Nium Podcast: Reinventing Sme Banking With Aspire

PUBLISHED ON : August 10, 2021

BY Nium Content Team

Singapore-headquartered Aspire is a Y-Combinator backed technology company that serves small and medium businesses (SMEs) with convenient & inclusive financial services across Southeast Asia. In this episode, host Taneia Bhardwaj sits down with co-founder Joel Leong to talk about what sets Aspire apart in an increasingly crowded neobank space.  

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Full Transcript:

Taneia Bhardwaj: Hey Joel, thanks so much for taking the time out, it’s been a pleasure really to connect with you. I thought we could start from the top. You’ve been a multiple time entrepreneur who’s currently on a mission to drive financial inclusion by reinventing digital banking for modern day small businesses. Tell us a little bit about how you ended up doing what you’re doing. 

Joel Leong: Hey, Taneia, great chatting with you, thanks for having me on the show and it’s a pleasure to share my journey. Let’s start from the beginning. I’ve run multiple businesses and the first one that I started was actually in the e-commerce space. We ran several marketplaces and then we slowly transitioned towards crowdfunding and then I dabbled in payments and eventually financial services where we have Aspire today. I was actually reflecting a bit on my journey and I realized that actually through each of these businesses, there was a common thread of empowering business owners through digitization and internationalization. The gradual shift towards payments and financial services occurred actually from a personal experience, as a business owner, having run multiple different types of businesses in different industries, there was a common thread and frustration of dealing with the financial service offerings that were available to me as a business owner at the time. 

One of the examples I can think of was the example of doing a cross-border transfer. I still remember the first time I did it. I couldn’t believe that the transfer wait was significantly different from what I saw on Google. I still remember that quite vividly. But I think the point here is that I soon realized that business owners were not getting the best products and services because there was a gap in the way that traditional financial systems are designed and incentivized. So, you have retail customers on one end and large corporates on the other, but you actually have this group of SMEs in the middle, and we tend to look at them and call them the underserved middle. I think the more we work in this space, the more we talk to business owners, we started to realize that this was a growing problem. And on top of that, you have Southeast Asia, which represents a huge unbanked opportunity in the SME space. I thought it was a meaningful opportunity to pursue and here we are with Aspire. 

TB: Let’s talk about Aspire then. You talked about some of the sort of problems that you’re looking to solve. There has been an explosion of neobank activity in general, especially in the small business segment. And like you said, perhaps it’s because incumbent banks have struggled to find that optimal balance between serving small businesses and really providing them the customer experience that they are looking for and even deserve. What are some of the unmet demands specifically that Aspire has identified and how will you folks solving for them? 

JL: I think as we go deeper into our journey of serving SMEs and talk to more business owners, like I said, we have indeed found that to be true. So, I think if you look at retail banking today, a lot of the incumbents have actually made significant leaps to digitize, right? And your consumer user experience is actually relatively up to date. But on the other hand, corporate banking is optimized for large organizations. These are companies that have significant headcounts, corporate processes in place and an entire finance department who is actually the end-user of these financial systems by the incumbent banks. But for someone running a small business, the expectations are completely mismatched, right? You have, let’s say one, one business owner, who’s the end-user with maybe four or five employees in total. Let me put this into some concrete examples. 

One example is perhaps account opening, right? In order to open an account for a business, you still actually have to be physically present at a branch. You have to provide documents like your MNA and you have to fill in a huge number of forms before you can actually open that account. Then maybe if you have to add an additional director or a finance manager, you actually have to provide the right specimen signatures and the right number of signatures. I remember frequently trying to figure that out myself, just to add another user. Another example that I’m sure that many business owners might be familiar with is maybe spending hours on end on the support lines, right? Waiting for someone to answer only to find out that the person cannot actually resolve your issue and it needs to be escalated and so on. 

So, support is definitely another angle. And I actually have two more examples. Fees are actually a big pain point. I think the way that the incumbents have been designed, unfortunately there’s been a culture of a lot of hidden fees, fees that are not upfront. For example, you have a fall below fees, right? Where, if your bank account on a specific day in a month, let’s say the 31st of the month, your balance falls below $10,000, you get charged a significant fee just because of that. For business owners, that’s a huge pain point because at the end of the month, you’re responsible for paying salaries, cash flow remains the number one problem for small businesses. That’s just giving additional headache to a business owner. Credit is another area that is extremely important for SMEs to grow, especially in the backdrop of a booming economy in Southeast Asia, yet a lot of these small businesses do not have access to credit easily. They’re usually very long application forms to fill in, very hard rejection rules that the banks have, where, for example, if you have not had three years in operations, you automatically get rejected, and it takes a couple of weeks before they actually tell you that. I think where we differentiate is that we actually really know the user, so we can actually say yes, in many places where incumbents are unable to. 

TB: I’m going to go back to a point that you made about the booming opportunity in Southeast Asia. And I think that’s an opportunity that’s been recognized by a number of players like yourself. If I was to ask you, what do you think sets Aspire’s offerings apart, how would you answer that? 

