Over the last five years, Hari Sivan and his team have turned convenience stalls in HDB heartlands into “human ATMs”. People enter clutching their phones and exchange a few words with cashiers before leaving with pieces of red $10 or blue $50 notes tucked in their wallets.
These interactions may seem strange, but they are an intermediate stage of sorts. Multiple cashless payment systems abound but not everyone is on board, merchants and customers included. A survey done by Rapyd, a UK-based payment service provider, indicated that 63% of customers continue to use cash for goods and services bought over the retail counter.
Now, as Singapore pushes towards becoming a cashless society as part of the overall digitalisation and transformation of its economy, SOCASH is here to ease the transition. Through a mobile app, users can select a nearby merchant and their desired withdrawal amount before heading over to collect their cash. Users avoid the hassle of locating the nearest ATM, while merchants can offload accumulated cash in their tills without physically visiting a bank to make deposits.
“We are not dependent on a plastic card, we are purely digital. We are embedded into the digital banking space and we provide a network,” says SOCASH co-founder Hari Sivan in an interview with The Edge Singapore. “From a business model perspective, we are unique.”
On July 6, SOCASH announced that local supermarket chains Sheng Siong and Prime Supermarket, which operate 62 and 24 outlets here respectively, will see the gradual rollout of SOCASH at their outlets. These two retail partners join existing chains including SPH Buzz, U Stars Supermarket, iEcon, U Mart, 7-Eleven and HAO Mart. SOCASH users can now withdraw their cash at over 1,500 locations. To put this number into perspective, DBS runs around 1,000 ATMs island-wide.
By partnering with these retailers, SOCASH wants to generate growth for itself. “Prime Supermarket has been a progressive organisation. They are always open to trying new things and they have a fast decision-making process as a company,” says Hari.
“Sheng Siong has a good sense of what people need and they are willing to innovate,” he adds. “That helps us as a small organisation. We don’t have a sales engineer to pursue big contracts, but with homegrown businesses, the decision-making is much faster.”
Founded by a family of former pig farmers, Sheng Siong is a favourite among heartlanders, with its popularity boosted by long-running sponsorship of a weekly Mandarin variety show. Yet, Sheng Siong has shown to be very tech-savvy, introducing its self-checkout kiosks as well as rolling out its SS Connect App, which delivers promotions and helps customers accumulate chances for lucky draws.
“Everybody says ‘China has got this, China has got that’ but a lot of it is just for demonstration purposes. If you look at what they are doing in Sheng Siong, those are real problem-solver technologies,” says Hari, referring to a common perception that China is much further ahead in its cashless transaction ecosystem.
SOCASH currently supports customers of DBS, POSB, Standard Chartered, ICBC and CIMB Niaga. Hari acknowledges the prevalence and growing popularity of cashless payment systems, but believes that even a digitally-savvy customer base will prefer having some cash in their wallet for emergencies, “like if your phone runs out of battery”.
In its plan to create the world’s largest cash network powered by mobile devices, SOCASH says it can benefit the small retailers out there who would often be otherwise overlooked.
“Feedback has been that we bring strangers into shops that they haven’t been to. For example, a soya bean stall — it may not be your favourite but because SOCASH is there, you go there.”
Even tiny businesses like mom-and-pop convenience stores are signing up with SOCASH to stave off the impact of Covid-19 on their footfalls, claims Hari.
“The banks are not going to put ATMs in quiet places, but small retailers know that ATMs attract people into their shop and help the community. We are shifting the cost of the network away from the bank to the retailers,” he explains.
Among F&B outlets, Hari notes that stalls in food courts are also applying to join the network, possibly as a result of poor human traffic. “We are getting a lot of requests from food courts, but there are regulations on that. We’re still figuring that out because food courts do hold a lot of cash.”
SOCASH is even targeting the small loans segment by letting its merchants skip a trip to the bank. “We have launched a service in collaboration with DBS SME [Banking] that enables our network partners to submit loan applications and get preferential terms at their shops. The response has been great, especially during Covid-19. We will be adding more features and financing options,” he says.
