important stress test for the credit analytics platform that we have built and continue to enhance at Helicap.
With the help of our big data platform built on AWS stack, we are able to capture and analyze originators’ detailed loan books to extract proprietary credit and performance insights. These insights have enabled our teams to stay ahead of the curve in terms of mapping near real-time trends on how borrower repayment behaviors and defaults were evolving for originators across different segments and geographies.
This data-driven and tech-enabled risk management process helped the investment teams at our subsidiary companies to rebalance the investment portfolio accordingly, and as a result, we have recorded zero originator defaults in our portfolio to date since the beginning of the pandemic.
On the AI/ML front, we are leveraging the AWS Sagemaker Autopilot offering for the predictive analytics part of our platform, where we build predictive models at scale to determine probability of default (PD) and expected credit loss on any individual loan or aggregated portfolio, based on borrower profile and loan characteristics. We have several use cases for this predicted portfolio performance of originators, including collateral selection and enhancement of risk-adjusted pricing for investments.
Andrew, speaking of AWS services, we have seen that AWS has built many utility services over the years for some of the most common use cases. Are there any particular products or services in the AWS product roadmap which you are most excited about? Are there any plans to possibly roll out any opinionated products around the FinTech domain specifically?
As you have mentioned, JJ, I’m really excited about the range of our AI/ML capabilities that we’ve built because they are so flexible and we have different products for different types and maturity of FinTechs. Helicap’s usage of Amazon Sagemaker to make credit decisions is a great example of that in the lending space. Another example is Canopy, a wealth management startup, who used Amazon Sagemaker to automatically extract text and data, going beyond simple OCR and enabling them to automatically process nearly 100,000 of financial documents to date.
Moving higher up the AI/ML stack, we also have analytics tools like Amazon Forecast, fraud tools like Fraud Detection, recommendation engines like Amazon Personalize, and image and video analysis tooling like Amazon Rekognition to assist humans in KYC verification which is notoriously difficult and expensive in ASEAN.
The products we have cater to different needs of FinTechs and can be adapted to so many use cases – the world really is your oyster! This was completely unimaginable two decades ago, when the first thing a founder needed to do was to buy server space and racks in order to host their compute power and storage. Cloud has made it so easy for anyone to start and scale a business.
Andrew, as we wrap up this conversation, I wanted to go back to the business strategy – how do you keep up with changing regulatory requirements in a region with several different regulatory bodies?
To stay on top of the changing regulatory environment, we have a team of professionals focused on working with governments and regulatory bodies. This is of utmost importance to us and is completely aligned with our internal priorities because we are in the business of providing compliant, secure and resilient cloud services to companies. At AWS we remind ourselves that trust has to be earned but is easily eroded – being the infrastructure of FinTechs, we are constantly making sure that we are fully up-to-date and aligned with changing government regulation.
And yes – as I mentioned earlier, the entire AWS team is extremely excited about the new region coming up in Indonesia later this year. Indonesia is obviously a hotbed for FinTechs and our local region there is going to further accelerate the growth of those FinTechs.
Thank you again Andrew and David for this insightful conversation, and many thanks to our Heli-Pad readers of course. I encourage anyone who has further questions about this discussion to reach out to us by email at firstname.lastname@example.org.
– End of Roundtable Discussion –
In addition to our usual press picks on the topics of alternative lending, the FinTech ecosystem, and impact investing, we have included a selection of articles in this issue on tech topics like AI, cloud services, and cyber security. Happy reading!
How The Cloud Is Changing Fintech
The 2020s are the era of the cloud. With purported benefits such as accessibility, ease of use and fast deployment, it’s not hard to see why businesses are drawn to this relatively new technology. But what does this mean for fintech?
How AI Can Help Grow Your Startup
Artificial intelligence is the buzzword in business today, much like digital marketing a decade ago. TechFunnel explains how the many ways that AI can benefit our business.
Golden Gate Ventures forecasts a record number of exits in Southeast Asia
A new report from investment firm Golden Gate Ventures predicts a record number of exits will happen in the region over the next couple of years, thanks to factors like a maturing ecosystem, more secondary buyers and the emergence of SPACs.
Small-Business Lending: With More Options And More Data, The Future Is Bright
Despite the clear impact small businesses have on the global economy, small-business lending has been a challenge for traditional institutions due to a variety of reasons.
How AI And Machine Learning Can Address Banks’ Fraud-Fighting Weaknesses
The following Deep Dive explores how fraudsters target Financial Institutions and how these institutions are leveraging AI- and ML-based defenses of their own to fight back.
Are managed security services the key to cybersecurity for SMEs?
While adequate cybersecurity measures is now a priority for businesses around the world, managing cybersecurity can be a struggle for most businesses —but managed security services (MSS) are changing this.
The Rise of Early-Stage Start-Ups in the ASEAN Region and the Role AWS Plays in Their Development
Following significant technological advancements such as cloud computing, the cost and effort to create a start-up has significantly lessened, encouraging more aspiring business owners to go out and start their own companies.
DBS to be anchor investor in a special situations debt fund by Muzinich Asia Pacific
Special situation funds gain ground on the back of the global health crisis, and as companies seek to access a wider spectrum of financing sources. DBS investment believed to be the first by a local bank in this space.