Cross-border payments made easy

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FINTECH: ASIC’s APPROACH and REGULATORY ISSUES
AN ASIC PERSPECTIVE
8 March 2017

Maan Beydoun – Senior Manager

ASIC
Member of Innovation Hub
Outline

Part 1: Setting the scene

• ASIC’s objectives
Part 2: ASIC’s Innovation Hub
• ASIC’s Innovation Hub – approach and outcomes
• Progress
Part 3 ASIC’s Regulatory Sandbox
ASIC’s strategic objectives

• Promote confident and informed financial consumers

and investors

• Promote fair, orderly, transparent and efficient

financial markets
ASIC’s Innovation Hub and approach

• The Hub is assisting fintech start-ups to navigate the

our regulatory system

• Consistent with cutting red-tape

• ASIC will not compromise fundamental principles of

regulation and licensing
The five point approach
• Engagement

• Streamlined approach

• Enhanced communication

• Coordination

• Digital Finance Advisory Committee

Innovation Hub – Some of work to date
• Marketplace lending (peer-to-peer lending)

• Digital advice (Roboadvice)

• Regulatory Sandbox; and

• Regtech – use of technology to facilitate compliance

ASIC’s Sandbox approach

• Additional guidance – organisational competence

• Limited licence – alternative organisational

competence

• Limited licensing exemption (the ‘regulatory

sandbox’ exemption)
The ‘regulatory sandbox’ exemption –
Conditions
• Advice or dealing service
• Liquid products
• Client and investment caps
• Adequate compensation arrangements
• External dispute resolution arrangements
• Core conduct and disclosure obligations
• Notification and report requirements
Further Information

Web: http://asic.gov.au/for-business/your-
business/innovation-hub/

Email: innovationhub@asic.gov.au
BIGSTONE
LOAN MARKET
Connecting small business
to a world of lenders
Introductory Presentation
February 2017
who are we?

1
how does the platform work?
live demonstration of platform

2
experienced leadership
• Ex-Partner at The Boston Consulting Group, focused on Financial Services,
Boyd Customer Experience Transformation, and innovative technology.
Pederson • Transformed SME & Commercial lending businesses at 3 banks,
CEO increased market share by 20%; multiple start-ups.

• Founded IT&E Ltd - startup that built CommSec, AUs largest direct broker.
Rob Morgan • Led the build of Commsee, CBA’s customer management & origination
CTO system, led business case for CBA’s $1.1bn core banking system upgrade.
• Experienced CTO in payments, integration, & CRM

Liam • Financial services regulatory lawyer, ex-Linklaters (UK); HWL Ebsworth

(Australia) and Commonwealth Bank (Australia).
McLagan
General • Expert in legal design of marketplaces and clearing houses – seconded to
Counsel Goldman Sachs to implement new derivatives clearing system.

• Recently led the establishment of a new bank in India

Indy Singh (500+ branches, 6m+ customers).
COO • Expert in process, operations, and contact centres; business banking
transformation and post-merger integration experience in Australia.

• Former Global Head of Risk, (Banks, Countries & Govt.) at ANZ,

Marcus with a focus on underwriting alternative lenders; 15 years’ lending authority.
Korff • Over 20 years directly analyzing and approving credit for business,
CRAO corporates, & institutions, and deep experience with analytic models.

1) All team members are full-time committed and not drawing pre-launch salaries
3
management team
Tino Ho • Left SocietyOne where he held the same role to join Bigstone
Head of BD • Prior 10 years at OFX (Ozforex) progressing through Business
& Channel development, channel partnerships and channel execution roles
Partnerships • Strong connections with Accounting firms and financial institutions

• Former fund manager with extensive experience in distressed debt and

Michael high-yield alternative finance in Asia
Wyer • Former MD, Wyerplan; supporting Asian investors into AU assets
Head of
Treasury • Former MD, Head Distribution High Yield Finance – Standard Bank SG
• Former Executive Director, Presidio Capital, Singapore

• Expert in digital marketing and online brand building

Chris Sonn
Head of • Deep experience across the content marketing, advertising and
Digital customer loyalty building components of digital marketing, both
internally and with agencies
• An established history in B2B sales leadership and strategy, specialising
Paul in commercial finance.
Goldsmith
• Led the Sydney Professional Services Team, Macquarie Business Bank.
BDM
• Former roles at NAB as a sales leader.

