The Lockdowns May Be Ending But The World Has Changed. What Does It Take For A Financial Services Business To Succeed?

By Danny Toe, ADDX Founder & CEO

Across Asia, Europe, America and the rest of the world — including here in Singapore — lockdowns are now either winding down or have already ended.

In an ideal world, things would quickly get back to normal and we would all return to living our lives just as if the COVID-19 pandemic had never happened.

The truth, unfortunately, is that this is not likely.

The COVID-19 pandemic has fundamentally changed the world — and, at least until effective vaccines are discovered and made widely available — is likely to continue changing it. Even presuming there are no further rounds of global lockdowns, the way we live and work each day have already shifted in real and consequential ways. Continued social distancing, a significant shift towards working from home rather than the office and altered global trade patterns are just a few of the most visible changes.

With that in mind, one can already see winners and losers starting to emerge from the changed financial landscape. I believe that many of the winners –particularly those in the financial sector — will share the following common traits.

1. Cloud Based, On-Demand And End-to-End Digital User Experience

The shift to a completely digital on-demand model was already underway in the financial sector even before the advent of COVID-19. In a world where in-person interactions are difficult, if not impossible for many, this trend is only going to accelerate.

Business and brands that want to survive and thrive in uncertain times must make sure they are able to serve their customers under virtually any circumstances. To use the case of ADDX, allowing investors to onboard, communicate with issuers, learn about upcoming investments, transfer funds from and to their bank accounts and, of course, invest without ever once having to leave their homes or offices allows us to future-proof access for our users. Digital is in ADDX’s DNA but other, more traditional businesses are now following suit.

2. Greater Resiliency Via Direct Access & Fewer Moving Parts

Just as financial services providers must make sure their products and services are accessible to users in uncertain and chaotic times, they must also ensure they are resilient enough to stay up and operating through turbulent and disruptive events. Streamlining business models in order to make them less dependent on external parties and events is one key way of doing this. After all, it is an unwritten rule of engineering that fewer moving parts means fewer things that can go wrong.

In the case of investing and capital raising, we believe this means finding ways to enable buyers and sellers to connect directly in a trusted way and with minimal intermediaries. Private capital markets are a prime example of where this is desirable and necessary. While it may or may not always be apparent to individual investors, traditionally, both private primary issuances and secondary trading have been dependent on interactions between a number of entities ranging from investment banks to clearing houses. What happens when one or more of these parties goes down? This will undoubtedly hamper the ability to transact for the rest of them.

ADDX has solved this problem by leveraging emerging technologies like digital securities and smart contracts to bring the entire private capital market investment lifecycle — from issuance to custody to trading — in-house.

Private capital markets are, of course, just one example of where this principle could be applied. We see potential use cases in many other parts of the financial industry, ranging from lending to payments to more.

3. Transparency, Trust & Regulation Are Vital

When economic times are uncertain, trust and safety are more crucial than ever.

For this reason, exchanges and other fintechs must ensure they are integrated with — and able to be trusted by — the rest of the global financial system. This means embracing regulation and regulated markets. ADDX’s operating company ICHX Tech has obtained recognised market operator status and a capital markets services licence from the Monetary Authority of Singapore (MAS). This is particularly important at a time when major regulators, including the MAS are embracing emerging technologies like digital securities and smart contracts, opening new worlds of possibility for both public and private investors and issuers.

4. Supporting Real Economic Growth

What the world needs now is capital to fuel companies building true economic growth. The true winners of tomorrow will be companies that provide useful products and services and, in the process, create jobs, help to rebuild and grow damaged economies, and put money into productive assets that benefit society. What that doesn’t mean is more over-leveraged and over-engineered products that only benefit a select few.

Fintechs now have an opportunity — and I believe an obligation — to play a leadership role in this rebuilding effort and, in the process, grow into the future financial giants of the 21st century. At ADDX, we are doing our part by making raising capital faster, less expensive and far more efficient for growth companies as well as far more accessible, open and transparent to a greater pool of investors. While the world adapts to a changing reality, ADDX will continue to serve our customers, communities and fellow citizens.

We are just one part of the solution. It will take the many more joining us to realise a ‘new normal’ that truly benefits all of society.

ADDX is your entry to private market investing. It is a proprietary platform that lets you invest from USD 10,000 in unicorns, pre-IPO companies, hedge funds, and other opportunities that traditionally require millions or more to enter. ADDX is regulated by the Monetary Authority of Singapore (MAS) and is open to all non-US accredited and institutional investors.