In recent years, digital banks have become increasingly common in Asia Pacific, including in the region’s advanced economies. Though these markets are well banked, regulators have sought to introduce greater market competition and promote digital transformation among oft-complacent incumbents.

A commentary in collaboration with Banking Circle.

Cross-border payments in Asia Pacific have made significant strides in recent years, buoyed by strong economic growth and steady digitization of financial services. Estimated by McKinsey & Co. to have grown at 6% annually from 2011-2019, the region’s cross-border payments account for an increasingly large share of a global market expected to reach US$156 trillion globally this year.

Singapore-based B2B payments firm Thunes is stepping up its global expansion. Following its securing of a major payment institution license in France in late 2021, Thunes has continued to grow its global footprint. This has included partnering with Alipay, broad expansion in Greater China and establishing operations in Saudi Arabia.

Southeast Asian countries have for several years been interested in establishing a regional cross-border payments system. Full payments interoperability could be possible in Southeast Asia as early as November 2022, Fitch Solutions Risk and Industry Research said in a recent research note, citing comments made by Southeast Asian central bankers in July. Yet if we take a closer look, we find that the linkages are predominantly bilateral and there are still some kinks to be ironed out before a truly multilateral system of real-time retail payment rails can be established.

Given the ever-more complex geopolitical situation, it is well worth examining the state of renminbi internationalization. Lofty goals mooted in the early 2010s, such as a free float of the Chinese currency, and full convertibility of the capital account, seem out of reach for the foreseeable future. Nor is the renminbi becoming a dominant global reserve currency. Rather, its use is rising in specific use cases, such as bilateral trade settlement, often due to geopolitical considerations.

A commentary in collaboration with Banking Circle.

As Australian banks in recent years have been hit with unprecedentedly high fines for money-laundering violations, they have stepped up de-risking to reduce their exposure to the types of clients they believe could land them in regulatory hot water. In some cases, the banks simply refuse to do business with firms without good reason.

We remember a time, before China’s tech crackdown, when Ant Group seemed keen on building its own cross-border payments ecosystem in Southeast Asia. The Chinese fintech giant’s shopping spree took it to nearly every Asean country, while it has also rolled out wholly-owned digital banks in the Asian financial centers of Hong Kong and Singapore. Then, as now, the question was always how Ant could connect the disparate components of its non-mainland China ecosystem. If it cannot, the whole will never amount to a sum greater than the individual parts.

When we talk about countries that have inadequate anti-money laundering (AML) and counterterrorism financing (CFT) controls, we usually mention how those deficiencies can cause a country to be pleased on the Financial Action Task Force’s (FATF) gray list. Asian countries with the gray list designation who are working to be removed from it include the Philippines, Cambodia and Myanmar. But there is a more serious designation for countries seen as dangerous conduits for illicit financial activity: the blacklist. Unfortunately for Myanmar, it may soon end up on the blacklist.

Though the U.S. and China have for now reached a stock delisting détente, Chinese firms are continuing to show interest in raising capital on European exchanges this year. As such, for the first time ever, Chinese companies have raised more in European capital markets than in the U.S., with the focus on the UK and Switzerland.