4
multi-layered risk assessment
multiple proprietary models (behaviour, financials, directors)
Bigstone Credit Index (BCI) is determined by the following sub-
components of risk:

• business financial condition

• business reputation and
management quality and the
financial position of directors
• industry and demographic position
(e.g. time in business, geographic
location)
• additional financial and non
financial factors that reflect the
customer’s ability to repay

5
 the data science behind
500,000 SME default history over 3+ years
Population of SMEs
Distribution of Risk
Robust data inputs
SME panel data 98.2% of
population
• 500k, 6 time slices
• Six month intervals

Calibrated to ABS
Survival Data (by geo,
age, size, entity type)
Bad Good

SME accounting
Predictive power
financial data
(proprietary)
• Financial metrics 1.8% of
• Cashflow signals population
5%
Hard cut-off filter at PD 5% (Probability of Default) removes 60%
Director risk overlay of “bads”
(personal score) Secondary and tertiary screening reduces the maximum PD to
3% and portfolio* average PD to 1%

[NB. *Model Portfolio of min. 100 loans]

6
insight drives liquidity
invest in predictability

contact
Boyd Pederson
CEO, Founder

M: +61 429 3290 916

LOAN MARKET
E: boyd.pederson@bigstone.co
Michael Wyer
Funding + Treasury
M: +61 488 802 822
michael.wyer@bigstone.co

Sherrie Robless
Investor Relations
M: +61 421 484 626
sherrie.robless@bigstone.co

7

eWise solutions
Money Management
Aegis: the data
white-label apps
aggregation platform
Money Manager and
FastBalance beautifully
designed apps offer best-in-
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Users get a global view of all
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dashboard and access powerful
Personal Financial
Management features.
www.ewise.com
The Aegis platform enables your
customers to privately and
securely aggregate, store,
manage and share their
financial information. Leverage
eWise's data aggregation
platform to easily connect users'
bank accounts, credit cards,
investments, pension funds,
utilities, loans and more.
1
API services
Developers can use eWise API
services to efficiently build
financial apps, leveraging eWise
expertise in transaction
categorisation, cashflow
forecasting and alerting.
APIs can be integrated
seamlessly within your apps or
connect to the Aegis platform to
access bank data.
 2
A patented technology
ACCOUNT AGGREGATION

Aggregate all of your customers’ financial account from their bank account, credit card,
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PERMISSION MANAGEMENT

Provide the user with full control and privacy over their personal data.

DATA BROKER

Users can choose to share their personal data with value added services.

www.ewise.com
Why CVX from InfraRisk?

THE PROBLEM THE CVX SOLUTION

Slower approvals causing Achieve Faster Turnaround

opportunity costs to borrowers
Time
through delayed time to market.

Demand for higher productivity Lower Cost to Income

and automation in banks in high-
wage countries to reduce
operation costs.
Increase Net Interest
Poorly defined pricing policy that Margins and Fee Income
are not centrally controlled and
managed.
Support introduction of Basel
standard Risk processes
Client data still maintained
through hard copies. This data has
enormous value in establishing
credit worthiness of borrowers Maximise advanced data
and is underutilized. and analytic processes

