C88 banking on Asean fintech boom
C88 Financial Technologies (C88), a Singapore-based financial services and technology company, is firmly convinced that Southeast Asia is one of the best places in the world for fintech players to be right now.
The company owns Southeast Asia’s largest financial e-commerce websites, CekAja.com in Indonesia and eCompareMo.com in the Philippines. It also co-operates Premiro.com, an insurance e-brokerage in Indonesia.
The company’s portals last year helped 25 million customers in the two countries to transparently compare and transact a wide range of consumer credit, property, general, life and health insurance products.
“We believe the potential for financial e-commerce, while large in Germany, the United Kingdom and the United States, is actually much larger in Southeast Asia,” C88 chief executive and co-founder John Patrick Ellis told investors during a visit to Bangkok in March.
Co-founder Karl Knoflach said buying insurance online benefits customers as the data is safer when compared to distribution by conventional channels and the price is cheaper.
He founded Check 24 in Germany back in 1999 to help people find the cheapest car insurance online. “Back then, insurers were laughing at us saying, ‘Who would buy insurance online?’ Fast-forward 10 years and everything is different and now buying online is the most efficient way to get insured,” said Mr Knoflach.
The market leader in Germany, Check 24 provides a product comparison portal that covers various sectors from insurance and home financing to electronic and household goods.
“I’m often asked, ‘Why now?’ and ‘Why Southeast Asia?’ and my answer is because there are certain enablers here that will point us to success.”
C88 in October last year raised an undisclosed amount in a Series B funding round led by Telstra Ventures, the venture capital arm of Telstra Corporation, Australia’s largest telecommunications and media company.
In March this year, it acquired Otobro, an Indonesian site that helps people compare cars and motorcycles and financing options. In 2015 it also acquired ThinkTank Software in Manila.
Mr Knoflach said that apart from a population of 630 million, one of the enabling factors he sees in Southeast Asia is a level of economic development that is ready to support rapid e-commerce growth.
Mr Ellis said the young population is also responsive to financial e-commerce products because they trust the information they see online more than the information they receive at a physical branch.
“Finance is one of the few industries without a Facebook, an Amazon or a Google and this contributes to the idea of why we are discussing fintech now and why it is exciting in Southeast Asia,” he said.
C88 has four core business models including a “digital sales agency” that works with financial institutions such as banks, fintech lenders, investment companies and insurers to sell their products via its portals.
It also provides data solutions for risk managers such as communication records, GPS and social media data that can help lenders decide on loan approvals or special interest rates for good customers.
The use of big data has “completely changed the game of the financial services world”, said Mr Knoflach. For example, most fraudulent insurance claims can be eliminated as machine learning can detect anomalies much faster than people can.
Mr Knoflach believes acceptance of online financial services is growing rapidly among the region’s consumers. “People are looking for financial products online here and we are it every day for the tens of millions of users that have visited our websites. So people want it but can we close [a sale] online? That is when it gets a bit trickier, but we are going to get there, very certainly,” he said.
Consumer behaviour in Southeast Asia, he says, is now similar to that in Europe and US but institutional readiness is not as developed so it is harder to close insurance deals online.
“We need very deep processing to close business here … so we have started to build deep processing into our partners and help them by working with the banks on how to collect applications. We also advise our customers how to fill them out, and we fill for them, so going deep is really important in the Southeast Asia market,” he said.
However, insurance pricing in Southeast Asia is one area that the C88 co-founder believes needs to be reformed.
“In Europe you can apply for car insurance and the price you pay for premiums will be based on your risk, where an accident-prone young driver will pay five times more than a 50-year-old who has never had an accident. Here in Asia at the moment, it’s all the same, where you can crash your car three times a year but pay the same price as somebody who has a clean record.”
Having an online pricing model will provide greater access to loans and insurance and there is a “huge opportunity” for fintech providers in Southeast Asia to grow. C88 is now looking at Thailand but it will be facing some local competition.
One of them is frank, a Bangkok-based online insurance broker that is now working with Bangkok Insurance to provide car insurance online.
“For the insurance company and for the traditional broker model, the online channel is very beneficial because they can grow revenue without increasing the cost of selling,” Harprem Doowa, frank’s founder and managing director, told Asia Focus.
“Traditionally if you want to increase your scale and growth potential you have to hire more sales people and sales people are very hard to maintain, while their turnover rate is very high. It takes three months to train a salesperson before they can effectively earn revenue for you and after you’ve trained them for three months, there is a possibility that they will leave in six months.”
Sales can now “very easily” be automated via a chatbot process that can do the job without people at the back end. But Mr Doowa says many consumers in Thailand are “not ready” to complete insurance transactions online yet, so frank also has a call centre, though its main goal is to get more people to move online.
“Insurance products are complicated and insurance companies want to keep it this way because the more complex it is, the more margins they can get, and we are trying to take that away by making it as simple as possible,” he said.
“The traditional way of buying insurance will definitely be gone because new-generation consumers want to search for themselves. If you go to Google Trends you will see the search volume for car and other types of insurance is increasing by 30-40% a year. That is why our target market is generally people around 25 to 45 years old and they are the ones that are transacting online.”
“Finance is one of the few industries without a Facebook, an Amazon or a Google and this contributes to the idea of why we are discussing fintech now and why it is exciting in Southeast Asia” JOHN PATRICK ELLIS C88 co-founder