For all the hype in the cryptocurrency space, the technology is still relatively nascent. When asked about the prevalence of cryptocurrency usage in Singapore, Mr Tharman Shanmugaratnam cited data from Coin Republic which estimated that only around 20% of Singaporean retailers accept bitcoin. Usage of cryptocurrencies for payments and even trading for speculative purposes were also considered as significantly behind than countries like US, Japan and Hong Kong. (MAS, 2017).
I had the pleasure of speaking with Mr Steven Goh; founder of NuMoney, to learn about the gap in the cryptocurrency industry and how these gaps can be plugged.
A graduate from NUS (Computer Science) he worked with his team of experienced programmers/ problem solvers to create software solutions such as GOM VPN (300k active users), Javelin Browser (1M downloads) and Picturemate (110k active users). With the experience, contacts and resources gained from these forays, they then founded NuMoney to address the gaps that they saw in the financial transactions and cryptocurrency market.
Today, NuMoney is a leading cryptocurrency Over-The-Counter (OTC) service with operations in Singapore, Indonesia and Malaysia that allows users to trade cryptocurrencies with physical cash. Soon they will also launch the “NuMoney Exchange” which will enable users to be instantly verified and trade both major and alternate coins using FIAT currencies which can be deposited and withdrawn via NuMoney’s physical stores.
Mr Goh feels that cryptocurrencies can immensely improve efficiency in the finance industry, especially cross-border transactions. Today an Overseas Fund Transfer via POSB takes 2-4 working days and if DBS Remit is used, same day transfers are possible if the transaction is done within a cut-off time (POSB, 2017). In contrast, cryptocurrencies can be transferred across borders within a matter of seconds, regardless of the time of day.
While cryptocurrencies have much to offer to the financial landscape, the technology is still relatively nascent and largely reliant on traditional banks as a medium to conduct business. However the banking system has yet to establish a clear strategy to co-exist with cryptocurrencies and thus may not be the most reliable partner. As a testament to this, around ten cryptocurrency firms saw their accounts closed by Singaporean banks last year (The Straits Times, 2017). 2 months after being founded, NuMoney was also forced to take a hiatus due to bank account closure and issues with their liquidity providers who did not seem to appreciate their high-volume, rapid movement of cash, especially given that they are a cryptocurrency start-up.
The NuMoney Solution
To eliminate reliance on banks, Mr Goh sought to build an OTC exchange which can sustain liquidity through its own operations, in itself becoming a bank. To do this, transactions would have to be conducted through physical cash and since an office cannot possibly store a substantial level of funds, NuMoney uses Cash Vaults from which clients can make deposits and withdrawals. In this way, funds can be transferred regardless of the banks’ stance on cryptocurrencies.
To pump in additional liquidity, he has positioned NuMoney as an international hub for cryptocurrency trading and has been working hard to attract and pool buy and sell orders from both local and international cryptocurrency investors. Having a hub here in Singapore is particularly attractive to foreign investors since Singapore does not subject capital gains from disposal of virtual currencies to capital gains taxes (IRAS, 2017). By concentrating trading activity within NuMoney, they are able to achieve enough scale to operate without relying on an external liquidity provider.
Moving forward, NuMoney will be expanding beyond its current OTC services and will be building an international exchange to allow FIAT currency to cycle within an exchange without having to cross-borders, thereby removing the need for a banking intermediary. The NuMoney exchange will combine the best aspects of leading exchanges; the ability to fund an account and purchase cryptocurrencies with FIAT currencies as seen in Gemini, access to a plethora of alt-coin pairs as seen in Binance and physical customer care locations as seen in Bithump.
