Fintech has gained momentum in Southeast Asia over the last year. The COVID-19 pandemic that swept across the world, consumers and businesses alike had to depend on the digital world more than ever. Demand for fintech solutions has never been so strong- and that makes 2021 a vital year for the evolution of this thriving industry. Let’s take a look at some of the fintech trends that are catching up pace in the region.
Digital-only banking
Even before the pandemic, the demand to visit brick-and-mortar establishments had dropped but the usage of digital banking spiked amidst the crisis. With technological advancements made in AI and cybersecurity, digital banking has become more convenient than ever. Consumers are becoming increasingly comfortable communicating with banks through online messages and apps. This shift has opened doors for fintech to expand their services even faster.
In countries like Singapore, Philippines, and Malaysia there has been an increased spotlight on digital banks with regulators offering licenses to launch digital banks.
Non-fintech giants are entering the fintech space
One of the fintech trends that is catching up in Southeast Asia is that the local-tech companies are expanding into fintech and the traditional players are trying to participate more actively in this space. This is opening up room for players to evolve their business models either to enable these consolidating forces or to compete with new players.
The shift to fintech is the next step for consumer platforms that are looking to seize the complete customer experience of their already huge user base. According to experts, investments into Southeast Asia’s tech sector will incline greatly towards fintech lines of business over the coming years.
Expansion of hyper-vertical platforms
Another interesting fintech trend is the growth of hyper-vertical platforms i.e. the companies which are focused on building services around definite customer voyages into financing. For instance, Carro, Singapore an online used car marketplace has already done this with its financial arm, Genie, leveraging huge data sets put together from transactions to underwrite car loans.
Rise of infrastructure fintechs
Traditional banks and other tech companies for instance, e-commerce platforms are venturing into fintech thus opening up opportunities for fintech enablers. The fintech enablers are the companies that create software and APIs for banks to enable developers to write their own fintech apps or to digitize processes.
Blockchain and Crypto
With increasing interest in cryptocurrencies being exhibited in the mainstream, there is no doubt that the demand for digital asset solutions and blockchain will rise as well. The investors’ interest in the cryptocurrency space has seen an upsurge in 2020, not only in Bitcoin but also Ethereum and the legitimacy of crypto as an asset will grow further in 2021.
Southeast Asia could be the next fintech hub
Fintechs have been benefiting from the tailwind of this pandemic coupled with government support across the region towards financial inclusion. The COVID-19 crisis has proven to be an opportunity for the fintech startups in Southeast Asia to drive adoption in the region. Fintechs that were profitable were able to grow, find new opportunities, or use cases for a product-market fit that were not in the market before.
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