1
CVX Platform – Integrating Origination

Time to prepare a submission

Identify Analyse Quantify & Price Approve
reduced by over 30% leading to:

faster time to market

• Demographics & • Financial • Ratings/Prob. • Approval
Profile Analysis Default Authorities
lower cost to income • Aggregation • Segment • Collateral/LGD • Covenants &
Group Template • Relationship Terms
• Accounts & Pricing • Document
Limits Generation
Efficiency checklist:
Meet regulatory requirements
Reduce rework
Analytics Reporting
Comply with policies and procedures

Effective Administration

2
Nathan Greeff
Chief of Staff & Indonesian Country Operations Manager
 What is muru-D and why is it different?

muru-D is a startup accelerator. Over 6 months, it offers a global

1 network of
mentors & investors, working space & more

A Unique Support Reach New

Network Markets
A core component of the muru-D program is being born global,
2 and accessing big markets - China, USA and Europe

muru-D was founded and is still supported by

3 Telstra Intensified with Alumni
Corporate Infrastructure Network
 JULIE TRELL
HEAD, MURU-D

PERTH BRISBANE

SILICON VALLEY

SYDNEY

LOVELY LAWYERS
SINGAPORE TEAM
Muru-D at a Glance

$2.5M capital
invested 62 companies
accelerated 56
companies
operational

$14M capital
raised $9M revenue
generated 290 jobs
created

5 50 1.8X
Teams will be
Accelerator Portfolio value
accelerated in
Programs growth
2017
Muru-D’s Graduate Start-Ups

Help mining companies improve asset management

by streamlining maintenance process & optimizing
the resource consumption.

A mobile application allowing

Indonesian small businesses to compare
and apply for loans easily and quickly.

A creative recruitment platform connecting new

talent to brands through match-making algorithms,
social analytics and assessments.
 Telstra’s Cycle of Innovation in Indonesia

VENTURES

Series B + C Taking innovative

Incubating & Mentoring
Strategic Minority ventures to market
Series A Investments
Investments at scale
Enjoyable Payment Experience - 2017
The
Our Vision:
Vision
Revolutionise
Revolutionise payment
payment ecosystem
ecosystem for
for
modern
modern society
society

Enjoyable Payment Experience - 2017

Mobile Indonesia
M-Social Penetration M-Commerce Penetration M-Payment Penetration

35% 33% 0.4%

+39% +155% +61%
y-o-y y-o-y y-o-y

Source: Statista (2016), Wearesocial (2016) Enjoyable Payment Experience - 2017

 M-Payment APAC
Global Rank: 1st Global Rank: 2nd
TPV: US$ 138.2b TPV: US$ 59.9b
GDP pc: US$ 6,497 GDP pc: US$ 1,750
Indonesia
M-Payment 0.4%
Penetration
Global Rank: 5th Global Rank: 6th
TPV: US$ 4.6b TPV: US$ 2.5b
GDP pc: US$ 25,023 GDP pc: US$ 44,656
Global
M-Payment 9.2%
Penetration
Global Rank: 8th Global Rank: 21-30th
TPV: US$ 1.7b TPV: US$ 8.6mm
GDP pc: US$ 54,708 GDP pc: US$ 3,834

Source: Statista (2016), TE (2016) Enjoyable Payment Experience - 2017

Our Pilot
M-Payment ecosystem needs accurate
meeting points of user and merchant

Enjoyable Payment Experience - 2017

 Our Pilot
Pilot Collaboration
Global Rank: 1st Global Rank: 2nd
TPV: US$ 138.2b TPV: US$ 59.9b
“Arema is a local culture,
PPP: US$ 16,660 PPP: US$ 7,224
Indonesia Population Density
Arek Malang = Malang People”
M-Payment 0.4%
Penetration district 876/km2
Malang Total Fanbase
TPV: US$ 4.6b Indonesia
Global Rank: 5th Global Rank: 6th
TPV: US$ 2.5b
3.2mm PPP: US$ 39,778 PPP: US$ 40,090
Global
M-Payment
Penetration
3mm9.2%
population
Mobile Active User
Mobile
1.8mm Fanbase Malang
1mm TPV: US$ 1.7b
Global Rank: 8th Global Rank: 21-30th
TPV: US$ 8.6mm
PPP: US$ 50,322 PPP: US$ 12,422

Source:
Source:
Source:
FB Insight
FBStatista
Insight
(2017),
(2016),
(2017),
LigaIMF
Indonesia
BPS
(2016)
(2016)(2016) Enjoyable Payment Experience - 2017
Collaborative Effort
x =
Revolutionise payment ecosystem for Arema
community through common interest.

