UK-based fintech Revolut has done well in Europe, where it is among the region's most prominent challenger banks. Before it acquired a banking license, Revolut built up a large customer base by offering a Visa or Mastercard-branded card tied in with a multi-currency account that allows users to transact in foreign currency on their smartphones at the interbank rate. Revolut has gradually added more services for users, such as no-fee ATM withdrawals overseas, pay-per-day insurance and the option to purchase cryptocurrency.
In Taiwan, Japanese messaging app Line has led the ascendant mobile payments market on the back of its strong brand cachet. Among Taiwan's population of 23 million, there are 20 million Line users. More than 6 million Taiwanese have its payment app Line Pay on their handsets. Line is probably the only app with a shot at becoming the WeChat of Taiwan.
South Korean regulators have dealt a blow to the ambitions of Kiwoom Securities and Viva Republica by rejecting their respective applications for a banking license. Both of those firms had sought to launch a challenger bank that would have competed with K bank and Kakao bank, who have operating for several years in Korea.
South Korea's Financial Supervisory Commission (FSC) said that it rejected Kiwoom Bank because it was not sufficiently innovative, while the regulator saw governance and financing problems in Viva's Toss Bank.
Alipay and WeChat Pay have been on a torrid expansion streak, setting up shop everywhere from Southeast Asia to Middle America. The digital wallets of Alibaba and Tencent seem intent on taking their battle for the wallet share of Chinese consumers global.
In Nepal, which is popular with Chinese visitors, the fintech giants got a little ahead of themselves. By facilitating payments by Chinese tourists in renminbi at Alipay and WeChat points of sale, the companies allowed the transactions to bypass the Nepalese banking system in violation of local law and prompted a stern rebuke from Nepalese regulators.
China has a complicated relationship with blockchain technology. Until the fall of 2017, China was the largest market for Bitcoin. But Beijing ultimately couldn't tolerate the decentralized nature of virtual currency and its utility in allowing Chinese citizens to evade capital controls, or in some cases, launder money. The ensuing crypto crackdown may turn out to be much like President Xi Jinping's anti-corruption campaign: never-ending.It's now clear that China will not allow decentralized digital currency in its financial system.
Taiwan may be the only market in Asia that can be called overbanked, making it a true regional outlier. In these commentaries, we usually discuss Asia's unbanked or underbanked populations. In Pakistan, for instance, 100 million people - almost half of the population - do not have a bank account. They are unbanked. The country as a whole is underbanked. In Taiwan, however, nearly every adult has several bank accounts. Taiwanese firms often ask workers to open a bank account at the company's preferred bank. Many people open new accounts each time they change jobs.
Ping An is a Chinese holding conglomerate with one of the largest market values in the country. Founded in 1988, it is valued at over $125 billion and is the largest insurer in the world to this date. Ping An is known for its fintech subsidiary, OneConnect which is a cloud-based technology service designed for small to medium-sized financial companies. OneConnect is the largest financial cloud platform across all of China and stretches all the way to Singapore.
Chinese internet giant Alibaba has been trying to go global for years. Yet its core e-commerce business - made in and for China - remains dependent on its home market. The key revenue generators, the online shopping platforms Taobao and Tmall, barely have a footprint outside of Greater China.
Rather than take those platforms overseas, Alibaba hopes to become dominant in China's near abroad by acquiring stakes in local e-commerce champions, like Singapore's Lazada and Indonesia's Tokopedia. Alibaba wants to replicate the ecosystem that has worked so well in its home market of an e-commerce platform, logistics and of course, digital banking.
Singapore's race with Hong Kong to become Asia's fintech hub is heating up as the city-state mulls issuing licenses for virtual banks. Both cities have long been major regional banking centers. With Hong Kong increasingly reliant on business from mainland China, Singapore has a chance to capture more regional business, especially from Asean.
