Cover Story: The accidental fintech firm

This article first appeared in Enterprise, The Edge Malaysia Weekly, on June 12, 2017 - June 18, 2017.

(From left) Co-founders Wong, Vivier, Liew, Siew, Ooi and Barnes

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Jirnexu Sdn Bhd started out by trying to replicate Moneysupermarket.com because the founders were used to the convenience of online banking in the UK. The company ended up developing a technology platform and creating a fintech concern along the way.

 

Once upon a time, a financial comparison site and a consumer financial education site decided to come together to create a financial products supermarket. 

Jirnexu Sdn Bhd (formerly known as Saving Plus Sdn Bhd) got its start when two young men who had spent a good part of their lives studying and working in the UK came home in 2010 and found that the banking and insurance processes in Malaysia were still clunky and manual.

Separately, they decided to do something in the financial services industry. Jirnexu CEO Siew Yuen Tuck started RinggitPlus with James Barnes (who is now the company’s chief operating officer) while Jirnexu chief financial officer Liew Ooi Hann started SaveMoney with Lucas Ooi.

RinggitPlus was a financial comparison site and SaveMoney was a financial education site. They helped educate consumers, compare the offerings of banks and insurance companies and sent the customers to the websites of the respective financial services companies. Both were small concerns with five or six employees each.

However, there was a problem. Once the consumers landed on the bank or insurance company’s website, they had difficulty completing the application process and securing the product or service they wanted.

“The banks would have thousands of applications coming in and they managed them on all types of software that did not have processes in place to deal with situations like that. Or in some cases, they used Excel sheets for telesales,” says Siew.

“If you imagine how banks worked in the past, you walk into a bank and submit an application. The customer service representative would have been responsible for you completing the application and if you had any questions, you could ask them.

“But when it is virtual, the old systems do not work anymore because the branch is not responsible, the customer service representative is not responsible and you are just one application in the queue.”

So, what the bank or insurance company actually needs is proper software to track the process, he says. “What stage is the customer at? What is the status of his or her application? If action needs to be taken, who is going to take action? What type of action is it and when does it need to be done? 

“Is it an SMS, email or call? Who is going to do it, when are they going to do it and what is the response? How many times have they tried? We built the software to do all this.” 

This is how XpressApply, a platform that helps consumers complete transactions, came about. The technology platform helps banks and insurance companies manage the complex sales or application process online.

Liew says, “We realised that there was a gap and worked with the banks to solve these problems. While we needed consumer brands to engage with the banks, we realised that we needed to go further. It was not a case of just sending them customers, which is what RinggitPlus and CreditGoGo used to do.

“So, we rebranded ourselves as Jirnexu, which allowed us to serve the banks as our clients rather than as our customers. You cannot handle your customers through a digital channel? We will help you do it.”

Culture shock

Liew had studied and worked in the UK and loved all things financial “I was an investment banker, but not the mergers and acquisitions stuff. I used to do structured products,” he says.

He returned to Malaysia in 2010 and did a few things before he started SaveMoney. He says was used to a certain level of ease when banking online in the UK. “I only set foot in a bank twice when I was there — to open my account and to close it. Everything in between, such as credit card and loan applications, deposits, bank transfers … you name it, I did digitally. 

“So, you can imagine my culture shock when I came back to Malaysia and could not do anything online beyond logging into the internet banking service and transferring stuff. But mainly, as a consumer, I found that if I wanted to learn what products were right for me, there was no place to do that.”

That was part of the reason Liew started SaveMoney. “We started it in late 2011. The consumer finance education portal was aimed at bridging the education gap in financial service products in Malaysia,” he says.

“Our aim was to educate Malaysians on financial products, their financial lifestyle, how to save money, how to choose the right credit card or loan, how to file their income tax returns and so on.”

Liew met Siew in mid-2012. “He told me, ‘I see what you are doing, it is pretty cool and I am thinking of doing something that is further down the value chain, which is after people have been educated, how do they get the product?’”

They met for coffee and what they talked about eventually became RinggitPlus.

There were plenty of similarities between the two. Like Liew, Siew had been away from Malaysia for half his life. He had studied and worked in the UK and was used to more convenience in his banking. 

