Despite the global health crisis, funding and investments in fintech startups in Southeast Asia have held relatively strong, and the region’s economy is likely to bounce back quickly. Many of the tech revolution stars have been the companies who are in sync with the fintech trends of recent years and have developed products that help consumers have more control over their finances.
With this being the case, it has come as somewhat of a surprise that Singapore-based fintech startup GoBear has come to the decision to shut its doors. We take a look at what went wrong and how their pulling out of the market may impact other fintech companies in the region.
An abrupt end
Founded in 2014 with bases in Singapore and Thailand, the financial services platform quickly grew to become one of the key fintech players in the ASEAN region. It had spread its services to the neighbouring countries of Malaysia, Hong Kong, Vietnam and the Philippines within two years, establishing itself in these burgeoning markets before moving into Indonesia in 2018.
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By 2019, the company gained traction and attracted an $80 million USD funding investment and achieved a gross margin positive for its platform shortly after. During this time GoBear also dipped its toes into the insurance brokerage sector in Singapore.
It appeared that everything was running smoothly when GoBear started 2020 on a positive note by acquiring AsiaKredit, an online lending service. As the COVID-19 crisis evolved, the company seemed to be thriving. They even received a further $17 million USD in funding in May through deals with Aegon NV and Walvis.
Unfortunately, this was the end of the good news for the company. In September 2020, it announced that it had to lay off 11% of its workforce, a total of 22 staff members across the operations, product, and technology teams. This move may have been the beginning of the end for the startup. In spite of a steady growth in adoption of fintech products during the various lockdowns and restricted movement orders, GoBear decided to shut down a few days into 2021.
Impact of GoBear’s demise on fintech in Southeast Asia
Despite having a robust startup ecosystem, Southeast Asia has not been immune to the economic downturn being experienced globally as a result of the COVID-19 crisis. Startups such as Stoqo Teknologi Indonesia and hotel room aggregator Airy were amongst the victims of the pandemic while even unicorns like Grab and Gojek had to reduce staff numbers and pivot to remain sustainable.
In general, however, fintech startups have escaped the wrath of the pandemic’s rage against the economy with many flourishing thanks to consumers wishing to conduct their financial affairs from home.
Countries in the region are capitalizing on their growing status as fintech hubs, and many governments are encouraging this digital growth through support and incentives for those wishing to develop financial technology products. In Singapore, four of its startups made the 2019 KPMG Fintech 100 list, while countries like Indonesia, Vietnam, Cambodia and the Philippines have a wealth of digital money management products striving to bridge the gap between the unbanked and financial services in their countries.
Fintech growth factors
As the Coronavirus restricts movements, more people shop online and purchase digital entertainment products than ever before. This buy-in to the eCommerce sector has had a direct knock-on effect on the use of digital financial products such as eWallets and online lending.
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Thanks to recent blockchain innovations, financial transactions over the internet are faster, more secure and reliable, leading to a boost in consumers’ confidence.
Newly developed biometric technology adds another layer to the security of moving money online, further enhancing the fintech industry. With many apps now using fingerprint or facial recognition to access accounts, users feel safe knowing that their money is secure.
As Southeast Asia’s economy moves swiftly towards digitalisation, another growth sector has emerged: Regulation Technology (RegTech). With an increase in financial products and online consumerism comes the added burden of ensuring protection and adherence to governmental and industrial regulations. The need for rapid action to stay the pace of digital development has spawned the exponential growth of the RegTech sector, particularly in Singapore, and the eagerness of VCs to invest in them.
As the fintech startups in Southeast Asia adapt and work to shore up their business in these COVID times, some firms will thrive, while others, like GoBear, will fall victim to the volatile economic climate. However, with ever-changing fintech trends and the move to a more digital society, the future is looking bright for those investing in or developing financial technology in the region.