Asia Financial Industry Blog

Singapore is an ascendant digital finance hub, in 2018 attracting $365 million in fintech investment. That investment was double the amount raised a year earlier. Despite its small size, the city-state is still the No. 5 fintech market in APAC by funds raised.

Vietnam plans to roll out a pilot peer-to-peer (P2P) lending scheme to boost financial inclusion in one of Southeast Asia's fastest growing economies. The pilot program will permit P2P lending firms to serve as intermediaries between lenders and borrowers, but they will be restricted from fundraising activity.

In Asia, digital wallets are increasingly where the money is for ride-hailing companies. Once they have a critical mass of customers using their app for taxis, the companies launch a suite of financial services people can access from the convenience of their smartphones. Didi Chuxing is going this route in China, while Singapore-based Grab and Indonesia-based Go-Jek are launching digital wallets across Southeast Asia.

Paradoxes abound in the Chinese economy, as the long arm of the state regularly collides with resilient entrepreneurial activity. Nowhere is this more apparent than the fintech segment, where Beijing is repurposing technology designed to facilitate freewheeling financial activity as an instrument of state control. We would like to ask enigmatic Bitcoin founder Satoshi Nakamoto to comment - if only we knew how to get a hold of him.

Across Asia, there is a race to go cashless as financial digitalization accelerates. Financial services companies want to capture business from digital payment adoption, while regulators want to reduce costs by printing less paper money and minting fewer coins. Consumers want convenient payment options.

Singapore's Grab is rolling out a suite of digital financial services in a bid to become Southeast Asia's preeminent app. The services including micro-lending, micro-insurance and payments. Like China's ubiquitous messaging app WeChat has done, Grab wants to build an ecosystem where consumers can bank, order food and shop - not just chat and hail rides. Asean's large underbanked population makes it an attractive market for fintechs.

March 20 2019

STOs coming soon to Taiwan

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Virtual currency adoption looks set to accelerate in Taiwan as the island plans to establish a mechanism for security token offerings by mid-year. The move is in line with Taiwan's launch of a fintech regulatory sandbox that allows firms to experiment with novel business models but not fall afoul of existing regulations.

Myanmar is an intriguing market for fintechs. It is one of the fastest growing of all Asian economies. Annual GDP growth has exceeded 6% in recent years. The government has embraced digitalization and to a certain degree, foreign investment, a remarkable turnaround for a country that had been closed to the world for decades.

In hope of a sustained stock market rally, U.S. President Donald Trump has been pushing for a rapid conclusion to the trade war he started with China almost nine months ago. Treasury Secretary Steven Mnuchin and National Economic Council Advisor Larry Kudlow, ever mindful of investors' concerns, reportedly have The Donald's ear. Trump's patience with the hardline approach of U.S. Trade Representative Robert Lighthizer may be wearing thin, people close to the White House say.

South Korea’s Financial Services Commission (FSC) has announced it will set up an open interbank payment network this year in a bid to strengthen the country's nascent fintech industry. The FSC hopes that the move will help facilitate the rise of new digital finance powerhouses such as the payment apps Kakao Pay, Naver Pay and Toss.

Japan is the world's No. 3 economy and known for its tech prowess, yet the Japanese people prefer cash over other forms of payment. Just one in five transactions in Japan are cashless. Some analysts say that Japan can learn from its giant neighbor China when it comes to cashless payments. In less than a decade, China has gone from cash reliant to nearly cash free. In 2017, nearly half of the world's digital payments were made in China.

In the late 20th century, Hong Kong became the undisputed financial center of the Far East. Tokyo might have had a larger stock exchange, but the city never saw itself as a global financial hub. It was Hong Kong that attracted large global banks, PE firms and hedge funds to establish regional headquarters.

2019 could be the year of the securitized token. In February, Thailand became the latest country to amend regulations to pave the way for tokenized stocks, bonds and mutual funds on the blockchain. The tokenized platform is likely to be implemented this year, according to Tipsuda Thavaramara, deputy secretary-general of Thailand's Securities Exchange Commission.

China led global fintech funding in 2018 as its tech giants stepped up their bid for global expansion. Data from a new Accenture report show that China raised $25.5 billion of $55.3 billion in fintech funding last year. $14 billion of that cash came from the mammoth Ant Financial fundraising round that closed in June 2018.

It wasn't so long ago that China's tech firms were panned as second-rate copycats. The best example might be Baidu, the search giant that is often less effective than Google in Chinese-language searches.

Tencent's WeChat messaging app changed the equation, establishing a mobile-internet ecosystem that is the envy of its global competitors. WeChat has over 1 billion monthly users (mostly in mainland China) and is the No. 5 most used app globally. Its payment platform has expanded to 25 countries. Thanks in part to WeChat business Tencent had a strong third quarter in 2018. Revenue reached $11.7 billion, up 24% over a year earlier, while profits rose 20% year-on-year to $3.4 billion.

Hong Kong authorities will reportedly soon issue digital banking licenses to six different companies in a bid to shake up the former British crown colony's financial sector. The lucky six include Chinese internet banking heavyweights Ant Financial and Tenpay, Zhongan Insurance (in a tie-up with Citic), Hong Kong Telecom, smartphone maker Xiaomi, and England's Standard Chartered Bank.

