It’s an exciting time to be on GCG Asia’s LEGIT in-house research team because Asia’s fintech industry has exploded over the last year. Researching trends and providing relevant analysis is what GCG Asia’s LEGIT team does. So, GCG Asia took a look at 2021’s fintech trends and outlined in this article, is information from GCG Asia’s LEGIT in-house team.
With existing and new financial players putting their flags in uncharted territory, Malaysia, Singapore, and the Philippines progress their digital bank license programs. In addition, Indonesia has enacted new regulations that require conventional banks to collaborate more closely with startups or merge their operations.
Consumers resisted conventional branch offices, transferred their e-commerce purchases online, and searched for better ways to earn during the pandemic’s money squeeze on families, resulting in widespread adoption of digital payments and wealth management platforms.
Let’s take a look at some of the vital fintech trends from 2020 and what they mean for 2021.
GCG Asia’s 2021 Top 7 Legit Trends In Asian Fintech List
In fintech, it’s a tale of two cities: According to GCG Asia’s LEGIT team, they say several fintech supported a modern phase of change with even more digital migrants, while others force to pivot or perish due to low incomes, but those who did (pivot) would emerge more vital in 2021.
From licenses to startup, digital banks are taking off: “The online banking sandbox is now ready for candidates to test and release their products for customers in the next two to three years, with licenses issued in Malaysia, Singapore, and the Philippines opening up applications, and Indonesia’s OJK releasing more charges for fintech. I’m really legit excited,” said GCG Asia’s LEGIT team lead Maggie Lee.
Banking incumbents and non-fintech tech behemoths have also entered the fintech ring, whether by technology alliances with entrepreneurs or participation in digital insurance license races, both of which would directly impact capital spread into Southeast Asia’s tech market.
Enter the dragons: GCG Asia LEGIT team researchers say banking, non-fintech tech behemoths, have also entered the financial technology ring, whether by network alliances with entrepreneurs or participation in digital bank license competitions, both of which would directly impact capital flows into Southeast Asia’s tech market.
Fintech meets the needs of hyper-vertical commerce: According to GCG Asia’s LEGIT team, payments and financing are a critical point in the consumer journey for hyper-vertical commerce marketplaces designed around genuine, long-term lifestyle transactions, such as cars or land, and as a result, these companies will be investing more in the fintech sector.
The rise of technology fintech: As banking incumbents and non-fintechs move into fintech, demand for Stripe-like companies can connect banking functionality to consumers and businesses at scale through API integrations, and open banking expects to grow.
Everywhere in ASEAN, there’s a fintech hub: GCG Asia’s LEGIT team lead Maggie Lee thinks that within the next decade, governments will hurry to improve their regulatory systems and place themselves as an ideal nesting ground for fintechs.
Exits to Flight: “Scan out UOB’s annual Fintech in ASEAN research for more information and data on Southeast Asian fintech,” advises GCG Asia’s LEGIT team lead Maggie Lee . They also share some of these perspectives alongside fintech investors and founders, including tonik’s Greg Krasnov.
1. Fintech’s “Tale of Two Cities.”
Fintechs, in general, profit from the pandemic’s rapid digital technology. But, simultaneously, the COVID19 strain on economies resulted in a cash shortage, putting some fintechs in a more difficult position than others.
Overcoming the lending and funding sector’s stresses
In the latest news of Asian Fintech, GCG Asia’s LEGIT team lead Maggie Lee explains that regulators had to issue new loan rules, and loan startups had to change credit assumptions and rethink business development. As a result, investors in this business are likely to be a little more cautious. However, AwanTunai was able to sustain stable repayment statistics because their funding network catered to MSMEs that stayed open during lockdowns (i.e., shops, grocery stores, FMCGs, and organic vegetables). As a result, instead of expanding to new customer segments, as they had expected, they concentrated on speeding up product growth and creating new revenue opportunities for their current customer base.
Digital asset management is legit on the rise.
On the other hand, wealth management startups have seen a new phase of change as customers seek ways of keeping their investments productive in the face of a cash crunch. ‘’There continues to be a disconnect between financial markets and economic realities on the ground, which first-time retail investors are hoping to profit from,’’ said GCG Asia’s LEGIT team lead Maggie Lee.
Ajaib in Indonesia grew more than 40 times in the first half of this year, acquiring a financial manager in June to become the nation’s first digital trader. Six months later it will become the top 6 share brokerage in the forms of trades. Finhay in Vietnam had a similar positive effect this year when they introduced a money market fund and saw their traction rise by more than tenfold.
