2019 FinTechSpace HIGHLIGHTS FROM THE ASEAN FINTECH ECOSYSTEM BENCHMARKING STUDY Chih Shan Luo Managing Director, FinTechSpace [email protected] , shanluo@LinkedIn
2019 FinTechSpace
HIGHLIGHTS FROM THE ASEAN FINTECH ECOSYSTEM
BENCHMARKING STUDY
Chih Shan Luo
Managing Director, FinTechSpace
[email protected], shanluo@LinkedIn
Market Analysis - Project Rationale
“The emergence of FinTech start-ups across ASEAN has progressed at an unprecedented pace, with more than $485 million invested in 2018 across 68 deals, a 143% year-on-year growth when compared to
2017 and more than four times larger than 2016”
Firm-level data from 208 Fintech Firms across ASEAN region:
Cambodia, Indonesia, Malaysia, Myanmar, Philippines, Singapore, Thailand & Vietnam
Fintech Taxonomy based upon 10 Over-arching Models, each with 3 – 5 sub-categories:
Digital Payments, Digital Lending, Investment Crowdfunding, AI/ML/Big Data Analytics, Digital Asset Management, Trading and Capital Markets, Personal Financial Management, Enterprise Technology for Financial Institutions, Enterprise Financial
Management & InsureTech
26% of Firms were operating in 2+ Models
88% firms have Customers & are Revenue Positive
2
The Landscape - Geographic & Model Breakdown
• Singapore (29%) & Indonesia (17%)
• ROW 18%
• 32% Digital Lending
Of which 53% P2B Lending
• 26% Digital Payments
Of which 67% Mobile Money/P2P Transfers
• 21% Capital Raising Crowdfunding
Of which 44% Donation CF
3
29%
17%
11%
10%
7%
4%
3%
1%
18%Singapore
Indonesia
Malaysia
Thailand
Philippines
Cambodia
Vietnam
Myanmar
Others - ROW
Customers Served by ASEAN Fintech Firms
B2B Emphasis w/ +50% from SMEs & Corporates
Some Models more adept at servicing business customers: • 45% of AI/ML Firms, 46% of Enterprise Tech Firms
are Corporates
• 34% of Digital Lending firms are SMEs
Single Largest Customer Demographic are Individuals
• 52% Digital Payments (in particular Wallet & Money Transfer firms)
• 48% Digital Lending firms
• 43% AI/ML/Big Data firms
4
Financial Inclusion: A good business strategy
5
Highest Proportion of Unbanked Customers from Philippines (36%) & Indonesia (21%)
Global Findex Survey denotes 66% unbanked population in Philippines, 51% Indonesia
25%
19%
12%
10%
2%
17%
16%
47%
30%
13%
10%
28%
51%
31%
56%
62%
77%
50%
8%
3%
2%
16%
11%
5%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Digital Payments
Digital Lending
Capital Management
Personal FinancialManagement
Asset Management
Complete Data Set
Unbanked Underbanked Banked Unknown
Technology - The Backbone of most FinTech Firms
6
Firms Actively Pursuing In-house R&D Activities:
Speed of Service (80%) & Ease of Customer Use (83%) Identified as High Priority
Regulation Enables the Fintech Ecosystem
7
42%
30%
24%
12%10% 10%
9%7% 7% 6% 5% 5%
Banking/financialservices
Platform is notregulated
Money servicebusiness
Insurance business Data processingbusiness
Other Credit business Securities business Deposit business Microfinancebusiness
Investmentbusiness
Designatednonfinancial
business
46% Firms View “Changes in
Regulation” as Very High Risk Factor
Regulatory Overview
Key FinTech sectors
Digital payments
• Flourishing in ASEAN, with regulators and government leading the push for QR and mobile payments
• Singapore’s Payment Services Act and Thailand’s Payment System Act are great examples of adaptive regulation
Equity crowdfunding
• Bespoke regulations have been issued in many jurisdictions to support the operation of equity crowdfunding platforms as an alternative means for fundraising
• In some jurisdictions such as Laos, Myanmar and Vietnam, regulators still apply existing security laws and regulations to equity crowdfunding activities
Cryptocurrency
• The Central Banks in Southeast Asian countries have all adopted a cautious stance towards the rise of cryptoassets and specifically cryptocurrencies
• Bespoke regulation have been proposed in a number of jurisdictions, such as the Royal Decree on Digital Asset Businesses in Thailand and the Guide to Digital Token Offerings in Singapore.
