Asia Leads the Way in Fintech Innovation
Asia looks to be fighting it out with Europe and North America for dominance of the fintech market. China and India both have the ecosystems, demographics and tech based foundations, to make a huge play in this space. Here’s why:
Getting adoption in early
China and India come in just above the UK as the biggest early adopters in financial technology products. Their growing web-savvy populations are perfectly suited for a fintech explosion.
Payment platforms, which largely derive their user base from thriving e-commerce and social media platforms, by far dominate the FinTech space in China. Digital payment is the leading market segment within the Eastern powerhouse with a total transaction value of USD 855 million in 2018*.
An ecosystem that supports start ups
FinTech has massively supported start-ups with its financial techniques. Instead of depending on banks, start-ups can work with fintechs, to develop their businesses.
From automatic payment methods, managing in and outflow of cash to a cloud-based system for all financial depositories, fintech provides a better more advanced way of money management to start-ups.
Hence, a lot of companies have quickly adapted to this new wave of technology. With the growth of fintech in Asia, there are more than a thousand FinTech companies running strong helping these start-ups with all their financial needs.
The Asian internet age
Application of the internet has seen a sharp increase in Asia. This down to a number of factors, the biggest definitely being the proliferation of smart phones. From small grocery shops to super markets all have accepted the trend of virtual currency.
Individuals knowing that they don’t have to visit the banks when they can manage their finances with the click of a button, they have entrusted their finances with fintech. Fintech has successfully penetrated Asia’s local market with the rise in internet connectivity in recent years.
The demographic is right
A huge factor behind the success for fintech in Asia has a lot to do with its young population. Millennials are dominant amongst Hong- Kong, Singapore, Tokyo and other Asian conurbations. This group of the population are digital natives and very accepting of the digital norms.
They have been quick in adapting to fintech’s functionalities. Be it young tech entrepreneurs or the man on the street, everyone has found a better more easy way to deal with their finances. Hence, financial technology has easily found its way into various regions of Asia.
The land of unicorns
At the close of 2018, there were 39 fintech unicorns globally; VC backed organisations with a valuation of at least 1 billion, totalling valuations of $147 billion between them.
Six were in Asia, including China’s Tuandaiwang, Tongdun Technology, 51Xinyongka, and Lu.com, as well as India’s Policybazaar and Paytm. The U.S. is home to 18, including Stripe and Robinhood. The UK has 5; OakNorth, Monzo, TransferWise, Revolut and Funding Circle.
The rise of BAT, with an Amazonian contender….
Baidu, Alibaba and Tencent have come in to dominate the Asian tech scene, and fintech is not an exception to this rule. They are dominating the Asian online payment market. In China, Ant Financial’s Alipay, Tencent Holding Ltd.’s Tenpay, and ChinaPay — had a combined market share of 66 percent in the fourth quarter of 2017*.
Amazon is also trying to make a play, never ones to miss a growing opportunity. The company is making a huge play in Indian fintech, investing in a number of payment start ups. Indian eCommerce is expected to expand to $72 billion by 2022, up from $33 billion in 2018, and Amazon is positioning itself to be at the centre of that growth.