StashAway grows revenue 2.5x, though losses widen

In The Top Up this week, we analyze StashAway’s 2021 financials and Tonik’s acquisition of Philippine earned-wage access firm TendoPay. [Read from your browser]( The Top Up💵 Welcome to The Top Up! Delivered every Wednesday via email and through the Tech in Asia website, this free newsletter breaks down the biggest stories and trends in fintech. If you’re not a subscriber, get access by [registering here](. Written by Melissa Goh Fintech Journalist Hello {NAME} Remember when robo-advisors were the new shiny thing? About five years since they’ve launched in this part of the world, robo-advisory platforms have reached the masses. I know many who use it, or plan to. Of course, there are those who prefer tools that offer more control. That said, while robo-advisory was once praised for being accessible and easy to use, it is increasingly described as lacking in personalization and even outdated. The platforms themselves do recognize the changing needs (and increasing sophistication) of their investors. StashAway, for instance, lets accredited investors access private equity and VC funds through an offering called StashAway Reserve. Many other platforms are letting clients build customized portfolios. But StashAway - one of Singapore’s first robo-advisors - has also seen its fair share of [controversy](. In addition, it underwent [layoffs]( earlier this year. Perhaps the best measure, however, will always be financials. In this week’s Big Story, my colleague Samreen breaks down the company’s performance in 2021. Revenue grew 150% year on year, albeit off a small base. Still, Singapore reliably has an [increasing concentration]( of high- and ultra-high-net-worth individuals, who could provide the tailwinds that these players need. Also financially savvy are those seeking new tools offered by earned-wage access platforms, especially in markets like the Philippines. In our Hot Take this week, I analyze Tonik Digital Bank’s acquisition of TendoPay - a provider of payroll-linked financial services - and why it makes sense for both companies. – Melissa  --------------------------------------------------------------- THE BIG STORY [Sequoia-backed StashAway’s revenue grows 2.5x, but losses widen]( According to the wealth management firm, the high losses were a result of costs related to its stock option plan. --------------------------------------------------------------- THE HOT TAKE A Tonik for TendoPay’s loan book growth? Here’s what happened: - Singapore-headquartered neobank Tonik, which operates in the Philippines, [acquired]( TendoPay, an earned-wage access (EWA) firm. - TendoPay provides payroll-linked financial services in the Philippines such as bill payments, budgeting, and automated saving tools. - The deal is subject to the approval of relevant government authorities. Here’s our take: We think the acquisition makes sense for both companies for several reasons. For one, both firms target a similar clientele - those who lack financial access and a credit profile, which excludes them from formal financial services. EWA is also booming globally: The sector raised [over US$1.1 billion]( in VC funding for 2021. As we head deeper into an inflationary environment, demand for the service could grow further. Interestingly, TendoPay was originally launched in 2019 as a buy now, pay later firm before pivoting into payroll-enabled financial services. Like many EWA firms, it provides a salary advance feature to employees tied to expenditures like shopping or bill payments. Purchases are deducted from a worker’s payroll. Acquiring TendoPay benefits Tonik in several ways. The digital bank: - Gains access to TendoPay’s merchant and employee pool. - Gleans more data about a customer’s spending habits and creditworthiness beyond its existing products. - Has more potential to cross-sell future financial services products, including insurance and investments, to existing users of TendoPay who it deems creditworthy. In exchange, TendoPay - which works with over 200 companies and more than 500 merchants in the Philippines - can use Tonik’s balance sheet to bankroll the growth of its loan book. In a [LinkedIn post]( Tonik CEO Greg Krasnov hinted at a possible payroll-deduction savings feature in the future. TendoPay’s other products - savings, loans, debit cards, and installments on shopping - are also services that Tonik offers in some form. In August, I spoke to Alex Kim, the president and co-founder of EWA startup Paywatch. In its markets of South Korea and Malaysia, the firm partners with Hana Bank and Hong Leong Bank, respectively. In a region where EWA differs from provider to provider, Kim told me that its model of working with major banks is structurally different from EWA firms that do not. With a bank partner, funds are disbursed directly from the bank to employees. Instead of having to borrow funds, Paywatch does not have to incur borrowing costs and can charge a nominal fee per withdrawal. Having a bank partner - rare among EWA companies because of the regulatory approvals needed - has another long-term benefit: Over time, the EWA firm can expand its product pool to include insurance, microsavings, or investments. This way, businesses improve their employee-benefit programs and users gain an alternative to taking on loans while building out a credit profile. Banks, in the meantime, gain access to a new segment of customers that they would not typically underwrite. “We don’t want people to just draw [their salaries] down in cash. We want to direct them to use it the right way, and we’re looking at payment-related features for financial products like insurance and even savings,” Kim said.  See also: [Is earned-wage access Indonesia’s latest hot ticket?]( Against incumbents and [the other five digital banks in the Philippines](, Tonik - or any digital bank for that matter - will need all the help it can get in attracting customers, boosting their loan books, or keeping its services sticky. Meanwhile, eliminating the need for borrowing could be a game changer for any credit company, especially as banks are [upping deposit rates]( on savings accounts to attract funds in a race to the top. Merits of the EWA model aside, such firms could struggle if their cost of funds continues to rise month on month. For that reason, I wouldn’t be surprised if we saw more of such partnerships going forward. – Melissa --------------------------------------------------------------- NEWS YOU SHOULD KNOW Also check out Tech in Asia’s coverage of the fintech scene [here](. 1️⃣ [Malaysian earned-wage access firm secures $9m]( Paywatch has over 100 corporate clients and plans to expand to Hong Kong and the Philippines next year. 2️⃣ [SBM Bank India, building BaaS platform, seeks funding at $200m valuation]( The bank’s active approach to fintech firms, which it considers a key growth pillar, has set it apart from larger incumbents. 3️⃣ [Indonesia-based Ajaib lays off 8% of workforce]( The online brokerage let go of 67 employees, joining several Indonesian tech firms such as KoinWorks, Sirclo, and GoTo in their downsizing efforts. 4️⃣ [Malaysia’s Al Rajhi Bank launches digibank offering]( Called Rize, one of the digital banking app’s main features is a personalized financing option that requires minimal documentation and zero processing fees. 5️⃣ [Singapore insurtech firm secures $27m in series B extension round]( The extension comes after Igloo’s US$19 million fundraise in March, and it will give the firm a multiyear runway, according to CEO Raunak Mehta. --------------------------------------------------------------- FYI 1️⃣ [Analysis: Australian buy now, pay later sector faces fresh hurdle: regulation]( Increased protection for shoppers could include bringing BNPL operators under the National Consumer Credit Protection Act, which prohibits the increase of credit limits without customer consent and requires background checks before lending. 2️⃣ [Fintech fundraising in Japan vs. Singapore]( Japan saw a third of fintech investment compared to Singapore in 2021, though that gap may be converging.  --------------------------------------------------------------- That’s it for this edition - we hope you liked it! Do also check out previous issues of the newsletter [here](. Not your cup of tea? You can unsubscribe from this newsletter by going to your “edit profile” page and choosing that option in our preferences center. In the meantime, if you have any feedback or ideas, feel free to get in touch with Terence, our editor-in-chief, at terence@techinasia.com. See you next week! P.S. Don't miss out on the biggest tech news and analysis. Add newsletter@techinasia.com to your address book, contacts, or safe sender list. Or simply move us into your inbox. Too many emails? Switch to a different frequency or get new content through our [preference center]( or [unsubscribe](. You can also break our hearts and remove yourself from all Tech in Asia emails over [here](  Copyright © 2022 Tech in Asia, All rights reserved. 63 Robinson Road, Singapore 068894