Many Asian countries struggle to contain money laundering, which is usually perpetrated by non-state actors. North Korea is different. The North Korean state itself is deeply involved in money-laundering schemes, often in cahoots with Chinese entities, to help Pyongyang evade economic sanctions, access hard currency and fund North Korea's nuclear program. Confidential bank documents first reviewed by BuzzFeed News and part of the FinCEN files show just how successful North Korea continues to be in laundering large amounts of money through the global financial system.

Neobanks like to talk about disruption, but in Hong Kong, they're actually putting their money where their mouth is. Five of the eight virtual banks approved to operate in the former British colony have gone live: ZA Bank, Airstar, WeLab, Fusion Bank and Livi Bank. While none of them has a game-changing value proposition yet, their low fees, digital agility and high deposit rates (at least during a promotional period) are bound to attract customer interest. Their digital acumen is taking on new importance during the pandemic, which recently flared up in Hong Kong.

China's ByteDance is quietly deepening a push into fintech in Asia as the future of its U.S. operations hangs in the balance. ByteDance's popular short-form mobile video platform TikTok has become a major front in the U.S.-China technology war. Now more than ever, ByteDance needs to monetize its services. Fintech could be a way forward for the company, whose US$100 billion valuation makes it the world's most valuable startup in private markets.

The pandemic didn't stop India's fintech investment from surging year-on-year in the first half of 2020. A new KPMG report shows that Indian fintechs raised US$1.7 billion from January to June, more than double the US$726.6 million during the same period a year ago. There were 70 deals in total.

Gaming firm Razer is about as far from a bank as you can get. While it has a fintech arm, Razer's bread and butter lies in gaming hardware, software and services. Fintech, which refers primarily to payments in Razer's case, is a means for gamers to make in-game purchases. Razer  sees a big opportunity though: Turn its many millennial gamers into banking customers. After all, they're already spending money digitally in the Razer ecosystem. 

In addition to the digital full bank (DFB) license it has applied for in Singapore, Razer is also aiming to develop a larger international digital finance network. A logical first step would be to apply for a digital bank license in neighboring Malaysia, where Razer already has a strong presence. Malaysia is the only market besides Singapore where Razer's e-wallet Razer Pay is in wide use. Malaysia also recently signaled its willingness to apply more non-financial firms to apply for digital bank licenses.

Capital requirements for a Malaysia digital bank license are fairly stringent, with an absolute minimum of RM 100 million (US$23.7 million) necessary during an initial three to five-year period and later RM 300 million. As a listed company, Razer, however, could easily meet them. It has about US$500 million in cash on hand, according to an August statement.

Razer is also reportedly considering expanding its digital finance business to other Southeast Asian markets, India and Latin America. 

Razer would not be the first gaming giant to become a digital banking juggernaut. Tencent has made that transformation, although it wasn't a straight shot from gaming to fintech. The WeChat messaging app played a paramount role.

Tencent-invested Sea is also trying to make the jump from gaming to banking, but unlike Razer, Sea has a large e-commerce business. That makes Sea's bid to support SMEs more convincing than if it were a gaming company alone. Sea already has many small businesses in its ecosystem, while Razer has primarily potential retail banking customers.

Sea and Razer have one thing in common though: Both are ascendant but still loss-making. Hong Kong-listed Razer posted a net loss of US$17.7 million ($24.2 million) from January to June, a 64% improvement over the US$47.7 million it lost a year earlier. Revenue rose 25% annually to US$447.5 million on the back of strong demand for its gaming products.

Razer's fintech business recorded US$1.8 billion in total payment volume in the first half of the year, up 114.3% year-on-year. The business grew briskly thanks to rapid customer acquisition, both on the merchant and consumer sides - rising digital entertainment consumption amid the pandemic helped drive growth in the latter market segment.

"The fundamentals of our business remain as solid as ever," Min-Liang Tan, co-founder and CEO of Razer, said in a statement. That, "coupled with our strong operating cost discipline and our strong cash position of over US$500 million, put us in good stead, even during times of challenging global economic conditions."