As with many other start-ups, Mr Goh feels that manpower determines the success of a company. When NuMoney first started, it was common for relatively fresh hires to be entrusted with large sums of money as there was simply no alternative given their small team. Therefore he stresses that while NuMoney, as with most SMEs, could always use more people to expand marketing efforts and widen their lead over their competitors, it is more important to select the right people who are committed to the job and are aligned with the company’s vision. This is exceptionally important for NuMoney as they have to sustain constant rapid growth and cannot afford the time-cost of training half-hearted staff. Beyond selectivity in hiring, retention is also important and thus he ensures that all staff work in a supportive work environment built on mutual-respect. With no change to hiring curbs in the Budget 2018, managing manpower to sustain growth will be especially important as Singaporean businesses continue to face tech manpower shortage (The Business Times, 2018)
Additionally, Mr Goh feels that a targeted marketing strategy is crucial for rapid growth. While it may be tempting to go into every possible advertising channel, he feels that such a vague strategy might yield little results given the lack of control and monitoring. Instead he opts for a more focused approach of selecting 1-2 channels and setting clear objectives to analyse growth and fulfilment of objectives. In this way, his marketing team is able to measure the success of different channels and concentrate their efforts on what works best. As said by Becca Wilson CEO of Sphrexx, an advertising agency providing business intelligence, “You can’t manage what you can’t measure” (Forbes, 2017).
Currently regulations do not adversely impact NuMoney, but to hedge against the risk of a new unfavourable policy being passed in any of the countries that NuMoney is operating in, he is trying to expand NuMoney into as many markets as possible. In expanding beyond Singapore, he has worked with many of his major-customers who have substantial resources in overseas markets and are able to help with navigating the unfamiliar regulatory environment. In this way, NuMoney has been able to set up their overseas operations in minimal time.
Call to Singaporean companies
When dealing with new technologies like blockchain and cryptocurrencies, there are bound to be challenges especially when engaging with the traditional incumbents. Therefore start-ups need to follow NuMoney’s example and constantly plan for their next phase of growth and hedge against adverse changes from external factors. Looking ahead, Singapore needs to foster a greater collaborative ecosystem to drive growth and already we are seeing some encouraging signs. An article written by the Fintech Leader and Director of PwC Singapore wrote that “most now agree that fintech in Singapore is much less of a fight between incumbents and new fintech entrants, but more of a ‘fourth industrial revolution’ that calls for broad collaboration” (The Business Times, 2018). As we approach the fourth industrial revolution, we urgently need to come together.
Forbes. (2017). Measurable Results Are A Must For Marketing And Advertising Investments. [online] Available at: https://www.forbes.com/sites/forbesagencycouncil/2017/02/16/measurable-results-are-a-must-for-marketing-and-advertising-investments/#14a0092571fb [Accessed 24 Mar. 2018].
IRAS. (2017). Income Tax Treatment of Virtual Currencies – IRAS. [online] Available at: https://www.iras.gov.sg/irashome/Businesses/Companies/Working-out-Corporate-Income-Taxes/Specific-topics/Income-Tax-Treatment-of-Virtual-Currencies/ [Accessed 22 Mar. 2018].
MAS. (2017). Prevalence use of cryptocurrency in Singapore. [online] Available at: http://www.mas.gov.sg/News-and-Publications/Parliamentary-Replies/2017/Prevalence-use-of-cryptocurrency-in-Singapore.aspx [Accessed 22 Mar. 2018].
POSB. (2017). Timing and Limits for Transferring Funds Overseas | POSB Singapore. [online] Available at: https://www.posb.com.sg/personal/support/bank-overseas-funds-transfer-service-standards.html [Accessed 22 Mar. 2018].
The Business Times. (2018). Disruption is the new norm. [online] Available at: http://www.businesstimes.com.sg/magazines/wealth-february-2018/disruption-is-the-new-norm [Accessed 25 Mar. 2018].
The Business Times. (2018). Singapore Budget 2018: Tackling skills shortages – Being pro-worker in a pro-business city. [online] Available at: http://www.businesstimes.com.sg/opinion/singapore-budget-2018/singapore-budget-2018-tackling-skills-shortages-being-pro-worker-in-a [Accessed 24 Mar. 2018].
The Straits Times. (2017). Some cryptocurrency firms had their Singapore bank accounts closed. [online] Available at: http://www.straitstimes.com/business/banking/some-cryptocurrency-firms-had-their-singapore-bank-accounts-closed [Accessed 20 Mar. 2018].