JL: I think there’s been a lot of activity in the digital banking space, or even financial services to SMEs, especially in Southeast Asia as a growing market. But I think how we see ourselves differentiating is that we realized that SMEs deal with about seven financial service providers on average, right. Banks being one of them, but you have other areas that include payment gateways, invoice management, foreign transfers, accounting, and so on. With Aspire, how we want to differentiate is that we provide the widest horizontal service that solves all these financial needs of SMEs. So it’s convenient, it’s fast, it’s easy, it’s transparent and it’s all in one place. We like to call it sort of the great rebundling and we believe we’re leading this charge. 

TB: I want to talk a little bit more also about the approach that Aspire has taken. I think we all know that thanks to banking as a service and the API economy today, you can pretty much spin up a bank in minutes and get to market a lot faster. It’s a strategy that you’ve deployed as well, the whole build versus buy strategy. How would you say it’s worked out for you folks and if you can also give us some insights, especially for those of our listeners who might be looking out for some actionable insights? 

JL: Yeah, sure. Definitely working with banking–as–a–service providers like Nium for example, has been core to our strategy. With the idea being that we want to provide that breadth of services to our users, which is not an easy thing for a startup to do with limited resources and so on. Yet at the same time, by providing that breadth and working with great partners like Nium and other partners in the ecosystem, we’ve created a product that has made users very sticky and given them many reasons to come back and continue to engage with us. So overall, we were very happy with how it has turned out. We continue to work very closely with our partners like Nium and on a more meta level, we believe that it actually builds the local ecosystem as well, the local FinTech ecosystem is regrouped together in this market. 

TB: Let’s talk about the pandemic. Of course, we are seeing most economies sort of limping back now to normalcy, but the fact is, COVID-19 was something that stopped many industries in their tracks, but also accelerated the need for others. What was the sort of impact felt at Aspire and any learnings along the way that you’d like to share with our listeners? 

JL: In terms of the pandemic, we’ve been very fortunate in that regard. I think the pandemic has really accelerated digital adoption amongst many. Basically, we’re seeing a moment of sort of what we call “crossing the chasm”, where the mainstream population is more open and beginning to adopt digital solutions. I think in general, it’s been a huge educational push, and it’s something that organizations have been trying for years to do. But you know, now in a couple of months, we’ve seen a huge population come online. For us, we’re on the fortunate side of things. We’ve seen significant adoption of our business accounts, with business owners searching for easier, better, faster ways to manage their finances. We’ve also seen a lot of new opportunities during this time, right? 

A lot of new businesses are getting off the ground and there’s a need to support their business with the infrastructure that we have. Of course, there are still businesses that are fundamentally sound, but are struggling during this time. And for that, we’re happy to help extend credit in areas, where the traditional institutions might normally shy away from. Like I shared earlier, because we are able to get more data points and really understand the customer, we’re able to help support them during this time. And I think that’s a silver lining that’s come up from this. 

TB: Great. That’s great to hear. You’re right about the digital acceleration, because pretty much every industry leader that I speak to talks about how we’ve almost fast-forwarded 10 years. We have a lot of FinTech enthusiasts and young entrepreneurs who listen to our show. So, it will be valuable for them, if you could give us some advice, and advice especially for other entrepreneurs who are building their business ground up, and as they go along their journey, how should they measure their success? What metrics should they be holding themselves to? 

JL: I think I can think of maybe two pieces of advice that maybe comes from the last 10 months where the only thing that has held true is that changes really the only constant, right. I think the first one is maybe to be forward-looking. I think the world has shifted significantly as I shared and there are a lot of opportunities that have come up during this time. If you were starting a business today, I would challenge you to solve a problem for the next 10 years, rather than for something today or in the past. I think the second advice is maybe to keep challenging your assumptions. I think that would naturally navigate you towards what needs to be done, what problems need to be solved, and do not get comfortable. I think in terms of metrics, I think fundamentally metrics do not change. I think what business owners, or let’s say entrepreneurs need to be aware of, is they need to be very clear on what they’re trying to achieve with the business, what stage your business is in, and then plan their metrics around that goal. 

TB: This is a question I ask every guest on the show. If you could look into that crystal ball and tell us what you think the bank of the future will look like? 

JL: Sure. I’ll give an educated guess. I think maybe there are three things. I think one is that banks of the future will be transparent. I think there’s a lot of activity around open banking. There’s a move towards transparency. I think gone are the days of hidden fees. I’m excited to look forward to a world where organizations try to compete in terms of differentiating their products. That leads to a world where end users will win. I think the second possibility is that banking will become embedded, right? So, I think this idea of going beyond banking and being very embedded within aspects of your users’ lives or their own journeys. I think you already see this in retail banks, right? 

Where a lot of apps, a lot of consumer-facing banks have taken a very lifestyle integrated approach. I think for businesses, this could potentially extend into operational or administrative processes. For example, invoices, expense and payroll management platform integrations with e-commerce and so on. I think that there’s a lot of room for innovation here. Lastly, I think the bank of the future will be hyper-personalized. I think data is the new currency. I think the opportunity is really to present financial products tailored to every user at an individual level. I think this would just unlock opportunities that were previously not available. 

TB: Great. Thank you, Joel, for taking the time out and really sharing your insights with us and talking to us about Aspire’s journey. It’s been a pleasure. Thanks. 

JL: Thanks, Taneia. It was a pleasure. 

 Thanks for listening.

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