Other sectors reviewed: P2P lending, InsureTech, Self-regulation mechanisms, Relevant policies & engagement.
8
Regulatory Innovation Initiatives
Innovation offices
9
Regulatory Innovation Initiatives
Regulatory sandboxes
10
Regulatory Approaches
11
P2P Lending Equity
Crowdfunding
Digital Payments ICO/Crypto InsureTech
Indonesia Regulated under
bespoke regulation
Regulated under
bespoke regulation
Regulated under
bespoke regulation
Regulated under
existing
legislation
Regulated
under existing
legislation
Malaysia Regulated under
bespoke regulation
Regulated under
bespoke regulation
Regulated under
bespoke regulation
Regulated under
bespoke
regulation
Regulated
under existing
legislation
Singapore Regulated under
existing legislation
Regulated under
existing legislation
Regulated under
bespoke regulation
Regulated under
existing
legislation
Regulated
under existing
legislation
Thailand Regulated under
bespoke regulation
Regulated under
bespoke regulation
Regulated under
bespoke regulation
Regulated under
bespoke
regulation
Regulated
under existing
legislation
Key Findings from Country Profiles
• Regulators in Southeast Asian countries welcome emerging technologies within financial services. However, there are challenges in balancing market simulation and risk management through adequate regulation;
• The majority of regulators across the region have signed cooperation agreements to share information on FinTech sectors in their respective markets;
• All of the regulators have responded to developments within FinTech markets with some form of bespoke regulation for specific sectors. As an examples, 80% have introduced bespoke regulation for digital payments;
• Regulators also continue to use pre-existing regulation for other sectors. As an example, 90% have used existing regulation for the InsureTech industry;
• The over-regulation by authorities may have contributed to preventing growth and development of certain sectors; and
• Regulatory harmonization is significant in terms of FinTech development in the region, and efforts are underway to encourage and further facilitate this, specifically involving cross-border initiatives.
12
About Singapore
13
• Digital Payment(34%), Digital Lending(23%)和 Enterprise Tech(18
%) are the top 3 in fintech categories。
• Over Half (57%) firms considering「Predictive Analysis」is the Key tech for
their business operation。
• Cyber Attack ranked as the biggest risk (46%)
• About Half (31 out of 61) SGP-based fintech companies expand their
business to other ASEAN markets…Singapore is the Springboard for fintech
firms in the region
About Taiwan
14
• Enterprise Tech (37%), AI/ML/Data(33%)和 Enterprise Financial Managment(33%)
are the top 3 in fintech categories。
• Over Half (16 firms) choosing more than three categories for their business, tend to
develop cross disciplinary
• Top 3 R&D focuses are:「Predictive Analysis」(77%), RPA (50%), Blockchain/DLT (32%)
• 72% Taiwan-based fintech firms plan to open their business to ASEAN markets, 73%
seeking for healthy fintech ecosystem as their first priority
2019 FinTechSpaceSources: National Development Council(2018 Nov.), World Economic Forum(2018 Nov.), Global Entrepreneurship and Development Institute(2017 NOV), The Global Competitiveness Report 2018 (2018 Oct, WEF)
SUPER INNOVATORS in the world
(WEF, 2018 Oct)
4th
44%
Tech Talents(2018 graduates stat)
Global Tech Firms Favorite R&D Center
The Global Entrepreneurship Index(2017)
3th/APAC Region(28)
ProductInnovation
HighGrowth
RiskCapital
About Taiwan
16
Corporate Lab
AcceleratorProgram
Digital Sandbox
26 Sets of FAPIs
10+ F.I.s
Regulatory Clinic
80+On-site 1/pw
70+ startups
Innovators Need OnO Innovation Environment
17
Corporate Lab
AcceleratorProgram
Digital Sandbox
26 Sets of FAPIs
70+ startups
From Tech To Fin,
From Zero To Open Banking
#1 Aggregator @ Open Banking
(1st phase O.B./ 20 Banks)
18
Corporate Lab
AcceleratorProgram
10+ F.I.s
Regulatory Clinic
80+On-site 1/pw
70+ startups
Regulatory Sandbox Is The Last Mile
Top Online Community @ Wealth Management
Regulatory Sandbox
P2P Fund Exchange
2019 FinTechSpace
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