Southeast Asia's two most valuable tech startups are determined to reinvent themselves, transforming from ride-hailing giants into digital banks. Singapore's Grab is leading in every Southeast Asian market but one: Indonesia, which happens to be where its arch-rival Gojek is based. Having recently received investments from Facebook and PayPal, Gojek looks to have the edge in the region's largest economy. But Grab is determined to prevail there. That's why the Grab-backed digital wallet Ovo is reportedly planning to merge with Dana, which is backed by Chinese fintech giant Ant Financial. Together, Ovo and Dana might be able to give Gojek's fintech arm GoPay a run for its money.

Chinese investment into Indian fintechs is set to slow following New Delhi's decision to restrict foreign investment from countries with which it shares a land border and more carefully scrutinize new portfolio investors from mainland China and Hong Kong. India's immediate reason to target foreign investment is to forestall opportunistic takeovers during the coronavirus pandemic, which has infected about 152,000 and caused more than 4,000 deaths in the subcontinent.

Tencent has paid US$300 million for a 5% stake in Australia's Afterpay in a bid to strengthen its global fintech services and expand into smart retail. Afterpay allows shoppers to pay in four installments for purchases online or in retail stores. It claims to have 7.3 million users globally.

Internet giants outside of China are trying to create a super app like WeChat, which users rely on widely to chat, buy goods on and offline, and bank. The payments application is the stickiest: Once WeChat became a preferred digital wallet, it had a captive audience for a much wider selection of banking services. For Facebook, which is shut out of China, India offers the chance to build a super app. There are more users of both Facebook and its messaging app WhatsApp in India than anywhere else on earth. Facebook has moved one step closer to that goal following its US$5.7 billion investment for a 9.9% stake in India's telecoms giant Jio, a subsidiary of the juggernaut Reliance Industries.

The economic downturn fomented by the coronavirus pandemic has been a rude awakening for cash-burning fintech startups. They and their backers are finding that there's a price to pay for championing breakneck growth over profitability. In contrast, fintechs with solid balance sheets, like London-based digital money transfer firm TransferWise (profitable for three years in a row), are poised to pursue targeted expansion. Tapping resilient demand for its cross-border payments services, TransferWise recently inked a partnership with China's Alipay and expanded to the United Arab Emirates.

In every crisis, there are opportunities. While many investors are tightening their belts during the coronavirus pandemic, some are opening their wallets. Now is the time to double down on certain investments. Take Australia's Airwallex as an example. The Melbourne-based cross-border payments platform closed a mammoth US$160 million (A$250 million) funding round in April, bringing its valuation to US$1.8 billion from US$1 billion. Less than half of the capital was raised in January, according to Australian Financial Review. Airwallex managed to raise the rest amid the pandemic's surge.

WeChat Pay has for several years been trying to develop its business outside of China. The first step is usually to partner with local merchants, making WeChat Pay available at points of sale where Chinese tourists shop. The second step is to target the local market. Thus far, WeChat has been more successful capturing Chinese tourists' wallet share overseas than in becoming a trusted local digital banking provider.

The novel coronavirus outbreak could slow WeChat Pay's global expansion considerably in the short term. Put simply, what happens if your international payments business primarily depends on Chinese tourists and suddenly there are none?

The leading enabler of digital commerce across the Middle East and Africa region, Network International, made an agreement with Tencent Holdings Limited in February 2020 that will enable millions of Chinese tourists to transact through Network International’s extensive UAE merchant network with their WeChat mobile wallets.

The largest merchant acquirer in the United Arab Emirates, Network will perform as a settlement partner or acquirer as well as solution provider in order to enable mobile-based transactions via WeChat Pay at points of sale as well as for online purchases.

Cambodian and Thai regulators recently announced the launch of an interoperable payment QR code for use between Cambodia and Thailand. Cambodian tourists who visit Thailand may now use their mobile banking app to pay in Cambodian riel when shopping at stores that display a Thai QR Payment sign, while the same functionality will be extended to Thai tourists in Cambodia by Q3 this year.

A collaboration between the Siam Commercial Bank (SCB) and five Cambodian commercial banks, the interoperable QR code was developed upon domestic electronic transfer system PromptPay which runs on Vocalink infrastructure. ACLEDA Bank PCL, Cambodia Commercial Bank (CCB) and the Foreign Trade Bank of Cambodia (FTB) are sponsoring banks of the collaboration, which mean that other banks would be required to work with the three in order to provide the service.

Ant Financial's international expansion runs on two separate tracks. The first is a concerted push into emerging markets, especially in South Asia. In these countries, Ant is laying the groundwork to become a primary provider of digital financial services to the local market. In many cases, incumbents and digital infrastructure are both weak. Ant sees opportunities to leverage both its banking and technology acumen in countries such as Bangladesh, Pakistan and Nepal. 

It's a very different story in Western Europe. There, Ant is making gradual inroads. The Chinese fintech giant says it wants to serve the local market, but its products are designed for Chinese consumers and businesses. European incumbents, meanwhile, are often entrenched. There's no easy way around that. Growing in Western Europe through acquisitions in local companies makes more sense than going it alone. With that in mind, Ant recently took a minority stake in Swedish payments platform Klarna, the most valuable fintech startup in Europe alongside the UK's Revolut. Klarna is currently valued at US$5.5 billion and says that it has 80 million customers globally.