“Whenever I needed any kind of personal finance, banking or insurance product, I just went to 

Moneysupermarket.com, be it credit cards, savings account or insurance plans … everything was done online and I took that for granted. I rarely had to go to a branch or speak to an agent. Then, when I came back to Malaysia in 2010, I had to start from scratch,” he says.

“I still had my Maybank Yippee account — a children’s account my mum opened for me when I was just a child. But I needed everything, from car insurance to credit cards and bank accounts. So, it was manual and painful.”

Siew went online to research products, but this was before Bank Negara Malaysia made it a requirement for banks to come out with product disclosure sheets (PDS). “At least with a PDS, a bank is required to share its information. Back then [in 2010], there was nothing. I could not even find information on the websites, let alone apply. Opening a bank account, to this day, takes up to two hours and that is if you are lucky,” he says.

“To get a credit card, I ended up going to a sales guy in a mall, which is very strange. Not only was it inconvenient, the whole process seemed very broken from every point of view.”

There were two problems with getting credit cards from a booth at a mall. “For one thing, the banks are spending a lot of money pushing products to consumers. And second, the customer is being ‘sold’ the product. I come from a world where I could readily choose whatever product was best for me. But here, I had to take whatever they were selling,” says Siew.

The flip side to all this pain and inconvenience was the opportunity it represented. “First, was there a more efficient way for financial services companies to distribute products to consumers? Second, could I offer more value to the consumers?” says Siew.

He decided that a financial comparison website would fill that gap. It was early days for online transactions in Malaysia. It was only two years later that he finally started to see a shift in consumer behaviour. 

“Groupon had become massively successful and Rocket had launched Zalora and Lazada. Although I do not have the actual data, anecdotally, I could see that people were starting to do online transactions,” says Siew.

It was a signal that people were starting to trust the internet more. “That was when I decided to give RinggitPlus a go. So, I started building a team in 2012 and reached out to partners such as SaveMoney. We launched RinggitPlus in January 2013,” he says.

They went to the banks to give them a consolidated offer: SaveMoney would educate the consumers and RinggitPlus could help them acquire the customers. At that point, the vision was very simple, which was “Let’s just copy Moneysupermarket.com”.

“Here was a business we were all familiar with in the UK. Consumers research a product on the website and then complete the application on the bank’s website,” says Siew.

While sending a customer to complete a transaction was a simple process in the UK, it was quite the opposite in Malaysia. “What we realised in 2013 was that it was like a supermarket where consumers could not buy the products because the vendors themselves — the banks or insurance companies — were just not following up. And if you came to RinggitPlus and applied for a product and the bank did not call you back or only called you back once or twice and never followed up, you would blame RinggitPlus,” says Siew.

By the end of the year, the founders came to the conclusion that there was really no business in just copying Moneysupermarket.com. Offering consumers education on financial products and the ability to compare products was not as valuable if they could not actually get the product. 

“We needed to solve a very fundamental problem, which was how do I make sure every consumer who comes to my website gets the product they want. It sounds so simple. However, it was anything but easy,” says Siew. 

Getting consumers to use the website was not a problem. From the early days, RinggitPlus made a conscious effort to be open and transparent. 

“We share all the information up front and we do not hide anything. We cannot change the product that the banks or insurance companies create, so we cannot be biased. We list every bank, even if we do not work with them,” says Siew.

The issue was basically the last-mile connectivity. “If you have ever done any kind of work for a bank or insurance company, you understand that it is very difficult for them to change the way they do things because they are highly regulated. They are also very large institutions,” he says.

It could take up to two years to get a process launched, which is a lifetime for a start-up such as Jirnexu. “We would say, if you want to acquire customers online, this is how we do it. And it is all about making sure that when a consumer wants your product, they can get it — anytime, anywhere and on any device. They should not have to fill out a form or scan anything. And they should be able to do everything from their mobile phone,” says Siew.

He points out that the most successful business-to-consumer (B2C) businesses are all about convenience. “Uber and Grab would not be so successful if you could not get your rides when you wanted. It may sound simple enough, but it is extremely difficult for them to make sure you can get what you want. 

“It is the same thing for us. The amount of work we have to do to make sure that if you want to get a credit card or apply for a personal loan, you can use XpressApply on RinggitPlus or KreditGoGo; that you can complete the application online; that if you have any questions, you can contact us and we can answer you; and that you know what is going on at every point in the process.

