Emerging fintech opportunities in APAC

Photo credit: Skeeze.

According to an analysis by KPMG International and CB Insights, US$4.6 billion in venture capital-backed fintech funding went to the Asia-Pacific region at the end of Q3 2016. Much of this investment went to China, a fintech powerhouse driven by high mobile internet adoption rates, and a tech-savvy millennial user base.

The Asian fintech sectors that were predicted to get VC interest this year include payments, regtech, data and analytics, and mobile. Adoption of mobile money and mobile payments in the region will see markets encompassing a range of demographics—from Chinese millennials using WeChat, for example, to Sri Lankan retirees receiving pensions in their Dialog eZCash mobile money account.

Across Asia, fintech driven by regulatory “sandboxes” are enabling financial institutions to experiment with financial technology. This is notable in Australia and Singapore, the latter being the “preferred gateway” into Asia with its progressive regulatory regime.

Months ahead of Hong Kong and Malaysia, the monetary authority of Singapore (MAS) last year launched a sandbox to enable financial institutions to quickly test innovative financial services. More importantly, the regulation recognized the need to balance experimentation with security. It also built on the work of MAS’s FinTech and Innovation Group, which has a “vision of a Smart Financial Center, where technology is applied pervasively to create new opportunities and improve people’s lives.”

A bank account aggregator 

Capitalizing on the market for personal improvement is fintech entrepreneur Justin Teo, 28. He saw an opportunity in enabling Singaporean millennials to get faster, safer, and holistic personal money management. With co-founder Jacob Lim, Justin noticed his friends had two or three bank accounts each which could take several minutes to load up. The answer? FinGo, an app to aggregate all their bank accounts at once, making payments easier.

“In Singapore there simply isn’t time to trace your spending by toggling through different interfaces, and there is certainly an opportunity in Asia to market to an increasingly busy and selective user base,” Justin explains.

“Software technology has a lower cost barrier to entry compared to physical production, but we still have to compete against established institutions. Incumbents have more resources and a head start. Still, there is room for survival as startups can innovate faster. Challenging the industry from scratch requires plugging knowledge gaps and sourcing outside expertise,” he adds.

Consequently, the app partnered with a data aggregation specialist, eWise, to enable Singaporeans to safely make money transfers and view multiple bank accounts in a single screen.

Interestingly, much of the web penetration in Singapore and elsewhere in Asia is via smartphones and not desktops, so it’s important for the mobile user base to use secure client-side data aggregation to provide a holistic view of their wealth—even when on the go.

Today’s key developments

The need to drive better customer service in Asia will drive personalized financial services across the board—accounting for mortgage, savings deposits, and checking accounts. Users say that a majority of traditional financial services are providing relatively poor customer-focused digital account openings, on-boarding, and cross-selling processes. This is also an opportunity for banks to become more digital-oriented.

Accordingly, financial institutions in the Asia-Pacific region are seeking to hire more tech specialists than investment bankers this year, as they enhance product offerings and upgrade their systems, according to a survey by Options Group Inc.

Elsewhere across the region, key developments include:

Hong Kong

‘The face of banking is changing’