In late 2021, PT Moduit Digital Indonesia (Moduit), an integrated fintech wealth management company, received funding worth $4.5 million (IDR 65 billion) in a pre-Series A round led by Singapore’s Reciprocus Moduit Holding (RMH), representing a consortium of backers led by Reciprocus Financial Services Pte Ltd, InsurTech entrepreneur Walter de Oude and Helicap Pte Ltd. In addition, PT Alto Network (Indonesia), a subsidiary of the Djarum Group, also participated in this round.
Without marketing support, Moduit’s Assets Under Advisory (AUA) grew in 2021 by more than 40 percent as the average ticket size for its business-to-customer (B2C) clients reached $4,600 per client. Along with that, the number of Moduit Advisory Partners grew by 74 percent, who on average handle portfolios of $60,000 per client.
In a TechNode Global Q&A, we sought the insights of David Z Wang, the Co-Founder and Group CEO of Helicap Pte Ltd, a Singapore-based fintech company that connects global investors to private investment opportunities in Southeast Asia. Helicap is one of the backers of Singapore’s Reciprocus Moduit Holding (RMH), the leading investor of Moduit’s Series A investment round.
Wang highlighted the benefit of digital payments on control, visibility, and flexibility in user spending, as well as the growing demand for wealth management tools. Digitalization has also provided increased opportunities for investing, particularly giving rise to a new generation of investors.
What are the trends driving innovation in the Asia-Pacific region today?
As boundaries continue to shrink between the physical and digital worlds, the resulting increased interconnectivity has led to rapid advancements and innovations across the board – especially in financial services. Contactless payments, online banking services, and more are changing the way that people approach both finance and commerce.
Rising consumer acceptance of digital payments has led to a growing population of digital consumers, especially in the APAC region. Not only are customers preferring to pay online, but they are also demanding more flexible, convenient, and personalized digital experiences from brands.
As a result, we are seeing APAC businesses leveraging or scaling up their use of artificial intelligence in many types of services and products, as well as deploying data analytics technologies – such as machine learning and statistical modeling – to predict evolving consumer behaviors and future outcomes. This enables them to optimize efficiency, deliver a better customer experience and increase customer stickiness.
The advent of digital payments also marked the beginning of APAC consumers having more control, flexibility, and visibility over their spending. This has resulted in greater financial literacy and a rising desire to improve personal financial management. We are seeing increased demand for wealth management tools and resources in the region as people start to manage their wealth more proactively; hence why we decided to invest in Moduit, where this perception shift is leveraged to create a more financially literate, secure population.
What are three key challenges that investors need to navigate in this post-pandemic environment?
Volatility is the name of the game in the post-pandemic environment. We are now approaching nearly two years since the COVID-19 pandemic first broke out. Despite the rollout of vaccines, there are still many unknowns and the global situation changes almost daily – the Omicron variant is one example. This constant uncertainty has significantly affected investor confidence, with frequent big swings seen in trading prices across markets and even traditional safe-havens. Without a foreseeable end in sight, this presents a very challenging investing environment, especially for new retail investors.
Secondly, travel and meeting restrictions have made in-person visits and face-to-face interactions a rarity rather than the norm. This makes it more difficult for investors to make on-ground assessments and better understand potential investments, which results in a more cautious approach or putting investments on hold. However, this could also lead to missed opportunities. Investors must read widely from various sources, keep abreast of changes and work with trusted fund managers to identify opportunities to preserve and even grow wealth in the midst of this global pandemic.
Last but not least, the accelerated shift towards digitalization has unlocked many new investing opportunities and given rise to a new generation of investors. However, the digital pivot does not come easily to all users, especially the older generation who are used to more traditional forms of investing. Given the sharp trajectory of technological advancement and evolving regulations, it can be difficult for them to keep pace with the rapid changes and understand the variety of digital investing products available.
What are Moduit’s strategies in addressing such challenges or enabling its clients to adequately overcome these?
Moduit’s primary goal is to simplify investing and wealth management for individual users. Moduit helps would-be investors determine their risk profile and empower them to make suitable investments via robo-advisory services. Using algorithmic data analysis, AI-powered robo-advisor can suggest personalized investment strategies for users, providing transparent, data-driven wealth optimization. Moduit also partners with trusted asset management companies in Indonesia to offer over 60 mutual fund products, giving our 20,000-strong user base more accredited investment options.
Financial and investing literacy remains relatively low in the APAC region, and some users find it easier to talk to human advisors about investments. However, from personal experience, a large part of client consultation involves educating them on the basics of investment before we even get to the pros and cons of each product, which is inefficient for everyone. Our licensed Moduit Advisor Partners have an advisor app to streamline the process, which features a client relationship management tool to support pipeline management, income planning, training programs, and more.
