Like so many sectors, the fintech industry is glad to see the back of 2020. Last year was a disaster for much of the business world, in large part due to the adverse economic effects of COVID-19. However, there is also no doubt the pandemic boosted the current fintech trends, along with other sectors such as multimedia, gaming, and eCommerce.
This year has already shown signs of improvement and predictions in other sectors which is further evidence that 2021 will be a good year for fintech startups in Southeast Asia.
Mynt leads the way
One of the cornerstones of this optimism is the almost $1 billion USD capital raised by Mynt, a fintech platform operating out of the Philippines. This figure includes $175 million USD of fresh capital from ASP Philippines, a Limited Partnership Fund managed by Bow Wave Capital Management. Mynt, founded in 2015, is also backed by SEA heavyweights Ant Group and Ayala Corp and provides capital for Fuse Lending, a micro-lending platform. It also operates GCash, a mobile payments service, part of the Philippines’ largest mobile networks and has a large stake as a LAN provider.
What’s been going on with fintech in Southeast Asia
Both of these services provided by Mynt fit seamlessly into the increasing optimism and the evolving landscape resulting from the pandemic as more and more people locally, regionally, and globally turn to online services.
Changing consumer habits
Most regions have noticed that consumers remain online even as lockdown and quarantines are lifted, hinting towards a permanent trend. This indicates that the existing move towards remote payments will continue beyond 2021. The transition from physical to remote transactions may have been inevitable, but the last year has undoubtedly nudged this ahead. If the technology is consistent and gets consumer trust, there is no real argument for rolling back.
This trend is occurring globally across many retail sectors, and the acceleration is almost definitely a result of the pandemic. In a domino effect, the fintech sector will yield the benefits of this previously unforeseen opening up of these retail markets.
These positive trends and signs inspire widespread predictions for continued and even increased acquisitions, which will, in turn, increase the influx of capital to the ASEAN region. More funding will lead to a greater variety of startups and a healthy diversity, building on the optimism that we have seen this far in 2021.
Other investments in the region
Mynt’s unicorn-like funding announcement is one of 15 listed in the region in January. Other funding announcements include Singapore’s Lendela, Pintek and Alami from Indonesia, Malaysia’s microLEAP, GPay, and Momo from Vietnam, collectively garnering investments over $50 million USD.
This increase in funding and optimism is thanks to the urgent need for stimulus after 2020 and changing consumer trends shown during the lockdowns.
Grab’s Financial Group (GFG) added a further $300 million USD amid reports of a US IPO. These funds will be used for expansion and increasing more “affordable, convenient and transparent financial solutions” in the region according to a GFG statement.
These changes reflect the increasing popularity of Special-purpose acquisition companies (SPACs) as sources for fundraising. There is a lot of movement in the SPAC sector with the Catcha Group, based in Malaysia, floating on the New York Stock Exchange. Catcha was founded in 1999 by Australian internet entrepreneurs Patrick Grove and Luke Elliott, to acquire a company in the SEA fintech market. Likewise, Indonesian eCommerce unicorn Tokopedia confirmed that Bridgetown Holdings, a blank-cheque company, is in talks with the eTailer with a view to floating this year.
Another fintech sector seeing increased activity, action and investment are the Buy Now Pay Later (BNPL) platforms. This sector has been an attractive aspect of the changing face of retail and has had a huge impact on consumers. Through a massive bout of job losses, cautious shoppers have been on the rise. The BNPL trend is giving financing new hope in the face of uncertainty, helping to open up the wallets again.
While this is becoming a global trend, the SEA fintech sector shows that of the almost 700 million people in the region, less than 30% have bank accounts. This amounts to over 400 million people without access to banking or traditional lines of credit. Many companies involved in the fintech in Southeast Asia are working to alleviate this. They have seized this opportunity to implement BNPL solutions, replacing traditional financing options with more convenient, alternative payment methods.
An enormous increase in tech innovation is rapidly shifting the region’s banking landscape, affecting both offline purchases and eCommerce. With such exciting fintech trends, variety, and investment levels on so many fronts, the SEA fintech industry is setting 2021 up to be a good year.