“That is a lot of work for us. It is a lot of work educating the banks and getting answers from them and the insurance companies.”

But this is par for the course, Siew points out. The financial services industry is highly regulated and companies have to be very strict about who they work with. “If you are not willing to work around those restrictions, then it is not an industry you should go into,” he says.

Jirnexu embraced the complexity. “We know if we get it right and we become the best at what we do, how will others compete against us? Right now, for what we do, there is no direct competitor in Malaysia. If the bank puts out a request for proposal (RFP) for what we do, no single party can apply. They would have to team up with other parties. No one has our track record, which took five years to build working with banks to address all of their concerns,” says Siew.

Building a fintech platform

People keep asking the team what they learnt about building a financial technology (fintech) platform. “My first response is that we never built a fintech platform. We built businesses to address certain needs and now they are called fintech platforms,” says Siew.

But because he accidentally built what is now known as a fintech platform, he knows a thing or two about the pitfalls. “If you want to provide a service for banks or insurance companies, in most cases, your funding will run out before you are able to realise that service. That is because most start-ups are not funded for more than 12 to 18 months and the sales cycles are longer than that.”

Liew chips in, “It does not sound sexy, right? That is because most technology companies are built on speed of execution. But you are not in control of the speed of banks. So, you have to be prepared for that.”

To be fair, neither of them was aware of the long sales cycles when they started out. They learnt this over time. “It was a big learning curve for us and we had to restructure the business accordingly. Our business plan for a client coming on board was three to six months, which we thought was pretty long and should be enough for a bank, but it wasn’t and still isn’t,” says Liew.

How did this realisation affect the company’s plans? “There were certain things that we could not do. Perhaps we would have liked to launch a third market sooner, but we said, ‘No, let’s focus on existing markets’. Locally, we could have looked at a new product vertical or new partnership that would have required resources, but we did not. Stuff like that,” says Siew.

Funding

Given the complexities of the industry, funding is one of the key components. So far, Jirnexu has been able to secure adequate funding to support its growth. The company recently closed its Series A round of funding, which added US$1.5 million to its coffers and brought its total funding to US$6 million since its seed round. It is now embarking on its Series B. 

Siew says most of its investors have a link to financial services. “For example, OSK Ventures International Bhd. Tuas Capital Partners is a local fintech-focused venture fund started by local entrepreneurs, all of whom have a background in financial services. Celebes Capital is a family investment group while Nullabor is an English family office based in Southeast Asia.”

Going back to an earlier question of managing a start-up that does not move at breakneck speed, Siew says one of the ways is to make sure the investors appreciate the long sales cycles. “So, that is one criterion, which is, do you appreciate the challenges we are going to face [providing services to this industry] and are you willing to work with us through these challenges towards the long-term goal? “Many of the investors have run banks in the past or invested in banks, so there is no issue there.”

How did Jirnexu manage to secure another round of funding when investments are admittedly thin on the ground? “I don’t think there is a simple answer for it. For one thing, you are just sitting here talking to two of us when there are actually six founders of the business. I do not see how any business with a sole founder could have done this,” says Siew.

To him, successful fundraising is a function of what a company can deliver. “At some point, you have to go from what you promised to delivering it. It has been five years for us and if in that time we promised certain things and did not deliver, we would have had difficulty raising more funds.”

The founders

Who are the founders? “Both RinggitPlus and SaveMoney were started by two co-founders and very early on, two very talented people — Cedric Vivier (now the chief technology officer) and James Wong (chief business development officer) came on board,” says Siew.

Vivier is French while Wong, unlike four of the other founders, was educated in Australia. “They believed in what we were doing, believed in our vision and wanted to join,” says Siew.

Liew cuts in, “The six of us have been at the table for four years, which is rare. I think that is one of the key reasons we are so successful. Each of us has his own skills and we are all focused on the vision of the company.”

Although the company started out in Malaysia, it is becoming increasingly regional in its focus, says Siew. In March 2014, it started the equivalent of RinggitPlus in Indonesia, called KreditGoGo.

“Our core business for the foreseeable future is RinggitPlus and what we do for Malaysians — the consumers, banks and insurance companies. KreditGoGo in Indonesia is a younger business, but it gives us the opportunity to replicate our success here in a new market,” says Siew.

