South Korea is going cashless. Again. This time it's e-wallets and digital banks driving the trend, not credit cards. South Korea is already one of the world's most credit-card friendly countries. By some estimates, it has the world's highest credit card penetration rate. South Korea also has the world's highest internet connection speeds. These factors are much more integral to South Korea's Cashless 2.0 movement than covid-19, even if the pandemic is pushing more of the economy online.

China's peer-to-peer lending crackdown has been a lesson in risk management with Chinese characteristics. While SOE juggernauts in China may be too big to fail, the P2P lending sector was too big to prevail. Massive scams on the largely unregulated platforms defrauded retail investors of their life savings, threatening social stability. The China Banking and Insurance Regulatory Commission reckons that P2P lenders still owe depositors about RMB 800 billion (US$115 billion). There are just 29 P2P lenders left in China today, compared to 6,000 when the crackdown began in 2015.

Indonesia's e-commerce market is surging amid the pandemic, giving a big boost to digital wallets. Transactions at the four largest e-commerce sites in the country will double to US$29 billion from US$14 billion in 2019, according to a study by the Bank of Indonesia published in July. Digital wallets accounted for 90% of cashless payments in the first five months of the year, while bank cards handled the rest.

Ride-hailing Grab is pushing deeper into digital banking, launching an auto investment service similar to Ant Group's Yu'e Bao. In Grab's case, the AutoInvest service allows users to invest - the minimum is set at just S$1 - while using the company's ecosystem. Fullerton Fund Management and UOB's fixed income funds are responsible for the investments. They expect annual returns of 1.8%, similar to what banks in Singapore offer. At the same time, Grab plans to offer third-party consumer loans from licensed bank partners, with which the ride-hailing giant will integrate APIs.

Amid clouds of a U.S.-China financial war, Hong Kong is fast becoming the default for Chinese fintech IPOs. The former British colony offers liquid capital markets both close to both home and global investors. But there are exceptions. Lufax, one of China's largest online wealth management platforms, is reportedly instead eyeing a New York IPO that could raise up to US$3 billion. If Lufax moves fast, it can list in the U.S. before new rules go into effect that may prevent Chinese firms non-compliant with American accounting standards from listing on U.S. exchanges.

It is not often that a company can shrug at its losses growing 300%. But in the world of fintech unicorns, where we don't always know what is real and what is make believe, going deep into the red is par for the course. Just ask Revolut: The UK's most valuable fintech startup lost £107 million in 2019, more than triple the £33 million loss a year earlier. A hiring spree was largely responsible for that, the company says, noting that it its headcount rose to 2261 from 633. Otherwise, Revolut says that it is in shipshape and expects to be profitable by year-end, pandemic or not.

While Alipay and WeChat Pay maintain a duopoly over China's mobile payments market, that duopoly does not warrant the antitrust investigation reportedly in the works. To be sure, no competitor has emerged able to pose a credible challenge to the duopoly, but primarily for reasons out of the companies' control. Beijing's market barriers have been key enablers of Alipay and WeChat Pay's ability to dominate mobile payments.  Together they control 94% of China's mobile payments market, Alipay 55% and WeChat Pay 39%, according to research firm Analysys. 

Hong Kong's eight virtual banks largely represent vested banking and tech interests in the city. Most of the newcomers are actually oldcomers if you stop to think about how well established they are outside of Hong Kong's nascent digital banking segment. WeLab, a Hong Kong-based fintech startup, is the exception. Founded in 2013 by ex-Citibank executive Simon Loong and two other partners, the company has steadily grown over the past seven years, and says it now has 40 million customers and disbursed more than HK$50 billion in loans in Hong Kong, mainland China and Indonesia. WeLab's Hong Kong virtual bank went live in July.

It's good to be Kakao Bank. Kakao was already South Korea's most successful neobank story before it reported record earnings in the second quarter of 26.8 billion won ($22.6 million), a nearly 900% year-on-year increase from 3.0 billion won a year earlier. Kakao's net profit for the first half of the year reached 45.3 billion won, a more than fourfold increase from 9.6 billion in the first half of 2019. That Kakao achieved this exponential growth amid the pandemic and a weak overall South Korean economy is particularly impressive.

According to Kakao, its profits surged on the back of rising net interest income and commissions from the sale of financial products. "We were able to make more profit from increased revenues from lending and fees from partnering with credit card companies and brokerages," the company said in a statement published by South Korean media.

The picture for Kakao Bank's lending business is fairly rosy. Its outstanding loan balance grew to 17.68 trillion won in the second quarter, up from 14.88 trillion won a year earlier. Financial inclusion is one name of the game as well: Kakao said it provided 660 billion won in mid-rate loans to consumers with mid- to low-level credit scores from January to June and plans to disburse a total of 1 trillion won of such loans in 2020.

Like many successful fintechs, Kakao Bank is steadily developing partnerships with key incumbents. It has four local credit card partners in South Korea, including Shinhan Card and Samsung Card. From April to July, Kakao issued 260,000 credit cards, according to The Korea Herald.

Kakao Bank also has a burgeoning equities trading business. As of late June, it had more than 2.18 million such accounts, up from 1.14 million in December 2019. Its partners among incumbents include Korea Investment & Securities, NH Investment Securities and KB Securities.

At the same time, Kakao Bank benefits from the stickiness of the Kakao ecosystem, which is a super app in all but name. Kakao Bank already has 11 million monthly active users, more than half who are under age 50. And there are many more potential customers where those came from: The dominant KakaoTalk messaging app has almost 45 million monthly users, about 87% of South Korea's population.

Thanks to its strong brand name and ecosystem, Kakao Bank managed to reach profitability in just two years from its establishment in 2017. Further buoying its growth was when its parent company Kakao Corp became the virtual bank's majority shareholder, the first instance in Korea of a non-financial firm holding a majority stake in a bank. That change allowed Kakao Bank to issue new shares worth 500 billion won and increase its paid-in capital to 1.8 trillion won.

When it comes to Asian financial centers, Hong Kong and Singapore are no longer the only games in town. Tokyo, Seoul and Sydney have recently signaled intent to bolster their financial sectors and take on a larger regional role. Yet right on Hong Kong's doorstep there is another potential contender: Taiwan. In recent weeks, Taiwan's government has highlighted its plan to develop a more globally oriented financial sector. That will be easier said than done. Taiwan takes a fundamentally conservative approach to finance that will not be easily changed.