Source: FB Insight (2017), BPS (2016) Enjoyable Payment Experience - 2017

 E-Membership &
M-Payment Release

Our Journey Enhance

Features & Positioning
Userbase: 230k

Userbase: 75k
Revalidate Feb ‘17
MVP & Product Concept +210% Mobile Payment
Userbase: 30k Dec ‘16 QR Ecosystem Start
Arema Access
+150%
Mobile Access to v 2.0 Release
Ticket & Merchandise
Aug ‘16
Australian Award
Indonesia Course

Apr ‘16
Arema Application
Initial Release

Enjoyable Payment Experience - 2017

M-Payment Ecosystem
Establishing M-Payment
Access for SMEs across
Malang District

300+
Mar ‘17
+304

Feb ‘17

Enjoyable Payment Experience - 2017

Our SMEs Traction
Warung Pak Mul is one of our top
SMEs. Warung Pak Mul digital
payment sales performance has
been increasing constantly by
1-day 50% each week since they’ve
joined our M-Payment
ecosystem.
US$ 115
TPV
39
trx

Enjoyable Payment Experience - 2017

More Financial Access

Additional Access to

Lending Insurance Dream

Savings

Enjoyable Payment Experience - 2017

Model Expansion

We are implementing the model

to other cities, Lamongan with
Persela FC and Palembang with
Sriwijaya FC. PayAccess
application will also releasing
very soon to cover broader
market.

Enjoyable Payment Experience - 2017

License and Authorisation

BI License No. 13/92/DASP/38 PCI DSS 3.2

Enjoyable Payment Experience - 2017

Working a more mobile financial
access for mobile generation and
SMEs PCI DSS 3.2

Enjoyable Payment Experience - 2017

Trust-backed Currencies, Settlement and Reserves Management for Central Banks

Damian Jeffree | Co Founder & CEO | damian@soveren.co

Paul McCarthy | Co Founder & President | paul@soveren.co
Problem
The current global monetary framework is the remnants of the poorly-designed Bretton
Woods system. It requires every country to have its own central bank (162 of them
including Samoa, Fiji, Tonga etc.) and to issue a currency if they do not wish to be
affected by another country’s monetary policy and costly seigniorage (Berg,
Borensztein).
Smaller countries should not imitate large countries in issuing currencies as their
central banks will struggle for credibility and their currencies will create barriers to trade
and investment. Ask yourself:
Would you like exposure to a million Tongan paʻangas to make an investment?
Further, because each small central bank uses its own settlement system even making
payments with its financial centre and other neighbours becomes a mess of nostro
vostro accounts and correspondent banking.
The result is that small countries are required to cut themselves off via their currencies
from the financial services they need that could readily and gladly be provided by their
financial centre neighbours. Lack of financial services is a key development hurdle for
small countries.

Confidential 2
Timor-Leste plans to issue its own currency
to avoid US dollar costs & for national pride.
This will cost trade and GDP growth.
 Denarius 157 BC Denarius 194 AD
Denarius 268 AD
90% Silver 60% Silver
5% Silver

And of course a problem that 1750

all investors face is that they 1400

can expect their holdings in any USD 1050
government-run currency to be in mg 700
subject to inflation and gold
350
debasement.
0
1900 1915 1930 1945 1960 1975 1990 2005