Less than two years ago, China was the world's virtual-currency capital by trading volume. On the eve of the great crypto crackdown in September 2017, China accounted for 90% of the world's Bitcoin trading. Miners capitalized on cheap electricity rates in far-flung provinces to churn out as many digital coins as their power supplies permitted. Crypto bulls lauded Beijing's apparent embrace of distributed ledger technology and decentralization.
As it turns out, the celebration was premature. In a move to control what it perceives as systemic financial risk, Beijing has been gradually squeezing the life out of the China crypto market. The Chinese government has banned ICOs and the use of fiat currency in virtual-currency purchases as well as blocked related websites. Recently, it began working to eliminate crypto mining. At the same time, the WeChat super app banned crypto trading effective May 31.
The Philippines is preparing to implement new legislation for mobile payments as it steps up efforts to digitalize its financial system. In a statement, the Philippines' central bank said that the National Payment Systems Act (NPSA) would support the development of a mobile payment system that can serve as the "third pillar of central banking." The Bangko Sentral ng Pilipinas (BSP) sees such as a system as crucial for controlling systemic risk and driving sustainable economic growth.
Manila aims to create a level playing field for incumbents and fintechs under one overarching set of payments regulations, officials say. The Duterte administration believes the NPSA will create the right conditions for healthy competition in the finance sector, they say.
As a near developed country with high financial inclusion, Malaysia is an outlier in Southeast Asia. Like its rich neighbor Singapore, Malaysia's need for fintech is less pressing than poorer underbanked countries like Indonesia, the Philippines, Cambodia or Myanmar. Fintech platforms can facilitate smoother banking for Malaysians, but aren't viewed as a necessity in the country yet. After all, 92% of the population has a bank account and credit cards have a strong foothold.
Axiata Group's Boost digital wallet, established in early 2018, is one of the first Malaysian fintechs to have a demonstrable impact on the country's financial system. Boost's executives say that it is Malaysia's premier digital wallet, with 4 million registered users and 80,000 merchant touchpoints. From January-December 2018, Boost users' average monthly transactions grew fourteenfold, the company says.
The WeChat super app is perhaps the best example of a made-for-China digital ecosystem that struggles beyond the Great Firewall. It's essential in China for communication with colleagues and friends, ride hailing, day-to-day purchases and online banking. WeChat puts all that and more at your fingertips - and it's not like you have a choice anyway. The competition is blocked. But outside the Chinese mainland - where there are lots of other messaging apps - WeChat's only good for one thing: keeping in touch with people back there.
An increasing number of fintechs are entering the Australian market, posing a growing challenge to the country's banking incumbents. In April, Judo became the second Australian challenger bank to receive a license this year after Volt Bank in January. Two additional neo-banks, Xinja and 86 400, have applied for their banking licenses and are awaiting the regulator's decision.
With a banking license, Judo can operate without restrictions and is well poised to compete against incumbents. The four heavyweights that dominate the Australian banking market, Commonwealth Bank of Australia, Westpac Banking Corp, Australia and New Zealand Banking Group and National Australia Bank, have come under increasing criticism following a misconduct probe into the nation's finance industry that revealed occurrences of bribery to win mortgage business and fees charged to deceased account holders, among other malfeasance.
Formerly one of Asia's poorest countries, Bangladesh has made remarkable economic progress in recent years. Today, it has a higher GDP per capita than its neighbor Pakistan as well as Cambodia and Myanmar. This year, it is likely to be Asia's fastest growing economy: The Asian Development Bank forecasts annual GDP growth to reach 8%, while the World Bank expects growth of 7.3%.
Yet the development of Bangladesh's financial sector has not kept pace with that of the overall economy. Among the country's 163 million people, 75% (122 million) are unbanked. Smartphone penetration, meanwhile, is forecast to reach 75% by 2021, while the population is young and open to mobile banking. Cash still accounts for 94% of transactions, according to the United Nations, while no credit or debit card companies have established a significant presence. Therein lies a strong opportunity for fintechs.