As Southeast Asia’s largest economy, Indonesia is among the most important market in the region for the financial services sector. With that in mind, Indonesia’s steady adoption of digital banking represents a huge market opportunity for both fintechs and incumbent banks engaged in digital transformation.

What is the largest potential fintech market in Asia and perhaps the world that flies under the radar? Many observers would be surprised to learn that the answer is Pakistan. With a population of 221 million, Pakistan is the fifth most populous country in the world. The majority of the population – 70% – is unbanked, including 100 million adults.

Australia's long buy now, pay later (BNPL) honeymoon is winding down at last. One of the reasons BNPL has been so lucrative in Australia is that the platforms have not yet been constrained in the way credit cards are. However, for consumers and the overall financial services market, Australia’s imminent BNPL regulation is for the best. Far from innovation killing, regulation should compel BNPL platforms to address problem areas in their business model and ultimately make it more sustainable.

Australia may be reaching its crypto inflection point. Canberra has never repudiated crypto but nor has it embraced decentralized virtual currencies. However, as other countries in the Asia-Pacific region like Singapore and Japan step up their efforts to become crypto hubs, Australia is realizing that decentralized digital currencies offer it an opportunity as well. A report published by Australia’s Senate in late October recommends that the country alter its laws to make them more amicable to crypto.

U.S. credit card firms have waited many years to be granted substantive access to the China market. In the meantime, China’s state-owned payments giant UnionPay has built a card empire in the country, while Alibaba and Tencent have come to dominate digital payments. Among U.S. card companies, American Express is the only one currently permitted to process renminbi transactions, having gained regulatory approval in June 2020.

In early October, Toss Bank finally went live in South Korea. The process took several years and hit a few bumps in the road. The country’s third digital lender had to reapply for a digital bank license after its initial application was rejected in May 2019. Regulators gave Toss preliminary approval in December 2019, but nearly two more years were required before it could launch. As it turns out, Toss is entering the market amid the first real fintech crackdown in South Korea, which has important implications for its growth trajectory.

Hong Kong’s IPO market had a banner year through September, posting its best performance since 1980 on the back of a flurry of listings by Chinese firms. Up to 71 companies raised nearly US$36 billion on the Hong Kong Stock Exchange (HKEX) from initial stock sales and secondary listings. Seven of the 10 biggest listings were Chinese tech firms. However, most of the funds were raised in the first half of the year. In recent months, the market has slowed sharply amid a highly uncertain and restrictive regulatory environment.

2021 has been a banner year for Indonesia’s tech industry, from the strong performance of key industry players to fundraising in private markets to IPOs. Data compiled by Bloomberg show that companies in Southeast Asia raised a record US$4.9 billion from January to June. 23 companies listed shares on the Indonesia Stock Exchange (IDX) during that period, leading the region. The deal pipeline has remained active in the second half of the year as well. 

The buy now, pay later (BNPL) craze is sweeping Asia Pacific, growing briskly in markets from Australia to Indonesia. Like many other segments of fintech, BNPL is present in Taiwan, but the situation is a bit different from elsewhere. Major online retailers in Taiwan have offered interest-free installment payments for years, but typically in cooperation with major banks, which are authorized lenders. Dedicated BNPL platforms are another story.

While a certain amount of hype surrounds digital banks, one thing about them is for sure: Their very presence intensifies competition in the market, drawing attention to incumbent complacency. Now that Malaysia’s central bank plans to issue five digital banking licenses in the first quarter of 2022, the country’s traditional banks are moving to head off the challenge – or at least prepare themselves well.