Correction: The earlier version of the article incorrectly stated the amount raised as US$400,000 instead of S$400,000
Singapore-based fintech startup soCash today announced that it has raised S$400,000 (US$296,577) –not US$400,000 as previously stated– of seed round financing from undisclosed global angel investors.
soCash uses smartphone app to connect minimarts and small grocery store into a network for cash withdrawals.
Despite popular belief that banking is starting to shift away from cash to e-payment methods, the startup still sees an opportunity for cash to thrive, even in countries such as Singapore.
“Contrary to the prevalent narrative, data from central banks shows that cash usage is growing globally. In Singapore, demand for cash is growing at nine per cent. This consumer preference poses an expensive challenge for banks to meet this increase in demand for cash. soCash’s platform is a superior digital alternative for efficient access to cash,” explained soCash Managing Director Rekha Hari in a statement.
The startup plans to use the funding to accelerate product development and expand “cashpoints” network in Singapore.
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soCash is currently in the process of securing partnerships with banks in Asia (India and Indonesia) and the US to integrate the soCash software into their digital banking platforms.
“The key reason for focus on US is that banks there have responded faster, given their strong focus on digital innovation. Another reason is that [local] industry practise is to charge customers (US$2-US$4) for withdrawals and it is a pain that banks want to avoid,” Hari explained in an e-mail to e27.
Setting up ATMs have become increasingly more expensive for banks, due to its fixed costs (hardware, rental, maintenance, power supply, leased lines) and variable costs (having armoured trucks with armed security service to load cash, counting and bundling of cash).
According to Hari, in Singapore alone, banks spent approximately S$125 million (US$92 million) just to manage around 2,500 ATMs.
“For new generation banks with strong focus on digital (and in many cases digital only), setting up a new ATM network makes no sense. So today they end up ‘sharing’ ATM networks to enable access to cash to the customer’s they acquire. Again it is expensive and is an Achilles heel, because they have to teach their customers to go to ‘another banks’ ATM , which ends up diluting their brand and amplifies an inherent weakness,” Hari explained one of the many pain points faced by banks today.
“A few years back, ATMs could have a role in branding & marketing, but with the shift to digital, that value is no longer exist,” she added.
There is also the problem of bank branches being clogged up by small merchants coming to deposit cash, limiting their capacity to just collecting, counting and bundling cash.
The startup claimed that it further stressed the need for a new approach to enable access to cash.
In the long run, the startup plans to provide last-mile service for banking and e-commerce. It stated that the first step in their product roadmap will be to work with banks to “take cash distributions beyond ATMs.”
SoCash was also handpicked by IE Singapore and TiE to be part of the Singapore delegation to TiEcon 2016 in Silicon Valley.