“Even if you fail at your ambitious thing, it’s very hard to fail completely”
— Larry Page, CEO of Alphabet, Google’s parent company
You can’t say that iFAST Corporation (SGX: AIY) is short on ambition.
Last Saturday, the Motley Fool Singapore team was invited to the company’s results briefing, and a Fintech Vision presentation. During the event, the iFAST management team shared for the first time, as far as I can tell, an ambitious long-term target: The company wants to achieve S$100 billion in asset under administration (AUA) by 2028. In Singapore, iFAST is targeting an AUA of S$35 billion by the same year.
The company’s goals are audacious, as the target amounts to 12 times more AUA than what it has now (S$8.33 billion).
Building The Business For The Long-Term
“Investors worry about how we are doing each quarter,” said iFAST CEO Lim Chung Chun.
As an investor himself, Lim added that he can understand why investors are concerned about the company’s short-term results. At the same time, Lim felt that the bigger picture vision has not been as clear for shareholders.
As such, iFAST decided to lay down what its is aiming for in the next ten years.
For the number crunchers out there, the S$100 billion AUA is not a forecast or profit projection. But Lim feels that that all business builders need to have clear targets for the long haul. He chose a ten-year time frame as he opined that businesses cannot be build within one or two years. In that spirit, the S$100 billion AUA target is one that the management team has set for itself.
A Long, Long Way To Run
According to a Monetary Authority of Singapore survey in 2016, the AUA size of authorised and recognised collective investment schemes in Singapore was at S$82 billion in 2016. The figure is even larger in Hong Kong where the assets under management (AUM) is estimated to be over US$800 billion.
Compared to the overall size of the wealth management industry, iFAST believes that its current AUA of S$8.33 billion is just a small drop. The company believes that it has substantial growth potential.
The size of the wealth management market is obviously huge, but Lim opined that most fintech companies are likely to fail. He sees three requirements for a fintech platform to gain traction: regulatory licenses, a strong ecosystem, and a strong in-house IT capability. The iFAST ecosystem has to be built bit-by-bit over the years, Lim said, while the company has kept on developing its own IT capabilities. He believes that the two factors will allow the company to move faster in rolling out new products.
Future Markets And Future Products
iFAST has a presence in Singapore, China (including Hong Kong), and Malaysia. The company also owns an associate in India.
At the moment, China and India make up only 2.2% of iFAST’s AUA, but the company believes that the two markets will play an increasingly important role in the future. Moreover, it is still early days in China, and iFAST is still absorbing short-term losses as it works its way to establishing itself in the Middle Kingdom.
Speaking of licenses, iFAST also announced that it has applied for a virtual banking licence in Hong Kong. There is no assurance that the company will secure the licence. But if it does, iFAST believes that the approval could lead to a substantial enhancement of its wealth management platform.
Google’s Gospel For 10x Improvements
On October 2010, almost eight years ago, Google revealed one of its most audacious projects: cars that can drive themselves, now known as autonomous cars. Back then, critics panned the effort as an indulgent distraction.
Fast forward to today, there is no shortage of companies racing to test autonomous vehicles on the road, ranging from traditional carmakers such as General Motors (NYSE: GM) to ride hailing companies such as Uber and technology firms like Apple (NASDAQ: AAPL). Local firms, such as Singapore Technologies Engineering Ltd (SGX: S63), are working on autonomous buses. Nanyang Technological University is testing mini-buses that pilot themselves while areas like one-north, Buona Vista, National University of Singapore, Singapore Science Park, and Dover have been earmarked as trial areas.
In short, what seemed to be audacious back then is accepted as a common occurance today.
iFAST’s audacious goal is nothing like the world-changing potential of autonomous cars, of course. It is also not a guaranteed bet that all of the company’s business plans will work out. However, iFAST’s target shares the same spirit as Google’s audacious goals. The investment platform company is aiming high, and as Larry Page notes, it is hard to fail completely when you do so.
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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. The Motley Fool Singapore has a recommendation on Apple and iFAST. Motley Fool Singapore writer Chin Hui Leong own shares in Alphabet, Apple and iFAST.