Asia is turbo-charged for fintech innovation. Are you ready?

When you think about fintech innovation, what do you think of? Would an eclectic mix of markets including Hong Kong, China, India, and Southeast Asia be at the top of your mind?

As tempting as it might be to group all of “Asia” together though, Asian countries are far from being homogeneous in terms of their needs and pace of innovation. The continent is home to 49 countries, with more than 4.6 billion people (more than half of the world’s population) speaking 2,300 living languages across Asia. It is both culturally and politically diverse.

Case in point: India alone has 22 official languages.

So while many fintech startups are thriving in the region, there are some emerging themes worth noting in the different countries and cultures that make up this expansive geography.

Local innovation

When we think about fintech development in India, we immediately think of two things: the ambitious Aadhaar project, and the 2016 banknote demonetization. The former has allowed more than 1.2 million Indians to have a biometrically secure, 12-digit identification number, which paved the way for the India Stack — the digital equivalent of a highway.

Meanwhile, the innovations within China are incredible in their own ways, especially around digital payments. Alipay and WeChat Pay have not only transformed payment behavior, the two giants have concurrently grown into such scale, that they have created new underlying ecosystems that transcends across all aspects of consumer lives.

Digital-only banking is another developing trend in recent years. The Hong Kong Monetary Authority (HKMA) has awarded eight virtual banking licenses, all focusing on retail banking, with an eye towards wealth management; whereas the Monetary Authority of Singapore (MAS) has granted four licenses, including two for retail banking and two for wholesale banking.

While the digital banking space is quite competitive in Asia, they have also proven to be quite successful, as in the case of WeBank in China and KakaoBank in Korea. Across Greater China, South Korea, and Singapore, there are approximately 22 licenses that have been granted or soon to be granted.

What lies ahead

We expect 2021 to be yet another transformative year for fintech innovation in Asia. Social ecommerce is now the new norm in China, commanding $300 billion (over 11% of total retail commerce) and growing. While the balance between innovation and regulation will be a trend to watch in the coming year, the dust should eventually settle, bringing about a more level-playing field, and the development of a more mature and stable market.

Whether it is with incumbent banks, telecom companies, tech giants, or startups, the future has never been more exciting for fintech ecosystem development in Asia. While players such as Tencent, Ant Group, Flipkart, and Paytm continue to evolve, for emerging markets such as Vietnam, Indonesia, and the Philippines, the party has just begun.

One thing is for certain, there is never a dull moment in the land of fintech.

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In this episode of our #OneVision podcast, Theodora and Arun dive into the eclectic mix of markets in Asia with Syed Musheer Ahmed, Founding Board Member of FinTech Association of Hong Kong and the Founder of FinStep Asia. You can find this conversation on Apple Podcast, Spotify, and other players. Please consider subscribing, and please let us know what you think in the comments. Sponsorship opportunities for #OneVision are available.

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