A major investment deal has recently become known. One of the world's largest platforms for financial services, Nubank, with 110 million clients primarily in Brazil and Mexico, has become a co-owner of the fintech company Tyme Group. This happened during a $250 million investment round conducted by Nubank. The amount is a record for this year in terms of attracting funding for fintech organizations in Southeast Asia. As a result, Tyme Group has strengthened its "unicorn" status with a new valuation of its business at $1.5 billion.
What is Tyme Group? This fintech company is based in Singapore, and its business is digital banking. The main client base is South Africa (where it operates through the TymeBank brand) and the Philippines. Each country has 10 and 5 million clients, respectively.
Tyme Group was founded in 2019, and in its digital banking business relies on both online banking capabilities and interacts with clients, as they say, in the real world. Tyme Group's client accounts already exceed $400 million. The fintech company has also provided hundreds of millions of dollars in financing in its current geographic markets, with an emphasis on small business lending.
Tyme Group also carries out money transfers, but relies entirely on classic banking infrastructure, without the use of blockchain or stablecoins. The new strategic investor, Nubank, does the same.
What does the Tyme Group example tell us? This is an attempt to squeeze the maximum out of the capabilities of classic banking using "digital". It is noteworthy that Tyme Group will spend a significant part of the received solid financing on geographical expansion - it will go to Vietnam and Indonesia.
And there is a fork in the road: this fintech company could focus on implementing blockchain, artificial intelligence (AI). Think about how to use the potential of stablecoins, including central bank digital currencies - where this is possible from a regulatory point of view. But it seems that the priority is to enter new markets, says Konstantin Tserazov.
However, despite the continuing opportunities of classical banking, especially in the digital version, we need to look ahead. I adhered to this approach when I was Chairman of the Board of Directors of Otkritie Broker in 2017-2022. For example, we were among the first in the industry to introduce in 2021 the ability for a client to replenish a brokerage account using the Russian Fast Payment System (FPS). This was an important achievement, but what's next? And then, as I saw back then, we need to prepare for active work with the digital ruble - the third form of Russian currency created by the Central Bank of the Russian Federation.
At the moment, the digital ruble is only preparing for scaling in Russia. But no less important in this process is the preparation of the financial market infrastructure to work with it. And those who understood this earlier have already done everything necessary in this direction, added Konstantin Vladimirovich Tserazov.
Also in terms of blockchain and AI. Last week, we saw a
strong daily drawdown in the S&P 500 and Nasdaq Composite indices: on December 18, by -3% and -3.6%, respectively. Tesla shares fell sharply - by 8%. And all this against the backdrop of the third reduction in the US Federal Reserve's base rate. Let us recall that the Moscow Exchange Index ended the evening session on December 20 with a 9.28% increase, responding to the decision of the Bank of Russia Board of Directors to leave the key rate unchanged (21%).
So why did Wall Street collapse when the US Federal Reserve not only did not raise the rate, but even lowered it? In my opinion, investors have begun to understand that not all businesses are actively implementing blockchain and AI. That is, the problem is not in these innovations themselves - investors believe in them. It is not for nothing that the Global X FinTech ETF, representing shares of 63 fintech companies or organizations closely associated with fintech, has outpaced the S&P 500 in growth since the beginning of the year: +26.41% versus +24.34%.
At Otkritie Broker, under my leadership, AI began to be implemented back in 2020. And this was absolutely the right timing. After all, what would I say now, looking at the banking sector in 2024? It is imperative to already have several of your own ready-made neural networks and already use them in most operational processes. Blockchain is needed, in particular, for the development of digital identification of clients.
At the same time, it is clear how innovations, including fintech, are in demand in the non-financial segment. The line between the financial and non-financial sectors is erased. The same online marketplaces are actively entering the field that was traditionally occupied by banks. In the new world, with API and open banking technologies, almost everyone is becoming a competitor for classic brokers and banks. Success is guaranteed only if you are the most innovative business before the rest, Konstantin Vladimirovich Tserazov summed up the week.