U.S. President Donald Trump is at the core of the Sino-U.S. trade war, just like he was the company boss and host of the reality-TV series The Apprentice. Trump fired many a contestant on the show. His White House staff has seen its fair share of defections too. The trade war with China has the air of reality TV, like much of The Donald's presidency, with even more twists, turns and quips. Trump became famous on The Apprentice for telling contestants, "You're fired!" In the trade war (show), his one-liners are even better: "Trade wars are good and easy to win" and "I am a Tariff Man."

The Philippines is gradually boosting financial inclusion as it digitalizes its banking sector. In early February, Manila-based financial inclusion firm Oradian announced it would partner with Cantilan Bank to provide digital banking services to the nation's most remote corners. In a press release, the companies said that Cantilan Bank is the Philippines' first regulated financial institution to leverage cloud-based technology.

Taiwan's regulatory sandbox has approved its first startup, Hong Kong-based financial settlement network EMQ. In Taiwan, EMQ will focus on remittance services for Indonesian, Vietnamese and Filipino migrant workers - a large and growing market. In 2018, migrant workers in Taiwan sent more than US$3 billion home, according to Taiwan's central bank.

If your competitors are there, do you need to be there? Mastercard thinks so. Along with Visa and American Express (AmEx), it is trying to gain a foothold in China following Beijing's announcement in 2017 that U.S. credit-card companies could apply for licenses. In late 2018, Beijing approved the first such bank card transaction clearing license when it signed off on a joint venture between AmEx and Chinese fintech firm Lianlian.

If at first you don't succeed in buying a money-transfer company, try again. Just make sure you go shopping in a friendly jurisdiction. That strategy paid off for the Alibaba affiliate Ant Financial as it acquired the UK's WorldFirst for $700 million in mid February.

Within Asean, Cambodia is a relative latecomer to fintech.  Its neighbors Vietnam, Thailand and Singapore are all well ahead in terms of digital finance adoption. But with the Cambodian government now supporting fintech through the National Bank of Cambodia, the country could be poised for a transformation.

Despite its embrace of advanced technology, Japan is a country that likes cash, settling 80% of transactions with paper bills and metal coins.  It is not uncommon to find restaurants and bars in the capital city of Tokyo - the world's largest metropolitan area - that do not accept any other form of payment. If the shop is small and family owned, don't expect to pay with a credit card.

February 15 2019

Wither China's P2P Lenders

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Peer-to-peer lending in China is cratering amidst a heavy-handed government crackdown aimed at stamping out fraud in the once-booming online loan sector. Nationwide, authorities are tightening the screws on the $176 billion industry. By some analysts' estimates, the crackdown could wipe out up to 70% of China's P2P firms. Among the most recent major firms to call it quits is Shanghai-based Yidai, who kicked off 2019 by announcing it was exiting P2P lending. Its 32,000 lenders (with a principal balance of RMB 4 billion) would be repaid within five years, the company said.

In 2018, Chinese banks lent a record $2.4 trillion in loans. That the credit spigot opened is no surprise: The banks had the full backing of Beijing, who looked on nervously as the Chinese economy limped - by its standards, anyway - to the finish line with just 6.5% annual growth, its worst performance since 1990. It wasn't so long ago that China could expect 9% annual growth.

Mobile payment adoption is accelerating in Thailand as the finance sector moves to digitize. Like its Asean peers, Thailand is keen to use digital finance to boost an underdeveloped banking sector. Without the entrenched incumbents of developed economies, Asean countries tend to view digital finance as a greater opportunity than threat. Even highly advanced Singapore has embraced fintech, with an eye towards becoming Southeast Asia's fintech hub.

Germany is pressing China to follow through on nearly two-decade-old promises to open its financial sector to foreign competition. In a January 18 dialogue in Beijing, the two countries vowed to open their respective markets wider to each other's banks and insurers. Reportedly, Beijing and Berlin signed three agreements: one between the two central banks, one regarding cooperation in securities and futures trading, and one to examine banking regulations together.

The cryptocurrency winter is getting frostier, but a blockchain spring may be around the corner in South Korea. Seoul's prudent approach to distributed ledger technology - less draconian than Beijing's but stricter than Tokyo's - just may represent the happy middle ground. A year ago, Seoul moved to ban anonymous virtual currency trading in a bid to quash crypto related crime, but stopped short of shutting down exchanges as China has done. Meanwhile, although Japan has also banned anonymous trading, it allows crypto to self-regulate, for better or worse.

The United States is not the only major economic power turning cold on Chinese investment. Now the European Union, China's largest trading partner, is having second thoughts of its own about allowing China to buy up its prime manufacturing and high-tech assets. Concern amongst the EU's heavyweights, including Germany, France and the United Kingdom, is significant, analysts say. While weaker states in the EU, notably Greece, continue to welcome Chinese investment, they are increasingly in the minority.

The crypto community is aghast at Beijing's move to regulate blockchain, which will be effective February 15. "Blockchain under threat in China," proclaimed Coingape in January 14. report. The Invest in Blockchain site said that "the Chinese blockchain industry is about to come under heavy scrutiny" in a Jan. 13 article.

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