Year

Confidential 4
 Soveren Concept

Multiple Central Banks

Issue a standardised BI BCTL Other

international currency Soveren Soveren Soveren

With a common
Common RTGS
RTGS system operated by
a BNY Mellon Trust in London

Base money and transfers M0 money

automatic reserves management reserve management

Confidential 5
Soveren currency design - highlights
• Fully trackable transactions - if no notes or coins are issued there can be
no cash transactions that could lower tax compliance or make it attractive
for criminal or money laundering use. Issuing notes and coins is optional.
• Fully AML/CTF compliant.
• As secure as the existing banking network, no blockchain risk.
• Zero cost transfers/instant RTGS between banks with Soveren accounts.
• Zero cost, instant foreign exchange to other Soveren currencies.
• Central bank/monetary authority control of which jurisdictions can be
transferred to and from.
• Only open to central banks (sub-accounts may be made available to
national banks at the discretion of the central bank).

Confidential 6
7
8
 xendit
making payments easy

March 2017

xendit
Cash is king, bank transfers dominate, with e-money outpacing
credit cards
Payments segmentation in Transaction volume CAGR
Indonesia 7,000
2% 71.8%
2%
6,000 9.5%
10.1%
5,000 41.9%

IDR tn
5% 25.2%
5% 4,000 25.2%

10% 3,000
67%

2,000 16.8%
11%

1,000

0
2010 2011 2012 2013 2014 2015 2016

Debit card Other Cheque ATM/Debit card - Cash withdrawal ATM/Debit card - Intrabank transfer
Credit card Credit transfer Direct debit ATM/Debit card - Purchase ATM/Debit card - Interbank transfer
Cash Credit card - Cash withdrawal Credit card - Purchase
eMoney
Source: BI
xendit
How does this translate to the contents of my wallet…

… and what does this mean for payments?

• Payments are fragmented

• Payments are exclusive
• Payments are disjointed

xendit
Xendit helps automate payment operations via API connection
and more
Accept credit card Pay your suppliers instantly,
payments for your e- at any bank in Indonesia, on
commerce site with a simple weekend or weekdays,
API integration when the bank servers are
up

Accept payment via virtual Pay all your employees

accounts or unique amounts through our batch
at major banks in Indonesia disbursement product with a
simple excel upload

Bill customers with our Refund your e-commerce

invoice UI and save customers, and send them
developer resources so they an automated email receipt
can focus on your product at the click of a button

xendit
A strong team from finance and technology with advisors from
banking, technology and government
Sajid Rahman
• Country head of Standard
Chartered Consumer Banking

Mahendra Siregar
• Vice Minister, Ministry of Finance
• Vice Minister, Ministry of Trade

Justin Kan
• Founder, Twitch $1b to Amazon
• YCombinator Partner, $65b value

Raoul Oberman
• Partner and MD, McKinsey
Indonesia
• Board member, multiple Agri busn

Philip Ingelbrecht
• Founder, Shazam $1b valuation
• Head of Partnerships, Youtube

xendit
Where is the payments landscape heading?
LHS With a high rate of RHS
(IDR tn) unbanked population Global vs Indonesia e-Commerce payments value (IDR tn)
16,000 (~110mn), will be a
dominant force in payments 140
14,000
Tight regulations
and low 3D secure/pin 120
12,000 penetration rate cards are
(`3%) will required by mid
impede growth 100
10,000 2017 will
increase online To remain core
usage banking method, 80
8,000 but will not be A necessary evil,
dominant problematic for
merchants, will 60
6,000
grow at slower
pace
4,000 40

2,000 20

- -
eWallet/eMoney Credit cards Debit cards Bank transfer Cash on delivery
Global 2016 (LHS) Global 2020 (LHS) Indonesia 2016 (RHS)

Source: Deloitte, Worldpay, Jakarta Post, Statista

xendit
Contact Us
Moses Lo
moses@xendit.co
Tessa Wijaya
tessa@xendit.co

xendit.co/

xendit
xendit