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.
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.
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.
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.
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 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.
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.
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.
With its underdeveloped banking sector, Vietnam is a prime market for digital financial services. Thus far the pace of development has been modest, but analysts expect it will speed up considerably in the next few years. In a November report, ratings agency Moody's said that startups focused on payments were the most prevalent in the nascent Vietnam fintech segment. By some estimates, payments startups account for almost 50% of Vietnam's fintech firms. Vietnam also has about 25 fintech incubators, accelerators and innovation labs.
All things considered, the U.S. and China had amicable trade discussions this week. With the clock ticking on the 90-day trade-war ceasefire, both sides have impetus to resolve the trade tiff. The Chinese economy likely grew at its slowest pace in 30 years - 6.5% - in 2018 as U.S. tariffs battered exports. The U.S. economy remains resilient for now, but U.S. President Donald Trump is watching the mercurial stock market nervously. People close to the administration say that he hopes to reach a trade deal with China to rally investors.
China's major banks are moving to open wealth-management units following a regulatory overhaul designed to strengthen risk management and oversight of fund flows in the Chinese financial system. The new rules allow bank subsidiaries to invest up to 35% of a product's net assets in "non-standard credit assets," i.e.: "off-balance-sheet loans.
At first blush, Didi Chuxing doesn't seem in dire need of a new business model. As China's top ride-hailing app, the Beijing-based firm boasts more than half a billion users and millions of drivers. Granted, it has been burning money for years, but that's par for the course among unicorns - tech startups valued at US$1 billion or more - and some analysts believe Didi could raise up to US$80 billion in an expected 2019 IPO.
At the end of 2017, regulations tightened around the cash loan industry in China and locked 36% as the highest APR lenders can collect on any loans. One year later, although many platforms have disappeared, others have transformed and are back at the forefront of lending in China.
In an interim report released last month Australia's Banking Royal Commission has highlighted the misconduct, greed, and even criminality involved in the Australian financial services industry. Set up in December 2017, the commission has worked through over 700,000 documents to investigate the dealings of some of Australia’s largest financial companies. The commission has heard from victims and cross-examined some of the key figures in the industry. The results are damning and are likely to spark much greater support for tougher regulation on the banks in the future. However, a battered, bruised, and riskless financial system is no good to anyone and may end up causing further disruption to the economy. It’s important that the government finds the right balance.
In China, financial cloud has become a key goal for financial institutions in 2016. According to ‘the 13th Five-year Plan’, by the end of 2020, banks’ online business system should all be transferred to cloud and more than 60% of their other business systems should be moved online. With this clear direction, banks are taking actions. The China Academy of Information and Communications Technology (CAICT) found that in 2017, 42% of financial institutions are applying to use cloud, whilst 47% are in the process of planning the transition to cloud as companies seek to establish agile banking infrastructure.
At the end of last month, another Chinese fintech company Samoyed Holding filed for $80 million IPO on the New York Stock Exchange. The company provides consumer finance services for the Chinese millennials. Its main business is the credit card balance transfer business, counting for 74.7% of its 2017 turnover.
Financial results from China's banks are improving recently as tight regulation is limiting the expansion of 3rd party competition, while overall bank profitability is increasing.
Fortune released the latest Global Top 500 list recently. 120 Chinese companies made the list, while US took the lead with 126 companies. Banking was the leading industry in China as China's banks come to the forefront again.
The 20th China-EU high summit was held in Beijing this past week and attracted a lot of attention due to the current global trade tensions. As the speculation on trade war continues, the EU and China decided to stand together against Trump’s attack on the global trade system.
We have talked about the trend before, but starting to see more and more cooperation between fintech companies and banks. China Construction Bank Wenzhou Branch is now in cooperation with Alipay for a hospital payment service channel, ICBC is supporting WeChat’s QR code payment and JD finance and Citic Bank have issued over 2 million co-branded credit cards called the ‘White Card’. We're also starting to better understand the potential business models for both sides.