Inequality is not inevitable – Be the spark for change, Asian Fintech insights with Theodora Lau

Theodora Lau

The decade long foray of fintech startups into the financial services ecosystem has been a formidable one. According to CB Insights, there are now 41 venture backed fintech unicorns worth a combined US $154.1 billion. In the first three months of 2019 alone, VC-backed fintech companies raised US $6.3 billion across 445 deals globally. Challenger banks continue to spread globally, with N26 (a newly minted unicorn) and Monzo both preparing for their imminent launch into the U.S.

Inequality is not inevitable – Be the spark for change, Asian Fintech insights

Hong Kong, one of the top three financial centers in the world with 194 banks (including 70 of the world’s 100 top banks) with banking assets worth 851% of GDP, also initiated open banking efforts in earnest. Recently, the Hong Kong Monetary Authority (HKMA) granted eight virtual banking licenses to a mix of big tech and incumbents: Ant SME, Insight FinTech, Infinium, Livi VB, SC Digital, Pingan One Connect, WebLab, and Zhong An Virtual Finance.

With such high concentration of banking institutions in the territory, will these open banking efforts by the HKMA generate enough competition and benefit more consumers? In another words, will open banking translate into broader financial inclusion and actually solve a critical market need? And what role will big technology firms play in this new era when they are increasingly competing with incumbent financial institutions?

Nowhere is this more apparent than in China, where Alipay and WeChat have dominated the mobile payments market and much more. These tech giants are light years ahead of their rivals in the rest of the world, and handle more payments than all global credit card transactions combined. They have become so ubiquitous in China that even homeless people on the streets use QR codes to ask for money from those that pass by.

Elsewhere around the world, fintech innovation continues to flourish. With 1.8 billion Muslims across 58 Muslim-majority countries of the world, the Islamic finance industry is forecasted to reach US $3.8 trillion by 2023. Fintech in Africa remains strong, with payments and microlending remaining the most active categories. Europe overtook Asia in funding for the first time, as regulatory oversight in China starts to increase.

As the battle of big tech firms continues to heat up – whether Alibaba and Tencent can extend their success outside of the China, or whether US-based big tech such as Amazon and Facebook will succeed in disrupting the financial services industry – it will likely be more a question of politics than a technical one of scale.

Ultimately, whether through incumbents, fintech startups, or big technology firms, financial inclusion does not automatically translate to financial health. As an industry, we need to ensure consumers have the proper tools and education to ensure financial well-being, and our traditional business model must change to reflect this new reality. With 1.7 billion adults still being excluded from the formal financial services system, and with 26 people in the world owning as much wealth as half of humanity, there is much to be done to create a more equitable society for all.

Inequality is not inevitable. We must learn how to cultivate the best ideas from every part of the globe to ensure that ideas don’t die, but flourish by turning those ideas into action. The story of the Lorax is one of hope, not greed nor despair. The lone Monterey cypress tree in La Jolla that acted as an inspiration for Dr. Seuss may now be gone, but the movement that it inspired moves on and is stronger than ever.

Be the spark for change in the industry in the arc toward financial inclusion. Be the voice that sounds out in the wilderness but is also heard in the boardroom. Be the one that takes those conversations and those ideas and turns them into a movement. It is the right thing to do, and the right path to choose.

“Unless someone like you cares a whole awful lot, Nothing is going to get better. It’s not.” ~ Dr. Seuss, The Lorax

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Listen in to our conversation with Jackson Mueller and Dan Murphy from the Milken Institute on our new episode of Red Envelope on iTunes and Spotify, as we talk about fintech development around the world.

With contribution and inspiration from Bradley Leimer.

See more articles by Theodora here.

My latest via @HarvardBiz – on AI, Voice, and FinTech

"We have the power to design a world where our collective voices help create better versions of humanity, where purpose becomes central to our innovations and drives our day-to-day actions."https://t.co/tbbhkt8Acs pic.twitter.com/aQeeeZQDT6

— Theo – ??? (@psb_dc) May 23, 2019

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