Southeast Asia has been a hotbed of fintech investments in 2021. The move to digital has enabled the growth of the fintech industry as a whole, as brands and consumers have to move online due to the pandemic.
To find out more about the changes and the implications for Southeast Asia, we spoke to Bogdan Dinu, Head of Product at Thunes. Bogdan currently heads the product development team at Thunes in Singapore and has over 15 years in the industry. He is in charge of building business and consumer products across different emerging markets.
We discussed the possible market saturation of fintech solutions like digital wallets to the challenges of scaling a fintech company in a region as diverse as Southeast Asia.
Fintech in Southeast Asia has been seeing an influx of invest in 2021
Find out what Bogdan had to share with us and give us insight into the Southeast Asian fintech market.
With the rise in fintech solutions and players in the Southeast Asian market, are we seeing the future of the industry or is this a short-lived boom for the industry?
The rise in fintech solutions is expected to continue to grow substantially. By 2025, digital payments are projected to hit US $1 trillion in Southeast Asia in gross transactional value – they’re fast becoming the new norm since COVID-19 accelerated the demand for ecommerce and cashless transactions. In parallel, the Southeast Asian fintech ecosystem is growing tremendously. This is a chance for fintech players to identify market needs and continuously innovate to plug any gaps.
We also observe increased interest from investors, particularly from the United States and China. Although Singapore attracted most of the fintech investments in the past five years, Indonesia, the Philippines, Thailand, Vietnam and Malaysia are gaining ground as well.
Fintechs in Southeast Asia can leverage the region’s economic opportunities and its large consumer and SME market. There are, however, challenges. Fintechs need to first understand local market dynamics and remain adaptable while doing so, in order to respond to on-ground realities. Not forgetting that customers today have high expectations – they often demand multiple payment options and seamless services.
While having multiple fintech options seems desirable, the market does seem saturated – especially around wallets – how will the market adjust itself?
At the moment, the market may seem to be saturated with digital wallet solutions — but it’s a healthy competition. In fact, the high number of financial institutions presents an opportunity for industry players to work together. To that end, we might even see more mergers and acquisitions taking place. By combining or leveraging each other’s strengths, companies would be better able to provide seamless, comprehensive payment solutions. This could take the form of proprietary e-wallets, ride-hailing or digital payment apps for consumers and businesses alike.
But of course, to stand out, fintech companies in the payments space will need to find what role and impact they deliver in the payments value chain. Are their products and service offerings differentiated enough to stand out?
What’s the next big thing for fintech in Southeast Asia?
There is certainly growth potential for fintech startups in Southeast Asia. Sizeable unbanked communities present significant market opportunities for the adoption of digital services.
I foresee increasing trade within emerging markets, and between emerging markets and developed markets. As global trade initiatives open up opportunities, there will be an increasing demand for companies that build essential financial infrastructures.
And any transactions happening within the diverse regional marketplace will require logistical support. Hence, solution providers that can offer interoperability between different payment methods, minimal friction in system integration, and cost effectiveness will become indispensable to the ecosystem.
What are some of the uniquely Southeast Asian challenges to expanding the fintech ecosystem?
The Southeast Asian market is undeniably robust, but there are opportunities to maximise fintech’s potential in a regional marketplace. Most importantly, we must understand each country’s local payment landscape and its financial ecosystem. With different regulatory requirements and licences in each market, it’s not easy for international players to operate here without the right tools or connections.
The benefit of having a global payments network provider like Thunes is invaluable in such a situation. Thunes connects more than 100 countries in 60+ currencies under a single API that complies with all regulatory and capital control requirements. By removing the complexity of cross-border payments, we allow our partners to focus on their core business and seamlessly move funds worldwide.
What’s next for Thunes?
We are constantly working to grow the Thunes network by expanding our Pay-In and Pay-Out offerings, as well as rapidly growing our worldwide coverage – especially to emerging markets.
Our team is working to introduce AI-powered solutions to multiple currency optimisation and increase the efficiency of moving money across borders. This will help make payments more predictable and transparent. We’re also continuing to enhance and simplify our APIs and position as an embedded finance provider. With Thunes, banks and other financial institutions can offer services in their chosen markets without first having to build their own technological stack. Thunes is a plug-and-play technology provider, so it’s a simple process for banks to connect our systems to their payment infrastructure.
We explore the changing fintech trends in Southeast Asia
Finally, we’re constantly looking at ways to enhance the user experience. One recent example of our efforts was the launch of our Onboarding Portal in late 2020 — a dedicated digital portal offering our new customers a quick, easy and secure onboarding journey, allowing them to go to market faster. The second was the introduction of a new payments portal called ‘Thunes Business Hub’ which enables customers to connect to our network without any technical integration – a simplified web-based platform to manage cross-border payments.
From making our customers happy to establishing connections to the world’s fastest-growing economies, we are ultimately driven by our mission to make financial services accessible to everyone. It’s been immensely rewarding to see the outsized impact we’ve made and you can look forward to more very soon.