Unlike the West, where digitalisation was relatively smooth, Asia stepped into the digital era immediately, putting all of its efforts into mobile technologies. Today, Asia is emerging as a global fintech leader. Here are some reasons behind this.
High-speed action
Perhaps the most distinctive feature of Asian fintech (primarily in South and Southeast Asia) is the rapid pace of its development. This is due to a combination of reasons that complement and reinforce each other. Among the main ones are:
Population
South and Southeast Asia account for a third of the global population. It is young (median of 27.6 years for South Asia, 30.2 years for Southeast Asia), technologically savvy, and eager to expand the horizons of prosperity and consumption.
Low level of financial inclusion
In the Philippines, for example, in 2017, only 32 per cent of the adult population had an account with financial institutions (46 per cent in 2021). For comparison, North America has these figures at 94 per cent and 95 per cent.
Proximity to a COVID-19 epicentre
It was Asia that enforced the strictest pandemic restrictions, which gave the biggest boost to digital financial solutions.
State support for fintech
For many Asian countries, fintech is the only way to fulfil ambitious government objectives. These may include geographical, financial equality (as in the fragmented island Philippines), mass introduction of accounts for the low-income population (Pradhan Mantri Jan Dhan Yojna, India), etc. National initiatives like NFSI, created in this context, are undoubtedly one of the most powerful stimulators of industry development.
Lenient regulation
Asian state support goes hand-in-hand with lenient regulation, which is attractive both to local and foreign players (most investments in Southeast Asian fintech are foreign). Singapore, a macro-regional fintech hub, also has a positive effect, as its legislative initiatives entail changes in other countries as well (as in the case of licensing neobanks).
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So what is the current state of things? Thanks to these and other drivers, today it is Asia that is emerging as a global fintech leader in terms of such fundamental indicators as fintech adoption or the volume of core investments, to name some.
Regarding the first, India and China are the world leaders with an indicator of 87 per cent, according to EY. As far as investments in fintech go, the APAC region is on its way to overtaking Europe and America, coming from the KPMG Q1 report.
While the Australian Afterpay does account for most of this momentum, the significant role of SA and SEA in this upper hand is also indisputable, given the successful rounds of Xendit (Indonesia, US$300M), Stashfin, Oxyzo and Slice (India, US$270M, US$237M and US$220M), Voyager Innovations (the Philippines, US$210M), etc.
All in one
The faster fintech develops in Asia, the brighter and richer the local digital landscape becomes. That leads to the further spread of digital financial services. Fintech solutions are being integrated into more and more areas of life, becoming more complex and capacious.
An important point to keep in mind is that, unlike the West, where digitalisation was smooth through the gradual development of a personal computer, the Internet, etc., Asia stepped into the digital era immediately, concentrating all its attention on mobile technologies.
As a result, there came an absolute climax of fintech development, also a strictly Asian phenomenon, the superapp boom. Grab (Singapore), GoJek (Indonesia), Paytm (India), Zalo (Vietnam) and many other digital platforms are definitely on the rise.
From taxi hailing to getting a visa, from paying a utility bill to dating, from online shopping to calling a plumber: the Asian population is increasingly bringing every day realities together into a single interface on their smartphones.
Of course, financial universalisation is also present in the West. However, there is another key feature that differs fintech in Asia. The existence of developed ecosystems that synergise with offline realities in Asian countries, the so-called phygital environment.
For example, they enable purchases not only through an app-integrated mobile wallet but also through a QR code attached to the product or order a pizza with fast delivery due to the vast specially designated car park. The degree of interpenetration of physical and virtual components in such environments in Asia is undeniably higher.
The list of differences in fintech may go on. Working in both Europe and Asia, for example, we know that women in the Philippines are more financially active (their share of applications for BNPL loans this year reaches 72 per cent), while Spanish clients still prefer to apply for loans via PC (only 27 per cent of applications are mobile). However, no matter how large the list of differences is, it is the level of speed of development and universalisation of the industry that remains fundamental.
Also Read: The future of fintech: The latest trends in the industry
Today we are seeing a rapid increase in the popularity of not only superapps, but also neobanking in South Asia and Southeast Asia. It relies on the same massive demand of the population for convenient and comprehensive mobile financial solutions. Alternative financial services, including those under the auspices of the Robocash Group, are also developing in this direction.
In conclusion
The current state of fintech in Asia will inevitably change. There will be new powerful drivers that will change the face of the industry.
For example, our analysts predict a restructuring of the age spread among online users in South Africa and Southeast Asia, with greater involvement of the older folk. This promises to give the development of Asian fintech a new impetus and facets of development.
There are efforts to form a single legal environment for fintech in the European Union, which may shift the global centres of development of financial technologies. The African fintech revolution is asserting itself louder and louder. The list of examples doesn’t stop here. So, the face of global fintech will go through drastic changes, and quite soon.
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