Finally, choice is important for users to grow their wealth. Besides robo-advisory services and mutual fund products, Moduit is also working on offering the full spectrum of wealth management products such as bank deposits, insurance, bonds and securities. Moduit aims to become a one-stop platform for users to manage their wealth securely and efficiently by listening to their needs and offering products that they need.
What is your view on emerging technologies that have been used in building platforms for investment and wealth management, such as decentralized finance, blockchain, and the like? How about emerging tech like NFTs?
There is no doubt that blockchain and decentralized finance are the hot topics in the finance world at the moment. There is a lot of debate around how they are used and how they should be regulated, but it is important to remember that we are only in the very early stages of their development.
I think that there is undeniable potential in the use cases for blockchain and decentralized finance. There has long been a demand for greater transparency, security, and – paradoxically – privacy in the industry. People are excited over blockchain because it seems to fit the bill: it can store a permanent, tamper-proof timeline of data via a distributed ledger, but also preserve investor anonymity. Transactions are clearly verifiable and are exceedingly difficult – if not impossible – to alter.
Meanwhile, decentralized finance (DeFi) purportedly puts financial power back in the hands of investors by replacing the middleman with digital protocols and allowing parties to trade directly with each other. Investors no longer have to jump through third-party hoops to secure financing or make investments, which naturally makes wealth creation and investing more accessible to a larger swathe of society.
The case for NFTs is also intriguing. They tokenize ownership of just about any asset that is perceived to have value, even traditionally illiquid and unconventional assets such as art, whisky, and more. This unlocks new investment asset classes for investors and improves liquidity for asset owners.
The aforementioned technologies can indeed be game-changers in investment and wealth management. We are already seeing blockchain and DeFi being used as the backbone of up-and-coming apps. However, we must also consider the regulatory environment as this will have a significant impact on how these technologies can be deployed and used – which will ultimately affect the success of the platforms that use them.
How do you see the environment for wealth management in the medium term? How about the long-term?
I would say that we are currently at a nascent stage, especially in regards to digital wealth management. More people are now interested in managing their personal wealth, and apps and services are starting to materialize in response to this demand.
Digitalization is lauded for enabling users to access information and services quickly and conveniently. The Business Times reported that around two-thirds of the ASEAN population would prefer to purchase investment products and insurance digitally. However, in-person investment advisory services are still seen as more ‘legitimate,’ trustworthy, and accessible, so many still prefer face-to-face interactions. In the medium term, it is likely that consumers will turn towards a hybrid of both digital and in-person services for wealth management.
However, as consumers become used to and more familiar with digital platforms and products such as Moduit, we expect demand to rise long-term for digital services. This will lead to more partnerships with investment and asset management companies and drive more innovation for better digital products in this field. This is a good thing as there can be no progress without healthy competition, and ultimately the customer benefits from better service.
Can you share some interesting data or case studies from Moduit’s portfolio that are a good example of how technology can bring about impactful change amid today’s business environment?
I have mentioned some examples above, but the important thing to remember is that technology is a tool that can be adapted to fulfill a gap or a need. It may not always be the perfect replacement for a human, but in many cases it can optimize processes and realize new possibilities. The global work-from-home situation is an excellent example; we would never have thought that full-time work from the comfort of our home would be plausible, but with technology, it became possible.
In the context of Moduit, technology is an integral part of our business foundation. Moduit can access and support a much larger number of clients on their investment journey with its Robo-Advisor, who does in minutes with data and AI what it might take a human hours to accomplish – and can go into more personalized detail to boot. Meanwhile, its advisor app helps Moduit Advisory Partners streamline client management so they can focus on the important things instead of worrying about the administrative side.
Ultimately, the benefits of technology to businesses boil down to two simple things: optimized operational processes and a better, more personalized customer experience. The results speak for themselves: this year, the average ticket size for Moduit’s B2C clients hit $4,600 per client, and we’ve seen our Moduit Advisory Partner team grow by 74 percent. Some have even left their day jobs to pursue a full-time career with Moduit.
With the recent fundraising, what is Moduit’s strategy for growth moving forward? Is the company focusing on certain markets? Is it expanding?
This $4.5 million pre-Series A round, led by Reciprocus Moduit Holding from Singapore, will enable Moduit to expand its product portfolio to include more curated wealth management products, as well as attract three times the current number of financial advisors to join the platform as Moduit Advisory Partners. In 2021, Moduit’s Assets Under Advisory grew by more than 40 percent; for 2022, the company aims to achieve sevenfold growth.
The company also has plans to improve upon and add new features to its Robo-Advisor, which we see as an essential tool towards democratizing wealth management. There remains a wealth of opportunity in Indonesia, where Moduit is currently based, but the team ultimately aims to expand regionally and may pursue Series A funding by the end of 2022 to achieve these goals.