Why tokenization and funding are two key issues for financial disruptors in 2024

HSBC's Vincent Lau a lineup of 250 speakers to discuss these at Money 20/20 Asia.

An era of disruption has settled upon the money ecosystem, signalling a very exciting future for both fintechs and for the way money will be used.

“The advent of DLT (distributed ledger technology), including blockchain, points to a very exciting future of money and has given rise to CBDCs (central bank digital currencies), stablecoins and, more recently, tokenized deposits,” Vincent Lau, HSBC’s Global Head of Emerging Payments Product, Global Payments Solutions, told Asian Banking & Finance in an exclusive correspondence.

Lau will be a facilitator for a panel in the upcoming Money 20/20 Asia conference, taking place on 23-25 April 2024 at Bangkok, Thailand. He joins a lineup of speakers composed of over 250 industry experts, fintech executives, bank leaders, and regulators from all across Asia.

So what excites Lau the most when it comes to the future of money and financial services? Lau summed it up in one word: tokenization.

“Not only is money being tokenized, but the tokenization of real-world assets is receiving a lot of attention. Over the past year or so, HSBC has announced the tokenization of bonds in Europe and Hong Kong, as well as gold for both institutional and retail trading,” Lau shared.

Tokenized deposits in particular have drawn strong interest from central banks and other market participants, Lau said, noting that it combines the advantages and innovations enabled by DLT with the security of a fully regulated financial market infrastructure.

But Lau warned that as interest in tokenized deposits and CBDCs grows, so does the risk of fragmentation. To that, he highlighted the need for interoperability.
“Interoperability remains key and the ability to interlink emerging and existing financial market infrastructures is essential to realising benefits enabled by tokenization and CBDCs for cross-border settlement,” Lau said.

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Funding challenges
But whilst there is a lot to be excited about, there are also a lot of challenges for financial disruptors. Startup funding — especially for financial technology (fintech) companies — had not been going well in the past year. To compare: from an all-time high of $141b in 2021, fintechs globally only got $39b collectively in 2023.

“Founders who have raised [funding] in more euphoric times may be facing flat or down rounds this year,” said Sabrina Tachdijan, head of Fintech & Payments Fund for The HBAR Foundation.

Tachdijan, who will be speaking at thel panel discussion “From Pitch to Profit: Navigating Fintech Investments Successfully,” on April 25th noted that the number of deals have increased, but valuations “remain moderate.”

Tachdijan does not see a crisis, however. “This is part of a natural correction reflecting the maturity of the fintech industry. With this in mind, disciplined teams with the ability to adapt to this new baseline will be best equipped to thrive,” she said.

Age of disruption
As for the future, Tachdijan sees sizable opportunities and room for disruption in the money ecosystem.

A number of meaningful problems still need solving — from slow and costly remittances to financial inclusion; the possibilities abound," Tachdijan said.

Founders who successfully apply modern tools to meet these challenges will be the ones poised to raise money this year.

“AI and blockchain, in particular, are the two “highly transformative and complementary” technologies to look out for, she added.

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All-star attendance
Lau and Tachdijan are just two of the experts poised to take one of the four incredible stages at Money20/20 Asia, where they will join over 250 other speakers from across APAC to discuss the latest news and insights on a plethora of financial topics: banking, payments, lending, regulatory bodies, insurtech, crypto, Web3, cybersecurity and identity and beyond.

Danny Levy, Money20/20 Asia’s Senior Vice President, said the event is a catalyst to bridge the gap between the traditional and the new.

“Asia, with its diverse economies and IT literate population, has become a hotbed for fintech innovation,” Levy said. 

“Money20/20 Asia is the destination for forging strategic partnerships, uncovering investment opportunities, and gaining valuable insights into the challenges and opportunities that lie ahead in the rapidly evolving fintech landscape,” he added.