Singapore-based venture capital firm Life.Sreda has applied for a digital wholesale banking license here with the aim of serving «higher-risk» clients that include blockchain or crypto-related businesses.
Arival, an internal venture spun out of fintech-focused Life.Sreda, is a digital bank that wants to meet the needs of tech startups including blockchain or crypto-related businesses, online businesses and entrepreneurs from co-working spaces that they deem disconnected from the banking system.
«The focus on ‘abnormal’ or underbanked SMEs gives us the opportunity to not compete with other digital or traditional banks, avoid spending money on advertising or customer acquisition, and allows us to focus on margins,» said co-founder Jeremy Berger, who was quoted in «Business Times»(behind paywall).
If Arival gets one of three wholesale licenses awarded by the Monetary Authority of Singapore (MAS), it will be run by all three co-founders – Jeremy Berger, Vladislav Solodkiy and Igor Pesin.
As a startup, Arival has raised over $3 million in funding to date through an undisclosed EU-based institutional fund and crowd-funding platforms Seedinvest and Crowdcube. It has plans for a Series A round later this year.
Key Differentiating Factors
One of Arival’s key differentiating factors is its razor-focus on «excluded» segments of customers, instead of trying to provide everything for everybody. It does not make sense to compete with the likes of big boys such as the incumbent lenders or even other big rivals such as the Grab-Singtel consortium, Berger noted.
Another key differentiating factor is its «compliance-as-a-service» product called A.ID that provides compliance solutions, allowing for plug and play integration and pay-per-use monetization. In the near future, the digital bank challenger plans to bundle fintech products from third-party service providers on one banking platform powered by open application programming interfaces (APIs).
Serving International Business
Singapore’s status as a global startup hub is an added boost for Arival as it intends to serve international businesses. «It’s no secret that most of the companies and startups in Singapore are non-Singaporeans,» said Berger.
«The nature of the startup world calls for geographic flexibility, working online, and banks need to meet these expectations to serve the new generation of businesses and entrepreneurs.»
Arival has also applied for a U.S.-based international banking license in Puerto Rico, which is said to be in the final stages of getting «preliminary approval». If it goes well, the bank should start sometime in the spring. This banking license will be «complementary» to the Singapore license.
«It gives us a unique entry to the U.S. banking market as well, and allows us to contribute to an ecosystem that is in need of a natural remedy for economic boost such as fintech,» said Berger, adding that Arival has also started the application process for a banking license in Europe, the results of which will be known by end of 2020.
Nine Successful Exits
Based in Singapore since 2014, Life.Sreda has invested in over 20 fintechs globally with nine successful exits to date, including the sale of mobile bank Simple to multinational finance group BBVA Group for $117 million.
Life.Sreda will help Arival to raise any necessary capital and open doors to various potential fintech partners through its own portfolio and global network of banks, fintechs and venture capital funds, said Berger.