Discussion

The opportunity to work in Kuala Lumpur didn’t come out of the blue, but was perhaps typical of any growing business. I've been with Engine by Starling for nearly two years now, and given Engine, the SaaS subsidiary of Starling Bank, was only launched in 2022, I’ve been fortunate to be a part of the journey from the start.

Prior to Engine, I’d spent a number of years working in consulting with PwC, which saw me working in strategy, technology and operations across financial services from investment to retail banking, so it has been interesting mapping this experience to Engine. More recently, I have begun focussing on business development and growing the business in new regions. It was through this that the opportunity came to spend some time out in Southeast Asia. Despite being hesitant about the prospects of eating tastier food, experiencing better weather and exciting travel opportunities, I grabbed it with two hands.

The logic behind sending me here in July this year was that with two banking clients under its belt, AMP Bank in Australia and Salt Bank in Romania, Engine had successfully proven itself in the market. Now, we could be more proactive. The Southeast Asia region is vibrant and diverse. With high population growth and a burgeoning demand for better digital experiences, there is a great deal of opportunity to support banks here. As a bonus, since we already have a team out in Australia, Southeast Asia was a logical place for a second hub. Spending time out here this summer and over the coming months (and indeed years) is crucial to help grow our insights, local partner networks and connections with potential clients.

I’ve previously spent quite a lot of time in this part of the world and love it for many reasons. There’s the richness of the culture, but also the constant feeling of opportunity. I have also had the pleasure of working with many clients in the region in my time at PwC, and so have both a professional and personal respect for the different cultures, ways of working and nuances of each country (that I’ve been able to visit so far!)

Of course, visiting a region for pleasure is very different from working there. While we’d had discussions about what success would look like before I left, we never could have planned it out entirely ahead of time. What we did know was that the 2 months that I’d be spending in KL would only be the start of the journey and an important step in building ourknowledge and connections in the region, which we’d continue to reinforce and invest in over time.

Many people think of Southeast Asia as one large region, but in reality it is very fragmented. There are many countries with different ways of working, differing regulatory landscapes, and various levels of development in terms of banking and digital transformation. This is especially due to a number of regulators issuing digital banking licences, such as in Hong Kong, Singapore, Korea, Malaysia. Thailand is going through this process at the moment. Across the region, some markets have already seen waves of digital banking. Meanwhile, there are others that are still part way through the journey. However, it is clear from a customer experience perspective that the region is light-years ahead in many ways. There are multiple examples of leapfrog technologies in the region. Where the adoption of bank accounts is low there are innovative solutions, e.g. in Jakarta, the ride-share service GoJek enables its customers to use GoJek’s app-based wallet to pay for everything from a coffee to a new moped.

New digital banks have definitely swept up a significant amount of customers. Much of that comes down to the onboarding process which is more convenient than the branch-based system. Customers are very forward thinking and ahead of the game when it comes to digital processes, and there is an incredibly high adoption of smartphones. People expect great user experiences and this has been driven by the innovative super apps they are used to in their daily lives. When it comes to localising Engine there are nuances across different markets that we'd have to lean into. In this part of the world, for example, QR payments are practically universal and very straightforward to use.

It is also clear that the SME market in this region is significant. Across the region economies depend on small businesses and there is a high entrepreneurial spirit. There are at least 71 million micro, small and medium-sized enterprises (MSMEs) in Southeast Asia, based on 2020 data from the Asian Development Bank. They account for 97% of all businesses in the region and employ 67% of the working population. But there is a real need for more digital banking options for these business owners, and Starling’s experience is particularly relevant here given the growth the bank has seen and learned from in this segment. Starling currently has an impressive ∼10% of the SME market in the UK, and I really see that there is a potential fit here for Engine’s capabilities to solve the pressing banking needs of these small businesses.

Banks are traditionally risk averse, as they should be, technological change is a big decision You need to maintain service continuity for customers, the risk can be high with deep complexity in existing technology stacks and many failures in the market mean migrations have a bad rep - so going with a known solution understandably feels like the lesser risk. You need to have a deep respect for these challenges and that this is about building and maintaining relationships and trust. Newer players that started with a blank slate, like us, need to understand these challenges and take the opportunity to address them.

We could not be sure whether the Starling story was going to resonate here, even though it had sparked interest elsewhere. But it did. Starling has always been used as a case study in this huge wave of digital banking. I've seen our story in so many decks and up on the big screen at conferences. It’s a real pleasure being able to share the learnings from Starling,

What people recognise in Engine is that it's proven. The technology is the platform that powers Starling and so it gives people a real reference point and a greater understanding of what Engine’s capabilities are (as well as our expertise).

Even when we first started pitching and demo’ing Engine elsewhere in the world we were never really sure how much our operational portal (Management Portal or ‘MP’) would resonate. We knew people were interested in the app/mobile side, but MP was our complete back end system. We didn’t quite realise how powerful it was until we started showing it to other banking executives.

It’s the same story in this region. Banks have the same challenges here with legacy systems and multiple tools/servicing layers - so MP is a breath of fresh air.

There is no substitute for being able to hear first hand the challenges that banks in the region are facing. I am learning about many topics from these conversations, including understanding local payment infrastructures, the differences in regulatory landscapes and changing customer expectations. I am looking forward to spending more time here over the next few months and years as we grow our presence. It’s going to continue to be a challenge, and there is a great deal more to learn, working with local partners and networks, and understanding clients’ needs - but the opportunity for Engine to make a mark is very exciting.

In part two of my letter from Kuala Lumpa, I’ll share what I have learned about the nuances of bringing a new software product to Southeast Asia.