While SME lending in APAC continues to gain pace, we are also witnessing key players making adjustments to their strategic focus and which markets they want to be in. Singapore-based B2B fintech, Aspire, is reportedly sizing down its Indonesia operations as it plans for global expansion, potentially in the US. Aspire’s services are available in 18 markets across Asia Pacific and East Asia, and it offers USD accounts to businesses incorporated in 11 of those markets. It seems many of the businesses using Aspire engage with US-based suppliers or customers, so launching in the US would be the logical next step. Aspire has been bolstering its capabilities in recent years, including a partnership with Singaporean insurtech Singlife and the launch of “Aspire AI”, a suite of AI-powered features that provide real-time analytics and automated financial processes for businesses.
When BNPL (Buy Now, Pay Later) first appeared on the scene, it was viewed as a consumer-friendly alternative to traditional credit, especially in emerging markets where significant portions of the population are unable to access traditional financial services. While the idea of installment payments is not new, the BNPL model promised to benefit consumers by helping them avoid additional interest charges and providing readily available access to a line of credit. Merchants would also stand to gain as BNPL generally encouraged higher value purchases and larger basket sizes. However, after several years of unchecked BNPL expansion, regulators are noticing that the similarities between BNPL and traditional credit are greater than they had seemed at first glance. Consequently, regulators across Asia are stepping in to address issues with consumer protection such as the risk of overspending and getting stuck in debt traps.
Coinbase, the US-based cryptocurrency exchange, recently announced that it has registered with India’s Financial Intelligence Unit (FIU) to launch its crypto trading services in the country. This move is aligned with Coinbase’s plans to expand its global presence, and the company also stated it plans to launch retail services later in 2025.
A new study conducted by the Cambridge Centre for Alternative Finance (CCAF) and the Asian Development Bank Institute (ADBI) highlighted the important role that digital finance platforms play in enhancing MSME access to finance and supporting their economic growth. The survey covered more than 800 MSME users of digital financial platforms with business operations in emerging and frontier markets such as Bangladesh, China, India, Kazakhstan, Mongolia, Pakistan, and Vietnam.
Grab Holdings’ reported attempt to raise a US$2 billion bridge loan for acquiring Indonesian tech giant GoTo Group signals one of the most ambitious consolidation moves in Southeast Asia’s tech landscape. If successful, this merger could reshape the region’s digital economy, creating a dominant player in ride-hailing, food delivery, and fintech. However, the deal faces significant regulatory and financial challenges, making its outcome uncertain.
Observing Revolut CEO Nikolay Storonsky comment on how the UK fintech unicorn erred in its growth-first business strategy, one could almost imagine he was having a change of heart – that perhaps Revolut should be more modest and disciplined in its expansion efforts. Storonsky recently told Bloomberg, “For a long time, I wanted to be as less regulated as possible, it was the completely wrong decision.” He said that Revolut had focused too much on brisk growth. Yet he then went on to seemingly contradict himself. He said that Revolut sought to double in size from its current 50 million daily active customers to 100 million in 100 countries, with US$100 billion in annual revenue – a fiftyfold increase over the US$2.2 billion it earned in 2023.
We remember when Swedish payments firm Klarna was valued at US$46 billion back in June 2021. Unsurprisingly, leading the charge in funding the company was SoftBank, which has a tendency to make losing bets on tech startups. At the time, investors were ecstatic about buy now, pay later (BNPL), which we have long seen as old wine in a new bottle. There is nothing particularly innovative about installment payments, and it was not long before banks and tech giants like PayPal moved into the space. Since there is little differentiation between different providers of BNPL services, it was no surprise that Klarna’s valuation plummeted, finally bottoming out at US$6.5 billion. Analysts have recently turned more bullish on the company though and it is valued at US$14.6 billion ahead of an expected IPO in New York next year.
Brazil’s Nubank had a strong third quarter in which its adjusted net profit reached US$592 million, beating the US$559 million expected by the London Stock Exchange Group. The Brazilian online lender’s annualized non-adjusted return on equity, a measure of profitability, reached a record 30%. According to Reuters, the profitability increase can be attributed to more active customers and higher average revenue per active customer. During the September quarter, Nubank reached 100 million customers in Brazil, a number that represents 57% of the adult population in the country.
On October 22, Indonesia’s Financial Services Authority (OJK) revoked the business license of peer-to-peer lender Investree and ordered it to shut down all operations. The OJK’s decision deals a potentially lethal blow to the troubled P2P lender, which has been unable to recover from severe fraud allegations against its founder and former CEO, as well as legal challenges from lenders. While the OJK’s action was technically triggered by Investree’s inability to meet a minimum equity requirement of 7.5 billion rupiah, the biggest underlying issue is the alleged criminal behavior by former CEO Adrian Gunadi, who is believed to be outside of Indonesia right now.
With one of the world’s largest unbanked populations, Pakistan is one of Asia’s last major nascent fintech markets. Yet in 2023 and through the first half of 2024, it was mired in a funding slump – not unusual given the broader global trend, but problematic for a country that truly needs more digital banking services to boost financial inclusion. In the 2023 fiscal year, fintech funding in Pakistan fell 80% to just US$20 million while the number of deals decreased 44% to just eight. However, 2024 could turn out to be a better year for funding given rising investor interest.
On Oct. 1, Ripple announced it had received in-principle license approval from the Dubai Financial Services Authority (DFSA), an important step in the process of gaining a full license in the city. When it gains full approval, Ripple will be able to provide cross-border payment services in the Dubai International Financial Center (DIFC), a special economic zone. The focus of Ripple on being licensed in Dubai is the latest example of the United Arab Emirates’ (UAE) growing importance as a fintech hub.
Brazil’s Nubank is unique among digital banks globally because it is both unusually large in terms of customers and profitable. Other profitable online lenders, such as Korea’s Kakao Bank – which has about 22 million customers – much smaller. Even Revolut is less than half as large as Nubank. However, there is some concern that Nubank’s lending practices are problematic given its rising non-performing loan (NPL) ratio.
UK fintech unicorn Revolut thinks big. Despite not holding a banking license in its home market until very recently, it has sought to depict itself as a global disruptor of the financial services sector. Long before it turned a profit, Revolut had set up offices across the world. Nothing has been able to slow Revolut down significantly, but the speed at which the company moves also has drawbacks. Its compliance regime has been lacking in the past, and it is now facing a growing problem with scams.
Fintech funding in Asia has been tepid due to a confluence of factors, notably high interest rates, uncertainty about the global economy – and especially that of the United States – and general investor disenchantment with growth-first business models. That said, there are signs that the drop-off in funding that began in 2022 may have finally bottomed out. A new report by DealStreetAsia suggests that a modest recovery may be underway in Southeast Asia.