Growing FinTech here
Before Hari was a start-up founder, he was a senior vice-president with DBS Remit which was part of DBS Group, where he worked on conceptualising and building the bank’s cross-border remittance system from 2012 to his departure five years later.
After spending a total of 14 years across Citibank, HSBC and DBS, Hari realised that cash remains a burden for banks, especially amid the push for digitalisation. ATMs retain hundreds of millions in uncirculated cash, he says, while banks pay hefty maintenance and security fees to keep their network active even in secluded areas.
Along with his co-founder Rekha Hari, they bootstrapped the then-fledgling start-up following its ACRA (Accounting and Corporate Regulatory Authority) registration in October 2015.
“SOCASH started as a digital payments product but that didn’t really work out,” says Hari. The team, who had been juggling SOCASH on top of their day jobs, then pivoted to SOCASH’s current business model.
In 2016, SOCASH caught the attention of the Monetary Authority of Singapore (MAS). That November, the start-up was the first to receive some funds from the Financial Sector Technology & Innovation Scheme (FSTI) grant under the Proof of Concepts scheme, a $225-million commitment by MAS to grow the FinTech sector over five years.
Just months prior, SOCASH had raised US$296,000 ($411,500) in seed funding from a group of angel investors. More investors were drawn in subsequently. In August 2018, it closed a US$5.5 million Series A round led by Vertex Ventures (See story on Page 17); last July, it raised US$6 million in its Series B round led by Japanese cash handling systems company Glory.
“Vertex helped us in the banking and financial phases, and advised us on overseas expansion opportunities. K3 Ventures, part of the Shangri-La family, and [board member] Kuok Meng Xiong helps us on the investing [side],” says Hari, referring to the grandson of tycoon Robert Kuok who is gaining reputation as a venture capitalist.
SOCASH has begun reaching out to investors for another funding round and expects it to close by November. “Singapore is probably the best market for FinTech in terms of support, infrastructure and the ability to experiment,” says Hari.
There are challenges though. For one, the market here is too small and there is limited competition of ideas from the incumbents of the Singapore financial services industry. “Problems are difficult to be solved if seen through just one lens,” he says.
Nevertheless, he acknowledges that support for the FinTech ecosystem here has been “fantastic” over the past five years and there is a bustling start-up community. Yet, therein arises another problem: finding enough talent, especially at the junior level. “The depth is there in terms of brain power as a regional hub, but what is missing is the starter level,” he elaborates.
But Covid-19 has somewhat levelled the playing field for talent, with large companies now hesitant on hiring. “Pre-Covid, the large organisations were hiring but now they have to keep their overhead [costs down]. Slowly, it’s normalising and we’re seeing a normal flow of talent.”
Old is new again
As a partner to both small retailers and large chains, Hari has witnessed the wide-ranging impact of the Covid-19 pandemic. “We are seeing signs of stress. Smaller businesses that don’t have the liquidity are shutting down.”
The team at SOCASH spent the “circuit breaker” period focusing on improving the product. “[There are] not many distractions when you’re working from home. Product was the only business lever we could work on over the past three months,” he says.
The company’s first cash machine also demonstrated untapped potential in the face of a pandemic. Launched in March at the Prime Supermarket at Block 461 Yishun Blossom Spring, the machine is the first ATM to serve the community in that neighbourhood.
“With the pandemic, there were risks that people would touch keypads and also interact with cashiers,” he says. “So we built a contactless machine where cash from the shop is placed into the machine.”
The machine is smaller and “significantly cheaper” than a conventional ATM and more of such cash machines will be rolled out across Prime Supermarket branches in the coming months, with the next installation slated for an outlet at Bidadari.
At present, SOCASH is working on improving the machine with PayNow integration and even dispensing coins. “Coins are a big problem for businesses, and banks charge a bomb for these. Very soon, if a retailer wants $100 worth of 20-cent coins, for example, the Yishun Blossom ATM will dispense that.” In the meantime, Singapore’s stickiness with cash continues. But that is fine with SOCASH.
