APAC’s financial services industry continues its dramatic technology-fuelled pace of change. Almost $15bn of fintech investment poured into the region last year, a trend expected to grow to $70+bn in revenue by 2020. What’s more, levels of insurtech investment eclipsed that of North America for the first time.
Of course, this is partly down to China and India, home to several fintech unicorns. However, there’s much more to APAC’s fintech explosion. Here are seven reasons why:
- Australia goes digitally native
Australia’s users are some of the most fintech-savvy in the world. The EY FinTech Adoption Index rates Australia 5th in the world for fintech adoption, with over one-third (37%) of the population reportedly using fintech products. This is up from 15% in the 2015 index.
- Singapore’s government support
Support for Singapore’s fintech comes from the very top. Its central bank has a department solely for promoting technology and innovation in finance. There’s also a compliance ‘sandbox’, where fintech companies can test new products without having to satisfy usual industry regulations and standards. Other APAC countries, including Thailand and Malaysia, have since offered similar platforms.
- Cooperation and collaboration culture
Singapore and Australia have signed a joint agreement aimed at helping fintech companies grow, expand and partner in their respective markets. The Innovation Functions Co-operation Agreement will encourage information sharing around regulatory frameworks, market insight, and applying fintech such as mobile payments, blockchain, big data, and APIs.
- Online alternative finance
APAC (excluding China) registered a 313% increase (2014–2015) in raising finance from non-traditional routes. Crowdfunding, peer-to-peer, venture capital for startups – all these and more generated $1.12bn. Notable markets include Japan ($360m) and Australia ($348m).
- APAC becoming more mobile
Asia Pacific is now home to more than half the world’s internet users. A year-on-year 15% growth in internet users (exceeding 1.9 billion) is fuelled by the boom in mobile device usage. Particularly for social media – 95% of the region’s 1.5 billion social media users logon via mobile every month.
- Increased internet coverage
APAC’s internet adoption has traditionally been held up by underdeveloped broadband infrastructure. However, the rise in mobility has helped to close this coverage gap. The region, along with North America, is also expected to drive the demand for 5G, where trials have already begun.
- The digital banking evolution
Fintech is ideal for countries with large land mass, such as Indonesia, where getting to a physical bank branch is a challenge. That’s why innovations such as virtualisation, SDNs and cloud solutions are key drivers. It’s therefore of little surprise that APAC’s enterprise IT spending is forecasted to rise 4.7% this year.
The future of fintech
APAC’s fintech ecosystems are clearly on the crest of a wave. And here’s the thing: the industry is at the very start of Industry 4.0. Many institutions are just beginning their digital transformation journeys.
New innovations such as blockchain are promising to redefine financial transactions. Companies are exploring Robotic Process Automation as a way to streamline processes. Artificial intelligence, machine learning, predictive analytics – the list of next-generation technologies goes on. Continuing this momentum requires the right infrastructure. Each one requires scalability, faster and more secure connections between partners. And of course, managing, storing and harnessing data.