Latest Reports

Events

No events
Latest Insight

Why did Tencent invest in Australia's Afterpay?

Written by Kapronasia || May 21 2020

Tencent has paid US$300 million for a 5% stake in Australia's Afterpay in a bid to strengthen its global fintech services and expand into smart retail. Afterpay allows shoppers to pay in four installments for purchases online or in retail stores. It claims to have 7.3 million users globally.

How is COVID-19 affecting Grab's fintech ambitions?

Written by Kapronasia || May 19 2020

Singapore's Grab reckons it can become the first loss-making ride-hailing firm to reinvent itself as a viable digital bank. So confident is Grab in its fintech endeavor that it has applied for a digital full bank license in Singapore with telecoms giant Singtel. If Grab succeeds as a digital bank, it will be an outlier. China's Didi launched a fintech unit in early 2019, but has yet to make any progress in digital banking. Uber too thinks fintech can help it monetize and created a dedicated division about a year ago. Like Didi's, it has gone nowhere yet. And of course, there's Gojek, an Indonesia-based variant of Grab. It too is dabbling in digital banking. 

The coronavirus pandemic is a day of reckoning for overvalued, overhyped and overextended fintechs. With a "go big or go home" ethos, these firms are finding that amid the virus-induced downturn they may have nowhere to go. Not so for South Korea's Viva Republica, the country's only fintech unicorn, which has been steadily building a business in its home market for nearly a decade. In fact, Viva Republica's mobile banking platform Toss just broke even in April for the first time in its five-year history. That's impressive given that the South Korean economy is in recession. South Korea's GDP contracted contracted 1.4% year-on-year in the first quarter, its worst performance since the 2008-09 global financial crisis.

Myanmar is gradually opening its banking sector to foreign investment in a bid to boost the economy. International lenders see strong potential in the Southeast Asian nation's underdeveloped financial industry. Myanmar has been one of the region's fastest growing economies in recent years. Thus far, it has not been hit hard by the coronavirus pandemic either. In April, the Central Bank of Myanmar approved seven Asian banks to enter the country: Taiwan's Cathay United Bank and Mega International Commercial Bank, South Korea's Industrial Bank of Korea, KB Kookmin Bank and Korea Development Bank, Bank of China Hong Kong and Siam Commercial Bank.

Indonesia's P2P lending sector has been growing fast for several years now, providing a vital credit channel for cash-strapped consumers and SMEs. In February, online lending increased 225% annually to reach US$6.1 billion, 80% of which was in the P2P segment, according to data compiled by the Indonesian government. Then the coronavirus pandemic hit the country of 267 million, plunging it into a technical recession. While several of the largest P2P lenders are weathering the coronavirus pandemic well, others are not so fortunate. The economic fallout from the virus may end up having a more profound impact on the industry's development than regulatory measures enacted last year to reduce compliance failures and protect consumers. 

Malaysia was gradually moving in a cashless direction long before the coronavirus pandemic hit the country, forcing it into lockdown from mid-March until early May. The virus just may have accelerated Malaysia's cashless push though, as people out of necessity opted for contactless payments instead of those involving contact. Now, digital wallets are offering new incentives to consumers and merchants, while policymakers are tightening regulations around the use of cash. Malaysia's cashless vision appears to have gotten an unexpected boost from the pandemic.

A growing number of global fintechs are eager to tap China's growing remittances business, the world's second largest after India. Given China's strict controls of money flows, the right local partner is important for gaining access to the market. Otherwise, regulatory hurdles are tough to surmount. In April, Singapore-based digital cross-border payments platform Nium announced it would partner with Geoswift, a counterpart headquartered in Hong Kong that specializes in clearing payments in and out of the Chinese mainland.

The economic downturn fomented by the coronavirus pandemic has been a rude awakening for cash-burning fintech startups. They and their backers are finding that there's a price to pay for championing breakneck growth over profitability. In contrast, fintechs with solid balance sheets, like London-based digital money transfer firm TransferWise (profitable for three years in a row), are poised to pursue targeted expansion. Tapping resilient demand for its cross-border payments services, TransferWise recently inked a partnership with China's Alipay and expanded to the United Arab Emirates.

India and Indonesia key to Facebook's fintech prospects

Written by Kapronasia || April 29 2020

Libra is the most visible profile prong of Facebook's fintech offensive, but it may not be the most important. Not for now, anyway. U.S. officials and regulators remain circumspect about Facebook's digital currency project. Facebook has a long way to go before it wins their trust. In Asia, Facebook has a seemingly simpler task: Roll out the digital wallet of WhatsApp to monetize its large regional user base, concentrated in India and Indonesia. That's proving to be difficult too though.

In every crisis, there are opportunities. While many investors are tightening their belts during the coronavirus pandemic, some are opening their wallets. Now is the time to double down on certain investments. Take Australia's Airwallex as an example. The Melbourne-based cross-border payments platform closed a mammoth US$160 million (A$250 million) funding round in April, bringing its valuation to US$1.8 billion from US$1 billion. Less than half of the capital was raised in January, according to Australian Financial Review. Airwallex managed to raise the rest amid the pandemic's surge.

Page 9 of 59