Asia Banking Research

For nearly 3 ½ years, the Philippines has been on the gray list of The Financial Action Task Force (FATF), which assessed the Southeast Asian country to have inadequate money-laundering and counterterrorism financing controls. Since then, the Philippines has been working to improve those controls so that it can be removed from the list, which is detrimental to the country’s business environment. Its next opportunity to be removed from the list will be in February 2025.

South Korea’s No. 2 digital bank K Bank has postponed its IPO plans yet again, after seemingly having committed to a listing in the near future. This development comes as something of a surprise. K Bank posted a net profit of 85.4 billion won (US$64 million) in the first half of this year, the highest since its establishment and more than thrice as much as during the same period a year ago. It seemed that the company had adequate momentum to finally go public. However, looking at a few aspects of K Bank’s business model, we can see why it is delaying the IPO again.

More than five years after Hong Kong regulators first announced they would allow digital banks, the online lenders are performing modestly at best – and in some cases, not well at all. The argument that introducing digital banks would somehow alter the competitive landscape of banking in the city and put heavy pressure on incumbent lenders seems increasingly unrealistic. After all, incumbent heavyweights like HSBC and Standard Chartered have long been investing heavily in digitization. Yet both the banks and regulators have been reluctant to acknowledge underlying problems.

Viva Republica’s Toss Bank has been visibly contemplating an initial public offering (IPO) since earlier this year. It is aiming to achieve a valuation of 15 to 20 trillion won (US$11 billion-US$15 billion). Toss is feeling increasingly good about going public because of what it sees as strong fundamentals. It has amassed more than 19.1 million monthly active users, while its loan brokerage, payments, advertising and tax services are performing well, as is its subsidiary Toss Securities.

Indonesia’s P2P lending industry has fallen on hard times. After several years of relatively unchecked P2P lending expansion, regulators have decided to crack down on problematic industry players with an eye on heading off catastrophic failures. No doubt China’s experience in the 2010s is instructive for Indonesia, which does not want to see its own retail investors be robbed of their life savings in pyramid or Ponzi schemes.

On October 4, Singapore’s Inter-Ministerial Committee announced new anti-money laundering (AML) recommendations. They include data sharing between agencies, flagging and striking off inactive companies, and programs to educate businesses about suspicious activity and increase the likelihood that they report such activity.

Taiwan is grappling with an increasingly serious scam problem, according to a new report that surveyed 25,000 people across the region has found. Conducted jointly by the Global Anti-Scam Alliance, Gogolook and ScamAdviser, a Web site legitimacy checker, the report found that Taiwanese may have lost up to US$7.5 billion over the past 12 months. On average, Taiwanese each lost US$1,940 to scammers, equivalent to 1% of GDP in 2023.

TymeBank is a rising star in Africa as well a key player in the Philippines’ fintech sector. It is one of the few online banks of note to emerge from Africa thus far. TymeBank claims to be one of South Africa’s fastest growing banks and recently reported reaching 10 million customers. While many digital banks highlight rapid customer acquisition, TymeBank appears to be an outlier with its presence in several emerging markets and a strong balance sheet.

Taiwan has long been one of the most overbanked markets in Asia. Strolling the streets of Taipei, one sees a plethora of physical bank branches. Overall, Taiwan has 37 banks, 21 life insurers and 50 securities brokers for a market of just 23 million people. Despite regulatory pressure for consolidation, there have been very few bank mergers in Taiwan over the past two decades.

Of the major economies in East Asia, Thailand has been among the slowest to introduce digital banks. The Bank of Thailand (BoT) has never said much about its decision-making rationale in public, but we reckon the Kingdom’s relatively high banked rate (more than 80%) has something to do with it. The wait is finally over, however. The deadline for submitting an application for a digital bank was September 19, and there only be three licenses awarded.

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