Latest Reports

Latest Insight

In their first year of operation, Hong Kong’s virtual banks all lost money. Ant Bank lost the least at HK$172 million while Standard Chartered-backed Mox Bank lost the most at HK$456 million, according to the banks’ respective annual reports. While it is still early days for Hong Kong’s digital lenders, it appears a few of them are pulling ahead of the pack.

Bitcoin mining was one of the last vestiges of China’s experimentation with decentralized virtual currency. Until recently, China was the world’s bitcoin mining center. For the crypto faithful (and the agnostics who profited from mining), it was great while it lasted. But now regulators have decided mining in China should go the way of trading. Several weeks ago Kapronasia wrote that the crackdown was just warming up. Sure enough, provincial authorities are turning up the heat. What began in Inner Mongolia – it shut down 35 mining firms between January and April – has spread to Xinjiang, Qinghai and Yunnan.

For digital banks, the Philippines is among the most promising markets in Southeast Asia because of its large overall size (population 110 million) and significant unbanked population. About 71% of adults in the Philippines people lack a bank account, but more than 2/3 of the population has a smartphone. Thus far, the BSP has issued three of the five digital bank licenses up for grabs. In April, Overseas Filipino Bank (OF Bank), a subsidiary of government-owned Land Bank of the Philippines, received one. In June, the BSP awarded two more digital banking licenses, one to Tonik and one to UNObank.

Indonesia’s peer-to-peer (P2P) lending sector is growing steadily after a pandemic-induced slowdown in 2020. Regulators, mindful of the sector’s ability to boost financial inclusion but wary of the risks that can build up when oversight is too light, have been gradually issuing licenses to legitimate companies while penalizing bad actors.

Malaysia’s digital banking race is kicking into high gear as a growing number of firms throw their hats into the ring. There are reportedly 40 firms interested in applying for five digital bank licenses, with the application period closing June 30 and Bank Negara planning to issue the licenses by the first quarter of 2022.

It has been an eventful seven months for Ant Group, with more downs than ups. Ever since the suspension of its anticipated blockbuster IPO in November 2020, the fintech giant has been trying to satisfy a long list of regulatory demands to restructure its operations. Regulators have been especially concerned with what they perceive as a highly risky (and previously, lucrative) consumer lending business. With that in mind, Ant gaining approval to operate its new consumer lending unit Chongqing Ant Consumer Finance within six months is an important step in the right direction.

Zip has been one of the biggest Australian buy now pay later (BNPL) success stories, second only to Afterpay. Zip, Afterpay and others have been so successful that other financial firms are hopping on the BNPL bandwagon, from PayPal to incumbent lenders like Commonwealth Bank. As the market grows more crowded and restrictive regulations loom, Zip is looking to expand overseas, including Canada, Europe and Southeast Asia.

South Korea’s digital banks are on a roll, buoyed by robust demand for digital financial services amid the pandemic. South Korea went cashless long ago with credit cards, but since the pandemic hit in early 2020, mobile banking has taken off. As a result, Kakao Bank, K bank and Toss have grown exponentially.  All three of South Korea’s digital banks are on track for IPOs in the next two years, with Kakao likely to go public first.

It was only a matter of time before bitcoin mining landed in China’s crosshairs. Beijing identified decentralized digital currency as a systemic financial risk in 2017 – for its use in skirting capital controls and links to money laundering - and promptly hobbled key parts of the crypto ecosystem, shutting down all exchanges and banning initial coin offerings. Mining does not pose the same immediate risks to the Chinese financial system, but its enormous power usage could crimp Beijing’s efforts to curb its carbon emissions – a major central government policy objective. With that in mind, the prospects for bitcoin miners in China look dim indeed.

The hype about China's digital yuan can obscure the reality, especially in the cross-border space. The most adamant supporters of China’s CBDC argue that it poses a challenge to the US dollar’s role as the world’s dominant international currency because, well, it is digital, has a technological edge and thus will perhaps redefine global payments rails. This argument exaggerates the benefits of digitization while overlooking the fundamentals of the dollar's paramountcy. 

Page 4 of 65