Asia-Pacific’s Growing Appetite for the FinTech Industry

The FinTech and alternative finance business industry is growing apace. For those startups sharing in that success, many will know that Asia-Pacific region is proving a key marketplace for their products and services.

Fintech Industry: A Glimpse

A recent survey from the Cambridge Centre for Alternative Finance (CCAF) highlighted the importance of the Asia-Pacific region in the rapid developing FinTech business industry. With China leading the way, the rest of the Asia Pacific region has experienced decisive growth, having increased year-on-year by 81% from USD$2 billion in 2016, to USD$3.6 billion in 2017.

This shows that alternative finance companies and digital banking are the “growth-engine” for market development. All this, to offer much-needed services to people in APAC region as well as across Europe or in the US. That’s just one reason why a growing number of international entrepreneurs, including experienced businessman and VC investor Oleg Boyko, internet entrepreneur and Adyen co-founder Peter van der Does and Alexander Graubner-Müller, CEO of Kreditech are so supportive of digital banking and financial services regional businesses.

They are working to ensure FinTech and the alternative banking and finance industry can strive ahead, break the traditional mould and provide more people than ever before with suitable access to the world of finance.

Of course, it’s not always a straightforward process creating a new finance or digital banking businesses that can achieve something important in a new and innovative way. But, the serial entrepreneur Oleg Boyko, founder and Chairman of Finstar Financial Group, describes the FinTech industry as “the biggest blue ocean” in the business world, according to a recent article. That clearly includes the Asia-Pacific region, which appears to be increasingly receptive to the provision of alternative financial services.

Do Enjoy Reading  Diversify and Thrive: Incorporating Annuities into Your Investment Portfolio

Boyko’s Finstar had a $150 million investment plan to support financial services and fintech businesses as well as developing portfolio`s companies in-house R&D researches, according to an article on the five-year investment plan, by CrowdFund Insider. Boyko had also specifically earmarked $50 million of that fund for the Asia-Pacific region.

Alexander Graubner-Müller, whose company recently announced ambitious plans for India’s finance market also believes that the“smart combination of new data sources with modern-age statistics/ machine learning can be very efficient to manage credit risk for customers which are not served by traditional financial institutions.”

Fintech Industry, fintechThe CCAF survey, meanwhile, outlines that innovation is a driving force for alternative finance market development across the Asia Pacific region. The firms pursuing changes to both their business models and the products on offer. In China, 15% of the company budgets are being committed to R&D departments, with approximately 75% of surveyed firms pursuing R&D into Process Streamlining and Automation.

Similarly, firms across the rest of the region have committed nearly a quarter (24%) of their operating budget towards R&D. Payment Processing, AI, and Process Streamlining & Automation are amongst the top three priorities for business models across the region.

Alternative Finance and Digital Banking in Asia

According to the third Asia Pacific Region Alternative Finance Industry Report from CCAF, alternative finance business industry has grown notably in recent years. It was worth $358 billion by the end of 2017.

The report did note that while that’s a large figure, growth in China, which is the main driver of the new finance business industry across the region, slowed to grow at a pace of 47% in 2017. While that’s an impressive rate, it’s dwarfed by the 138% rate of growth experienced by FinTech startups and new financial services businesses, during 2016.

Do Enjoy Reading  What Does GME Saga Teach Us When It Comes To Stock Trading?

Across the whole of the Asia-Pacific region, however, the alternative finance market has surged by some 81% to a value of $3.6 billion.

Alternative finance engine shifts from China to Southeast Asia and India

While China has been the main driver of alternative finance businesses and initiatives. The increased regulatory interest from the authorities has contributed to a slowdown. However, the broader region remains responsive to the growing provision of new finance businesses. Now, India and Southeast Asia are well-positioned to benefit from investment interest in the industry.

Large populations, many of whom are ‘unbanked’ but gaining better and easier access to the internet is one of the major reasons behind that shift.

Indeed, a recent study shows Southeast Asia has over 150 million adults over 25 years old who remain without regular or reliable access to a banking system.

The research also shows that during 2017, India gained 41% of total alternative finance deals across Asia. While the number of new deals in the sector in China declined by 15% in 2017 from 2016. For Indonesia, clarification of peer-to-peer lending rules is supporting increased interest in the sector, there.

The provision of new financial services and digital banking business ideas is something that looks set to continue in years to come. For now, it also appears as though the right new innovations to satisfy the changing financial needs of consumers in APAC, will be able to find the support they need.

You may also like: Top 10 Fintech Companies in India

What’s your take on this changing scenario in the fintech industry? Feel free to share your feedback on the same.

Leave a Comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.