When it comes to Indonesia's digital wallets, Go-Jek's Go-Pay captures many of the headlines. After all, Go-Jek is Indonesia's most prominent unicorn, valued at US$9-10 billion. It's battling Singapore's Grab across Southeast Asia, burning piles of cash as investors rush to join the next round of fundraising. Speculation about a Go-Jek IPO is mounting.
Yet Indonesian consumers prefer a different digital wallet, according to local research firm Snapcart. Data compiled by the Indonesia-based company show that Ovo, backed by Grab and the Lippo Group, is the top Indonesian mobile wallet by a wide margin. Ovo holds a 58% market share, compared to Go-Pay's 23% and Emtek Group and Ant Financial's DANA, a distant third at 6%.
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In early August, Australian challenger bank Judo announced it had completed a second round of equity fundraising that brought in a record $400 million, double the original target of $200 million. In this new round of fundraising, the largest ever for an Australian startup, Bain Capital Credit and Tikehau Capital joined existing shareholders OPTrust, the Abu Dhabi Capital Group, Ironbridge and SPF Investment Management.
On July 20th, Chinese State Council announced 11 measures to advance the further opening-up of Chinese financial industry to the world. 8 of the 11 policies are related to bond, asset management, and currency brokerage. The momentum of increasing foreign investment will not cease in the foreseeable future but be boosted with the newly released policies.
The Chinese gambling hub of Macau has a well deserved reputation for illicit activity. Although the territory has prospered in the two decades since returning to Chinese rule, overtaking Las Vegas to become the top gaming destination globally, the sources of its riches have sometimes been questionable. Corrupt officals and businessmen as well as criminal organizations launder money through the territory, taking advantage of its lax regulatory environment. Macau has no currency or exchange controls, while its threshold for reporting transactions in casinos is more than US$62,000, compared to an international standard of US$3,000.
The Philippines is steadily adopting digital payments as part of a state-led drive to boost financial inclusion. The number of active e-wallet accounts in the country rose 22% annually in 2018 to reach 33 million, according to data compiled by Bangko Sentral ng Pilipinas (BSP), the Philippines' Central Bank. E-wallet growth last year edged out credit card growth, which rose 18% to 9.4 million users compared to a year earlier.
The Philippines is poised to reduce its dependency on cash - which accounted for 99% of transactions in 2018 - thanks to high smartphone penetration, strong demand from a large unbanked population and consumer willingness to bank digitally. Additionally, with their low barriers to entry, digital wallets are a good way to support financial inclusion.
For Indonesian ride-hailing giant Go-Jek, the more funding rounds the merrier. As it seeks to gain a leg up on its arch-rival Grab, Go-Jek is tapping a wide variety of investors bullish on the Indonesian decacorn's digital banking prospects. In its latest funding round, the second half of Series F, Go-Jek attracted an estimated $3 billion (the company has not disclosed the actual figure) from investors including top Thai lender Siam Commercial Bank, Visa and three Mitsubishi firms: Mitsubishi Motors, Mitsubishi Corp. and Mitsubishi UFJ Lease & Finance.
In the emerging world of super apps, Japan's Line is something of an anomaly. It is neither a wholly domestic phenomenon like China's WeChat nor global like the U.S.'s WhatsApp. It is not a ride-hailing app like Singapore's Grab or Indonesia's Go-Jek. Rather, Line is a quirky messaging app beloved in its home market of Japan as well as in Taiwan and Thailand, where Japanese culture has enduring appeal, and to a lesser extent in Indonesia. Outside of those markets, it is virtually unknown.
WeChat has proven that a messaging app can become a digital wallet and that the road to monetization runs through fintech. Line aims to show that such a platform is viable regionally in Asia. Because Japan remains attached to cash, Line cannot rely on its home market alone. “Fintech itself is a proven monetized model, the only problem is how fast we can secure a meaningful size of users,” Line co-CEO Shin Jung-ho told Bloomberg in a June interview.
Virtual banks are coming to Singapore, but the biggest incumbents have little to fear. Singapore's top three lenders, DBS, UOB and OCBC, have plenty of cash to invest in fintech innovation. What they cannot build independently they can access through tie-ups with startups. For smaller lenders who lack the heavyweights' resources, the virtual banks could pose a tougher challenge. The scope of the challenge will depend on how much freedom the Monetary Authority of Singapore (MAS) gives the new entrants.
Facebook's plans to launch its cryptocurrency Libra in the first half of 2020 have prompted a new round of discussions in China about the merits of virtual currency. If Libra, which is aimed at the enormous global market of 2.38 billion Facebook users (not including China, where Facebook is blocked), were to succeed and China had nothing comparable, it could be left behind in the next wave of digital financial innovation.At the same time, Beijing worries that Libra will further entrench the hegemony of the U.S. dollar. “If the digital currency is closely associated with the U.S. dollar, it could create a scenario under which sovereign currencies would coexist with US dollar-centric digital currencies,” Wang Hexin, research chief of the People's Bank of China, was quoted as saying by The South China Morning Post in a July report.
At a time where China’s financial institutions face increased competition from rising fintech companies, banks in China have been battling with fintechs for market share. The surge of fintech companies have facilitated the process of acquiring loans by providing consumers with an alternative to credit cards. They also do not exclude the unbanked population of the country which is a further competitive advantage for fintech companies. Therefore, banking segments efforts to outdo fintech has forced them to take riskier measures by expanding their lending platform to unsecured loans. Creating incentives for increased consumption has consequently resulted in a higher issuance of credit cards.
Taiwan has a fairly well developed financial industry. This small island has a population of only 24 million in total, but has access to more than 5,000 physical financial institutions. Customers, therefore, are able to enjoy all the banking services provided with ease. Plus, the interest rates on loans in Taiwan are extremely low with only 2.63% APR. The application for a fiduciary loan becomes relatively easy for office workers. Thus, FinTech derivatives such as P2P lending are not previously widely considered.
Imagine you are sick at midnight. You lay in the bed comfortably and consult your private doctor through your smart phone at home. They know your medical history perfectly and give you a personalized prescription online. You don’t need to go to the pharmacy. With a few clicks on an app you purchase drugs and they arrive at your doorstep within an hour and everything is seamless. This is not necessarily a futuristic movie, but rather - reality made possible by PingAn Good Doctor - the largest and artificial intelligence powered mobile medical platform in China.
With the launch of its cryptocurrency Libra, Facebook is diving headfirst into digital banking. The U.S. social-media giant can draw on its massive global network of 2.3 billion users as it forays into finance. Yet Facebook will not be introducing Libra to China, which has the world's largest number of internet users. China blocked Facebook a decade ago and has moved to cripple crypto to control systemic financial risk and discourage capital flight. If Libra is a success, being excluded from it could have major ramifications for China's fintech development. At the very least, Beijing's own fintech system would be further isolated from the rest of the world.
In April, the Hong Kong-based fintech startup WeLab quietly won the former British colony's fourth virtual-banking license. Founded in 2013 by ex-Citibank executive Simon Loong and two other partners, the company has steadily grown over the last six years. It now has 30 million customers in Hong Kong and mainland China as well as a staff 600 strong. The company expects to launch its virtual bank - named WeLab Digital - between October and January.