Fintech Developments for Developing Nations: Lightnet Group is Determined to Serve the Underbanked
As fintech continues to gain traction in Asia, connecting more companies with more consumers across the Southeast Asia region, the lack of consistency in regulation continues to affect the cost, efficiency and security of cross border remittances. Often, migrant workers who leave home to seek better income opportunities overseas are the most affected by this lack of regulatory consistency. In the absence of regulatory reform, some fintech firms are attempting to provide services that can benefit lower-income individuals in rural areas by encouraging micro-financing through remittances.
Thai innovators taking fintech to the next level
One such company is the Singapore-based Lightnet Group. Led by founder and chairman Chatchaval Jiaravanon — family member of the CP group, one of the largest conglomerates in the world, and co-founder and vice chairman Tridbodi Arunanondchai — a former banker turned tech entrepreneur. The Lightnet Group offers three core products: BridgeNet, LiquidNet and Smartnet. All three products are designed to provide greater convenience and cost-saving remittance services through the use of blockchain settlement technology. BridgeNet facilitates interoperability of the banking rails between non-bank agents and money transfer operators (MTOs) by acting as a messaging platform that offers a more affordable option when compared to legacy services. LiquidNet is a low-cost instantaneous cross border remittance service that is available 24/7 and uses a fiat backed collateralised protocol model in order to eliminate FX rate fluctuations and minimise transaction fees. The service allows partners to tap into one of the largest liquidity and remittance infrastructure networks globally and offers value transfer compatibility with cash, e-wallets, bank accounts, and non-fiat assets. SmartNet encompasses a series of smart contract frameworks to boost the capabilities of legacy financial transactions. This is complemented by tools provided by Lightnet Group to help businesses compose or customize financial smart contracts, while EvryNet, a native smart contract platform developed by Lightnet Group, helps businesses to automate their financial workflow.
Serving the underserved
In addition to providing secure, synchronized networks to help users handle remittance services more quickly and efficiently, the Lightnet Group is focused on lowering service costs. This is necessary to make cross border remittance accessible to everyone. With this in mind, Lightnet Group signed an MOU with SEBA Bank, a FINMA-licensed digital bank in Zug, Switzerland, in August 2020 to provide a seamless, secure and accessible bridge between digital and traditional assets. The MOU has SEBA Bank acting as the banking counterparty for the Lightnet Group, thereby enabling settlements, correspondences and remittances in both fiat and digital currencies. At the same time, SEBA Bank will act as an alternative settlement banking network, account and custodian, as well as the settlement bank for MTOs in digital currencies. Using fiat backed collateralised protocol, the Lightnet Group is providing remittance services across Southeast Asia for millions of unbanked migrant workers, allowing them to bypass the global remittance industry — a trillion USD market characterized by high transaction fees, fragmentation and unreliable payment routes. Migrant workers using the Lightnet Group’s services enjoy lower fees, quicker transactions and wider coverage. The firm intends to roll out multi-currency virtual accounts to address the inefficiencies of global trade finance.
The future of fintech
Innovations in cross-border payments over the last 10 years have positively impacted 800 million people worldwide, with approximately 164 million migrant workers sending financial support via remittances to family members abroad. The World Bank reported that, in 2018, remittances to developing countries hit a record US$529 billion. Fintech has played a significant role in helping migrant workers overcome challenges such as high transaction fees, language barriers and a lack of technological know-how. However, transitioning from a cash-based to a digital economy remains a major challenge for fintech firms as they endeavour to create products with international appeal; especially in light of user demographics becoming increasingly diverse. Taking this into consideration, the Lightnet Group is determined to stay the course and continue innovating to meet the needs of a broad range of cultures, users and consumer preferences. In this vein, things are beginning to flourish for the Lightnet Group, having raised US$31.2 million earlier this year in a Series A financing round backed by six major Asian conglomerates, including UOB Venture Management, Seven Bank, Uni-President Asset Holdings, HashKey Capital, Hopeshine Ventures, Signum Capital, Du Capital and Hanwha Investment and Securities.