“We also have technology. We can run the technology business out of Malaysia. Our product development team is here, the operations are here, but we can service customers out of any market in Southeast Asia and eventually, any market in the world.”

What’s in a name?

Why Jirnexu? “If you need a brand name, something you get can a dotcom for, the options are very limited. Another thing you have to keep in mind when you choose a brand name is make sure it does not mean something negative in another language,” says Siew.

He had asked everyone for ideas and one of his investors came through. “This investor actually keeps a list of words in other languages that have good meanings and do not mean anything negative in another language. He gave me the list and Jirnexu jumped out because it is short. It had a dotcom and it meant ‘prosper’ in Maltese. 

“‘Prosper’ goes back to our original reason for setting up the business. Both Liew and I were trying to figure out how to get more consumers and how to make their lives better by improving their finances.”

Barriers to entry

If this was such a good idea, why didn’t another company jump on the bandwagon? Or for that matter, why didn’t the banks do it themselves?

Siew says creating a technology platform that can be proven in the real world is especially tough because most technology businesses are set up purely by technologists and they need to go out and find a proof of concept or several proofs of concept, and these are never perfect.

“We have a live proof of concept in RinggitPlus. So, we built the technology platform to solve the problem of how to help consumers get any product, anytime, anywhere,” he says.

The company was able to test the platform on a live basis. “But to do that, we have had to service banks, consumers and insurance companies. We have also had to provide digital marketing services and create back-office processes and operations,” says Siew.

“We were able to build this because the technology team sits with the business team every day. So, when there is a problem with the technology platform, it could go into a queue or they could just sit beside each other and talk so it can be fixed.”

If a bank wants to build a technology platform to get customers on board, it could take a year to kick off the process, the former Citi banker asserts. “You have to align all the different teams, find vendors, put out an RFP, go through multiple internal committees … and that is just to get it built. 

“After it has been built, when something does not work, you have to put in change requests to a third party that is probably in another country. It is such a nightmare to get things done. That is why the banks do not do it.”

This, Siew hastens to add, is not a criticism of the way banks operate, but an opportunity for companies like Jirnexu. As for competitors, he says a lot of the start-ups that enter this space do not have a clear understanding of what the business is about. “They believe it is a consumer business and you just need to acquire as many consumers as possible and build a brand.”

Jirnexu, on the other hand, chose to spend its money on making sure that the technology platform is sound. “I would say the distance between us and our nearest competitor keeps increasing because we are the only one with that platform. There must be five or six comparison sites in Malaysia today, but we are the only one investing in the technology platform and process,” says Siew. 

And because the company has already refined the technology for one of the most complex sales processes in the world, it can be easily applied across industries. Are its investors pushing for this? 

Siew shakes his head. “The venture capitalists trust us to run the business. Some start-ups are very opaque in how they operate, providing only short summaries. But we provide a full look-through into not just our profit and loss statements but all the business metrics.

“If we are not sure about something, we ask them. We also tell them if we tried something and it failed and how much it cost.”

Liew says, “Being opaque only works if things are going well. But if you are transparent about your problems, successes and failures, then it is very easy to ask for help. Rather than focusing on how I am going to explain this problem, I focus on the actual problem and how to fix it.”

He points out that this policy is one of the reasons there are still six co-founders in this company. “So it is always, ‘Here is what’s happening, here is what we need to do. You are welcome to ask questions. Or if you want to sit in on the board meeting, you can’. 

“Our investors interact with the founders, sometimes without me knowing, which is fine. If there is something they want to tell or ask us, just go ahead.”

This is also how the company interacts with clients and consumers. “This means we have to be perfectly aligned with the consumers, banks and insurance companies. This is very challenging and, again, it requires transparency. It also requires very long-term thinking and there is a partnership process for everything. If we did not have that, I am not sure we would have survived,” says Siew. 

How much?

The two co-founders refuse to disclose their valuation, but one thing Siew will say is that Jirnexu hopes to be a unicorn, or a US$1 billion company, within five years. 

For the last three to four years, the company has recorded a compound annual growth rate of 70% and it expects to double it this year. “The volume of customers coming to our website has consistently grown,” says Siew.

Has the company identified a third market? “We are still looking; somewhere in Asean. We have not decided yet.”