The Covid-19 pandemic has created a new normal that is affecting the livelihoods of billions of consumers and businesses globally. Singapore is no exception as the fintech industry faces unprecedented challenges. However, the Singapore government has been very supportive of the industry and there are a number of public and private initiatives that have been launched to help the industry along. As part of Kapronasia's work to help companies through this time, please do not hesitate to reach out for a conversation of how we might be able to help your business weather this time. As a Singapore-based firm, we are able to work through many of the programs that are listed below which provides clients with the same Kapronasia quality at often a much lower cost through grants and incentives.

Summary of Programs

The Monetary Authority of Singapore (MAS) threw FinTechs a lifeline in April following a survey of Singapore FinTech Association (SFA) members which found that 47.8% of respondents felt that Covid-19 has had a significant impact on their business.

As part of the S$125 million “Covid-19 FinTech Care Package,” funded by the Financial Sector Development Fund, the MAS announced a new Digital Acceleration Grant (DAG) under the Financial Sector Technology and Innovation (FSTI) scheme. The DAG seeks to help smaller financial institutions (FIs) and FinTech firms in adopting, customizing, or collaborating on digitalization projects to streamline processes and deepen capabilities.

The DAG scheme consists of two tracks: The Institution Project track and the Industry Pilot track.

The Institution Project track supports the adoption of digital solutions to improve operational resilience, enhance productivity, manage risks more effectively and/or serve customers better. Eligible FIs and FinTechs are entitled to 80% of qualifying expenses up to a cap of S$120,000 per entity over the duration of the scheme.

The Industry Pilot track supports collaborations among at least three smaller Singapore-based FIs to customize digital solutions for implementation within their institutions, by co-funding 80% of qualifying expenses, capped at S$100,000 per participating FI per project.

The MAS’ Covid-19 FinTech Care Package consists of three main components. The DAG scheme falls under “strengthening digitalization and operational resilience.” The other two main components of the MAS support package are:

Supporting workforce training and manpower costs: Under this component of the package, the MAS will launch a new Training Allowance Grant (TAG) to encourage FIs and FinTech firms to train and deepen the capabilities of their employees. Self-sponsored individuals and employees at FIs and FinTechs can apply to receive a training allowance and subsidized course fees, while FIs are also eligible to receive a salary grant under the Finance Associate Management Scheme (FAMS).

Enhancing FinTech firms’ access to digital platforms and tools: Under this component of the package, the MAS will provide all Singapore-based FinTech firms six months’ free access to the API Exchange (APIX), an online global marketplace and sandbox for collaboration and sales. The MAS will also work with the SFA to set up a new digital self-assessment framework for MAS’ Outsourcing and Technology Risk Management (TRM) Guidelines hosted on APIX. Completing the self-assessment will help FinTech firms provide a first-level assurance to FIs about the quality of their solutions.

MAS-SFA-AMTD FinTech Solidarity Grant

In a separate initiative introduced in May, The MAS, SFA, and AMTD established a S$6 million MAS-SFA-AMTD FinTech Solidarity Grant to support Singapore-based FinTech companies amid the Covid-19 pandemic. The grant will help FinTechs manage their cashflow better, support them in generating new businesses, and provide greater support for FinTechs to pursue growth strategies.

The grant is made up for two parts:

The Business Sustenance Grant seeks to tide over Singapore-based FinTechs during this Covid-19 period and save jobs. It offers both wage and rental support.

The Business Growth Grant aims to foster the continued growth of Singapore-based FinTech companies and help these companies offset their POC costs. The grant offers 70% of qualifying costs related to the POC on APIX, as well as 100% internship funding for interns involved in the development and implementation of the POCs.

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.

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.

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.

The pandemic has disrupted Malaysia's digital banking plans, but the ensuing delay may be a boon for interested firms that now have more time to select partners. The original contenders for up to five digital bank licenses include ride-hailing giant Grab, telecoms juggernaut Axiata Group Bhd (owner of e-wallet Boost) and the banks CIMB, Affin Hong Leong, AMMB Holdings and Standard Chartered Bank. Those banks are now reportedly less interested in obtaining a license, while several non-financial firms may throw their hat into the ring: gaming giant Razer, conglomerate Sunway Group, telecoms company Green Packet. Hong Kong investment bank AMTD may also bid for a license.