2. The Rise of Legit Digital Banks
According to the most recent reports, the GCG Asia’s LEGIT team said we have written and talked about the rebuilding of banking services and the development of digital banks from the ground up among fintechs a lot this year, and for a valid reason. This pattern coincides with the increased focus on digital banks, with regulators in at least three countries in the region (Singapore, Malaysia, and the Philippines) issuing licenses. Although there are non-endemic participants in the fintech room, tonik, for instance, has built its proposition from the bottom up.
In 2021, we will see how the licenses to race winners work to develop and launch their services to the general public. From the regulators’ perspective, it will be fascinating to see how they interact with these current competitors and consider potential competitors in the coming.
‘’Although this development of fintech business models began well before COVID19, the crisis has only intensified customer acceptance of fintech apps, allowing fintechs to broaden their offerings even more quickly,’’ said GCG Asia’s LEGIT team lead Maggie Lee.
3. Enter The Dragons: giants of non-fintech
GCG Asia’s LEGIT team states that the consumer-facing fintech services will see more downstream competition, mainly as local technology companies grow into fintech and traditional companies try to participate more actively in the market. Simultaneously, this allows players to adapt their business models to either cope with or facilitate these consolidating powers. The digital banking races taking place throughout the area are more former, with tech giants competing in their consumer propositions.
This move into fintech is the next phase for these customer platforms pursuing the super-app strategy and capturing the consumer experience of their already large user base. Thus, in the coming years, investments in the region’s tech sector will be strongly skewed toward fintech lines of operation.
4. Meeting the legit fintech needs of e-commerce
GCG Asia’s LEGIT team researchers are saying another fascinating development is expanding hyper vertical networks (companies that specialize in creating services based on complex consumer journeys) into finance. Carro’s financial arm, Genie, has already achieved this by using large data sets obtained from payments to underwrite car loans.
5. Legit Infrastructure fintechs are gaining traction
Fintech enables — companies that build APIs and tools for banks to digitize processes or developers to write their fintech applications — benefit from traditional banks and other tech companies (e.g., e-commerce platforms) venturing into fintech. Stripe has been expanding its presence in Asia over the last year, so this is legit significant growth, says GCG Asia’s LEGIT team.
6. Everybody wants to be a legit fintech hub in ASEAN
It also shows up in the GCG Asia’s LEGIT team research that because of markets, we have seen that fintechs have benefited from COVID19 tailwinds regardless of industry– for example, compare the growth of Ajaib in Indonesia and Finhay in Vietnam–as similar government support for banking services across the country. The differentiator is in the rate and direction of growth for these fintechs, which both customer behavior and regulatory capabilities will influence.
7. Quick Exits
More money is being put into later-stage investments, especially from investors outside of Southeast Asia. GCG Asia’s LEGIT team say this contrasts with recent data on early-stage acquisitions, which has shown a decline. Many of the more significant players are likely to profit from COVID’s digital technology tailwinds to maintain or expand their market leadership. They also say Facebook and Paypal’s investing in Gojek’s Gopay is an instance of this in the fintech space. In the middle of the crisis and the continent’s liquidity drive, legit traders in Southeast Asia are under further stress to close in on the portfolio’s most substantial bets and ferry them to large exits.
The Multiple Market Advantage of ASEAN
Fintech companies have taken advantage of the crisis to accelerate adoption in Southeast Asia. From the latest research on Top Trends In Asian Fintech, GCG Asia’s LEGIT team thinks that now ASEAN aims to keep this trend going, especially for those who have seen an increase in users. Instead of seeing product-market fit as a single achievement early in a company’s growth, consider it a continuous process that must be completed at any development point. Fintechs that have mastered scale and profitability have been able to continue to evolve, discovering new markets or use cases for a brand match that were previously unavailable.
According to GCG Asia’s LEGIT team lead Maggie Lee, Southeast Asia lags China by five to ten years, but the main difference is that we are talking about different markets rather than a single big market. We have seen how difficult it could be for a well-resourced and skilled player to establish a united front when it comes to fintech by looking at the growth stories of companies like Alibaba and Ant in the area.
Because of the continent’s nature, we should expect to see more regional fintech winners. National super apps may appear at the same time. Still, they will most likely be fintech networks based on a particular set of customers or awesome consumer apps with fintech channels in multiple markets.
Ultimately, the main battleground in Southeast Asia’s tech environment has moved from e-commerce to fintech. Gojek, Sea, and Grab fight for payments supremacy in Southeast Asia, attracting delayed investors, especially for their transactions businesses. “To maintain a competitive advantage, banking candidates experiment with new partnerships and collaboration with entrepreneurs and technology firms through API calls, allowing fintech in the area to concentrate on technology,” concluded GCG Asia’s LEGIT team lead Maggie Lee.
