A combination of the words ‘financial’ and ‘technology’, fintech seeks to design and deliver good quality financial services and products through innovative technology. The sector is booming with contributions not merely by banks and technology giants, but also Small and Medium-sized Enterprises (SMEs). Below are some predictions of the 2019 fintech landscape in ASEAN.
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1. Cross-country collaborations will catalyse innovations
As competition in the fintech sphere intensifies, many are looking at collaborations instead. Countries in ASEAN are expected to deepen their ties to promote knowledge sharing about fintech to accelerate progress.
Singapore, for one, is looking at deepening fintech ties with China in 2019. In a bid to drive fintech development forward, regulatory cooperation is expected to enable fintech activities to flourish. More information exchange and knowledge sharing on fintech development and risks are also expected. Initiatives facilitating investment flows are likely to be explored over the medium term, and financial authorities may also strengthen supervisory cooperation.
Not far away, Cambodia, Laos, Myanmar, Thailand and Vietnam have also pushed for a convenient cross-border fund transfer scheme via QR codes. The service, which is expected to be rolled out in central banks in Thailand and Cambodia in 2019, will lower fund transfer costs, especially for migrant workers who are charged for remittance services. Cambodia, Laos, Myanmar and Vietnam migrant workers in Thailand are currently charged 10% of the money transferred for remittance.
2. Singapore to take the lead
According to UOB, Singapore fintechs attracted 25% more funding within the first 10 months of 2018 as compared to the full year in 2017. The funding of USD 222 million taken is almost half of the funding earmarked for ASEAN, with Indonesia coming close at USD 185 million. With Singapore having 43% of all fintech firms in ASEAN-6 (Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam), it is no wonder that she is gaining attention from investors beyond the region. With that, Singapore is likely to continue taking the spotlight as ASEAN’s leading fintech hub.
3. Quality data will thrive
Fintech is becoming a data industry. The insights developed after analysing quality data will help fintech firms to predict future trends, which in turn guides their strategic decisions.
With more quality data in the backdrop, open banking and Application Programming Interfaces (APIs) are expected to intensify the competition within the fintech industry by forcing banks to provide data in a secure and standard format. This creation of safe data space will also benefit consumers.
4. Government initiatives to pour in
In Singapore, the government has upped their efforts to aid fintech firms’ expansion. Monetary Authority of Singapore (MAS) is seeking feedback on proposed fintech sandbox schemes with faster approvals, with public consultation being held in December 2018. The proposed Payment Services Bill by Singapore is also indicative of the country’s strong commitment to improving the fintech industry.
5. Participation by technology giants
Big payment companies like Mastercard and Visa are participating actively in the fintech exchange. More and more collaborations are happening in the e-payment sphere as well. Digital payment service alliances such as that between Grab and UOB are also not uncommon. In 2019, more participation by technology giants is to be expected.
6. Creation of jobs
The number of jobs in Singapore’s fintech and financial services sector grew by 7,800 over 2016 and 2017. Singapore’s Industry Transformation Map for the finance industry in October 2017 also revealed that 1,000 net jobs in fintech are targeted to be created every year. Some frontiers in fintech include automation in payments and investments, improvements in cybersecurity, and digital currency, just to name a few. This translates to career options such as quantitative analysts, who do up financial models and data-driven trading programmes that analyse risk and trade securities.
7. Recruitment of cross-border talent
Talent shortage in the ASEAN’s fintech landscape is an issue. According to Ernst and Young’s ASEAN Fintech Census 2018, about 60% of companies surveyed feel there is a lack of required skills. 39% of respondents highlighted attracting the right talent as an internal challenge, making it the biggest internal problem faced by fintech firms. As such, talented individuals with specialisations in Computer Science, Finance, Engineering and Information Technology (IT) are likely to be groomed to keep pace with this thriving fintech industry. To cope with the talent shortage, cross-border recruitments are also likely.
8. Blockchain to boom
Singapore has also started dabbling in blockchain in the energy sector. Blockchain start-up, Electrify, has created a peer-to-peer energy market which allows consumers to purchase electricity at a lower cost. Nearby, Malaysia also has the largest blockchain centre in Asia while Thailand is set out to become a major regional center for blockchain as the government has been actively launching several initiatives to facilitate the growth of the local blockchain ecosystem. The region may also be looking at a shift away from Initial Coin Offerings (ICOs), and towards Securities Token Offerings (STOs) as it is something that the government can regulate. This not only prevents fraud, but also creates a more transparent market.
Conclusion
As Singapore leads the fintech boom in ASEAN, Malaysia and Thailand will delve deeper into blockchain, Indonesia will continue to embrace digital payments, while Vietnam and Cambodia will progress towards e-payments and being cashless, just to name a few. In 2019, we can all look forward to a vibrant fintech landscape in the region.
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