The Southeast Asian market is a fascinating and aggressive market, especially when it comes to technology and industries like Fintech. High smartphone penetration and improving internet speeds has opened up new avenues for businesses and technologies to get entrenched faster than ever before. Add that to a growing economy and consumers with disposable income, as well as high financial literacy in the major cities around the region, it makes sense why Fintech is becoming so commonplace here.
Why is Asia leading the Fintech race?
Rather than focus on the issues we already know, let’s look at some factors boosting the growth of the industry in the region.
Market diversity and how they overcome it
You cannot compare Asian countries to the different countries in the EU, especially since an Asian version of the EU is unlikely to happen. Each market has a different set of rules and regulations around Fintech and this has led to a differing market when it comes to the broad industry. Indonesia and The Philippines have a strong loan-driven Fintech market, as well as remittance, while more developed markets like Singapore and Malaysia are focused on wallets and payment options.
But looking at hubs like Singapore and to some extent Malaysia, banks are playing their role to be the central driving force for Fintech adoption around the region. Most large banks from those markets have offices and have established a strong foothold across the region, allowing them to work with local regulators and help integrate new technologies and companies into confusing local markets.
Singapore and the MAS
Singapore is a highly regulated market with the Monetary Authority of Singapore being the guardian of the financial industry in Singapore. They have had a relatively open stance on new companies entering the market and local Fintech innovations in order to maintain their position as a regional and global hub for Fintech.
Singapore puts a stronger emphasis on collaboration between startups and larger companies like banks and financial institutions and often acts as a springboard to new markets across Southeast Asia.
Despite being one of the smallest countries in the region, Singapore is a global powerhouse in commerce, finance, and transport.
In less than two years, Singapore FinTech Association is fast growing into one of the largest FinTech organisations in the world hundreds of member organisations and international partnerships. Though the report also shares that the industry is still in relatively early stages of development, so there is still a long way to grow.
Southeast Asia is a technology hub
In the region, the rate of technology adoption is fast as there were never any strong incumbent technologies or services in place to hold back innovation. This has led to a fast-growing market that is looking for new entrants and encouraging a competitive market that is open to change.
The Southeast Asian market is definitely open to newcomers. Using Singapore as a springboard, many companies enter from European or the US to explore the market in Southeast Asia.
The recent MAS Fintech Regulatory Sandbox is a good example of an openness to change in the financial industry to drive growth. An excerpt from the article states:
MAS is encouraging more FinTech experimentation so that promising innovations can be tested in the market and have a chance for wider adoption, in Singapore and abroad. The regulatory sandbox will enable financial institutions as well as FinTech players to experiment with innovative financial products or services in the production environment but within a well-defined space and duration. It shall also include appropriate safeguards to contain the consequences of failure and maintain the overall safety and soundness of the financial system.
Southeast Asia stands at a point where they can become a global and regional powerhouse for Fintech. The willingness to change needs to remain a priority in the region with continued support from regulatory boards and governments.