Fintech Research

The rising ubiquity of smartphones together with broader digital transformation in the business world are catalyzing the adoption of artificial intelligence (AI) in the financial services sector. As AI matures and becomes more widely integrated into business operations, this trend is set to accelerate.

During the pandemic, the idea of a travel-focused super app built on top of an airline and focused on the Asia-Pacific region seemed iffy. After all, international travel was grounded in Asia for longer than anywhere else in the world. But with the pandemic in the rearview mirror at last, Capital A CEO Tony Fernandes’ idea is starting to make more sense. All the groundwork AirAsia did to build its super app may come to fruition before long.

It’s been a long and humbling road for Ant Group since the abrupt cancellation of its expected blockbuster IPO in November 2020. The nixed IPO marked the beginning of a wider crackdown by the Chinese authorities on tech giants that had gotten too big for their own good. Since then, we have strained to read the tea leaves and figure out just how much Ant would be cut down to size when the IPO could get back on track. The decision by regulators to require Ant’s parent company Alibaba to become a holding company divided into six different business groups suggests that the restructuring of the internet giant has reached an inflection point.

Despite Covid-19’s impact on the global economy, the steady pivot to digital financial services has helped fintech and the overall financial services industry emerge from the pandemic relatively unscathed. Indeed, during the low-interest rate environment of the past few years, fintech valuations increased dramatically across nearly every market segment, especially in certain areas like crypto.

What goes up, most come down, even in a huge country with significant financial inclusion needs. In recent years, Indonesia has been a hotspot for fintech investment, and that remains true, relatively speaking, but Southeast Asia’s largest economy is seeing a slowdown as investors tighten their belts and it begins to sink in that the digital banking sector may be overly crowded.

2022 was a year characterized by slower fintech funding in most parts of the world, especially East Asia, where it had previously been growing expeditiously. East Asia’s premier fintech hub of Singapore, however, managed to buck the trend with funding hitting a three-year high of US$4.1 billion, up from US$3.4 billion the previous year, according to a new report by KPMG.

With the world’s third-largest unbanked population, Pakistan is one of the last major nascent markets for fintech. In the past few years, fintech investment has picked up in the country thanks to rising investor interest, supportive government policies and a need for effective digital financial services solutions. Though the deal pipeline started to taper off towards the end of 2022, the long-term outlook remains bright.

2022 was a tough year for Japan’s SoftBank and its CEO Masayoshi Son. Neither the company nor Son is weathering the global tech slump and general rising investor skepticism towards growth-first, cash-burning startups especially well. In the third quarter, SoftBank’s Vision Fund arm lost a whopping US$7.2 billion, which only looks acceptable when compared with its record US$23 billion loss in the April-June period.

Japan’s largest bank is betting big on fintech. In recent months, Mitsubishi UFJ Financial Group (MUFG) has invested in several ascendant Asian fintech firms, including Indonesia’s Akulaku (also backed by Ant Group) and the consumer finance businesses of Netherlands-based Home Credit NV in Indonesia and the Philippines. MUFG may also acquire Japanese buy now, pay later (BNPL) firm Kanmu for roughly 20 billion yen (US$150.56 million).

Like its rival Alibaba, Tencent has developed a large portfolio of overseas fintech investments. Many of these are strategic bets on rising Big Fintech players, like Voyager Innovations in the Philippines, Sea Group in Singapore and Airwallex in Hong Kong via Australia. However, until recently, there has been nothing that clearly links these different companies in Tencent’s fintech ecosystem. The Shenzhen-based company intends to change that with the launch of Tenpay Global and Tenpay Global Remittances.

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