Australia’s casino gaming sector has long had lax money laundering controls. However, historically, Australian banks have borne the brunt of regulatory ire for money laundering breaches. Both Commonwealth Bank of Australia and Westpac have paid massive fines for such violations in recent years. However, with AUSTRAC launching a probe into Crown Melbourne and Crown Perth on March 1 and allegations emerging later in the month that the Star Entertainment Group laundered money in Macau, the casino gaming sector is likely to come under much greater scrutiny.
There is a growing list of Chinese companies that could be forced to exit U.S. stock exchanges under legislation passed in 2020. The legislation requires all public companies in the U.S. to comply with auditing requirements that Chinese companies have resisted due to Beijing’s own state secrecy laws. On March 30, the Securities and Exchange Commission (SEC) added Baidu to the list. A total of 11 Chinese companies facing delisting have been named so far.
Southeast Asia is the most dynamic market for the digital economy in the world, especially e-commerce and fintech. It has a population of 655.3 million, which ought to be big enough for most young tech companies. Not Sea Group though. Sea has done well in the region, but like many platform companies, it is getting overly ambitious, overextending itself, and making costly mistakes.
We had thought Bank Negara Malaysia (BNM) would have announced the winners of Malaysia’s five digital banking licenses by now, as the deadline was originally set for the end of March. The BNM has been mum about any reasons for a delay, though the longer deadline could give Capital A (the erstwhile AirAsia), one of the more enthusiastic applicants for a digital banking license, more time to improve its financial condition. With 29 applicants, there will be many more losers than winners in this race.
Home to about 70 fintech startups, Nepal is a nascent market for digital finance. That said, the pace of adoption in the Himalayan nation of 30 million is picking up amid the Covid-19 pandemic and with about 55% of the population unbanked, there is a need for fintech solutions that can boost financial inclusion. In the past few months, there have been several key developments that could speed up the digitization of Nepal’s financial sector.
The performance of Australian neobanks so far has been a bit underwhelming. Of the best known four (not to be confused with the big four), only Judo Bank has been an unequivocal success. Xinja collapsed about a year after receiving its banking license; 86 400 threw in the towel when it received an offer from National Australia Bank (NAB) it could not refuse, and Volt is pivoting to banking as a service. Given that it is targeting a similar SME customer demographic to Judo, the ascendant Aussie fintech Zeller could be more successful than the digital lenders focusing on the retail market.
While Kakao’s fundamentals remain strong, the Korean super app has been struggling of late amid a perfect storm of regulatory travails, investor disappointment and awkward leadership changes. In the past six months, Kakao Bank and Kakao Pay’s shares have both fallen about 29%.
What goes up must come down, right? Usually, yes, but with fintech startups the "up" can sometimes go on for so long that one wonders if the "down" is inevitable. This holds especially true for the buy now, pay later (BNPL) segment, which is now ascendant in India. The scale of BNPL’s growth in the subcontinent is something to behold. Indian research firm Redseer predicts that the market will reach US$45 billion to US$50 billion by 2026, an exponential increase from US$3 billion to US$3.5 billion now.
In mid-2021, Revolut became the UK’s most valuable fintech with a valuation of US$33 billion. Though the company lost US$280 million in the 2020 fiscal year, it has continued to spend heavily on expansion efforts in a bid to build a “global financial super app.” Revolut has long had its eye on the Asia-Pacific region and recently moved to strengthen its position in both the India and Australia markets.
Banking has been critical to Revolut’s ascendancy in Europe. However, the company’s origins do not lie in deposit taking and lending. Indeed, Revolut began as a multi-currency travel card offering favorable exchange rates. In India, Revolut is returning to its roots with a focus on cross-border payments, as seen in the company’s recent strategic acquisition of Indian international money transfer firm Arvog Forex for an undisclosed sum. This deal – which follows Revolut’s Indian arm raising US$45.5 million from its UK parent – will allow Revolut to launch a cross-border remittances service for Indian customers in the second half of the year.
The Philippine central bank BSP decided in October 2021 to cap the number of digital bank licenses at six for the next three years. It awarded licenses to Overseas Filipino Bank, Tonik Digital Bank, UNObank, Union Digital Bank, GOtyme and Maya Bank. The BSP wants to see how the arrival of digibanks affects the country’s financial industry before it issues any new licenses. Thus far, the digital lenders appear to be stimulating a huge amount of market activity.
Lax anti-money laundering (AML) controls resulted in Cambodia being placed on FATF’s grey list once again in February 2019. Since then, Cambodia has been trying to improve its AML capabilities but running into one obstacle after another. In Nov. 2021, the United States Department of State cautioned businesses about the risks of doing business in the kingdom in a new report, citing risks for the financial, real estate, casino, and infrastructure sectors.
Indonesia will probably be the first country in Southeast Asia where the reality of digital banking lives up to the hype. The vast archipelago nation has everything online banks need to thrive: a huge market, amenable regulators, sufficient connectivity and eager deep-pocketed investors. Even the complex geography of the country, which is made up of 17,508 islands (6000 of which are inhabited), favors branchless banking.
For an aspiring super app, PayPal’s performance over the past six months has been underwhelming. There is nothing “super” about its 59% decline in its share price to about US$110.50 during that period, nor the revelation that it had removed 4.5 million fraudulent user accounts. Though they were just a fraction of the company’s 425 million overall accounts, they represented a significant potential fraud risk.
Thailand is late to Asia’s digital banking party, which formally began back in 2019 when Hong Kong and Singapore approved them – though South Korea had digital banks as early as 2017. Since Asia’s two main financial centers embraced digital banks, Taiwan, the Philippines, Indonesia and Malaysia have followed suit. Until now, middle-income and well-banked (85% of the population has a bank account) Thailand has been a hold-out. A recent announcement by the kingdom’s central bank suggests a change of direction.
Next to Indonesia, the Philippines is perhaps the most exciting emerging market for fintech investment in Southeast Asia right now. Like Indonesia, the Philippines is an island archipelago nation with a large unbanked population – 47% of the adult population – and geography that makes physical bank branches impractical in many cases. The Covid-19 pandemic has meanwhile accelerated digitization of financial services in the Philippines, a trend that looks to be irreversible. All these factors have converged to facilitate rising investment in the country’s fintech sector, with several key big-ticket deals already closed just a month into 2022.