Standard Chartered Bank has spun off a tech subsidiary, audax, which plans to offer banking services (BaaS) in Asia and surrounding regions. It was the winner of the 2024 Celent Model Bank Award for Embedded Finance.
“Embedded finance is one of the hottest topics in the industry today,” said Celent the fintech consultancy, in its announcement of the award. “It can enable a bank to access new markets and customer segments far more easily, and at a lower cost, than through organic growth. However, delivering this at any kind of scale typically requires new capabilities and new technology. Standard Chartered saw an opportunity to build an embedded finance proposition based on a new, cloud-based, technology platform. The success of this approach has since led the bank to launch audax, which is a separate business line offering the technology stack to other financial institutions.”
Its first live partnership is with Indonesia’s Bukalapak, an e-commerce platform with more than 150 million users and 20 million business owners. They have launched BukaTabungan which provides a paperless, digital banking access, serving Bukalapak’s more than 150 million users and 20 million business owners. By August 2023, the latest reported data available, it had 230,000 active users, and 98% of them were new to the bank.
Through audax, Bukalapak is offering current account and savings account services, debit cards and, to its whitelisted users, lending. In addition, audax has also partnered with Sociolla, an Indonesian e-commerce focused on beauty products.
Standard Chartered began work on the platform more than five years ago before BaaS was part of the lexicon, said Kelvin Tan, CEO of audax.
“We decided to build an entire banking stack because Standard Chartered realized legacy tech was not suitable for a massively scaled business. As as we built up the tech stack and the business model and business solution, we then said we should commercialize the tech.”
The result was audax, which the bank spun out several months ago and is available to other banks. Standard Chartered has its headquarters in London but does most of its business in Asia, Africa and the Middle East.
Tan sees huge potential in countries where Standard Chartered has a banking license. The software offers the opportunity get up and running in six to nine months, rather than years. The range of potential to corporate users is large.
“We have spoken to ride hailing, airlines’ loyalty program and e-commerce platforms,” he said.
The platform values speed and ease of use — it can conduct Know Your Customer (KYC) checks in just over two minutes through remote digital connections. In a whitepaper describing the product audax said it can result in 20% business growth and reduce man hours and IT costs by 40%.
BaaS platforms like audax should also improve financial inclusion, Tan said. Indonesia spans more than 200 islands, a geography beyond the reach of traditional branch banking. Across Asia, he added 40 to 50% of the population is underbanked or unbanked.
“In Asia, smartphone penetration is far higher than banking penetration.”
Banks can save on acquisition costs by tapping into partners’ established user base, said the whitepaper, noting that Capital One, JP Morgan Chase, Citi and Bank of America had each spent more than $1 billion in advertising and marketing in 2022.
In its statement as it won the Qorus Banking Innovation Awards in 2023, Standard Chartered said: “Acquiring customers at scale on our partners’ platforms could cost as little as €3, compared to €200 for traditional incumbents….[We can] tap into partners’ ecosystems, leverage their competitive strengths and improve financial access to traditionally underbanked/unbanked populations in developing markets. As one of the first traditional banks in Asia to offer this BaaS model, we wanted to build a scalable, on-cloud platform that could connect with multitudes of partners in different geographies seamlessly,” it added.
