What Makes Asia the Hottest Destination for Fintech ?
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2016 was the year where fintech arrived in Asia. Though entrepreneurs and start-ups have been setting up base camp long before 2016, this was the year when everyone from big banks, large corporations to governments started paying attention to the revolution of fintech in Asia. The following factors highlight the fact that Asia is indeed the hottest destination for Fintech in the world.
Asia surpassed the US and Europe on fintech investment in Q3 2016. According to KPMG and CB Insights’ The Pulse of Fintech report for Q3 2016, Asia ended up surpassing the US and Europe on that front, with investment in the year’s third quarter reaching US$1.2 billion versus US$900 million in the US and US$200 million in Europe.
Though Japan, Singapore and Hong Kong have been ahead in the race in Asia, India and China are emerging markets where there is a huge untapped potential, especially with the blank canvas that is the hinterlands where the reach of fintech and digitization is very raw as of now.
Talent and Resources:
Asia, with its large populations and superior technical education, is a breeding ground for great technological talent, and resources that are cost effective!
Moreover, Creativity and out-of-the-box thinking has become a norm in the industry, with a cross pollination of various people coming together from different areas of expertise. Co-working spaces are becoming a fad. Support systems and best practices of access to networks, legal services, infrastructure, digital infrastructure and syndicated service platforms are becoming increasingly available under one roof.
Asia – Fastest Growing economy:
The Economy of Asia comprises more than 4.4 billion people forming 60% of the world population. Asia is the fastest growing economic region and the largest continental economy by GDP PPP in the world. China and India are currently the first and third largest economies in the world by GDP, respectively. This makes Asia an obvious playground for Fintech, both as a growing business and an investment opportunity.
Healthy Competition: Governments and corporations are spending!
The race to digitization and fintech development in Asia has led to governments spending and prioritizing on these areas. This is seen by the exponential emergence of fintech tools across various touch points like next generation payments, digital cash, alternative credit decision, P2P lending, security and biometrics, blockchain, robo-advisory and financial inclusion in India,
There is also a healthy competition within the continent where Singapore and Japan are competing to become the eastern fintech hub as a rival to London in the west. Given the growth opportunity, this healthy competition and the immense support of the government makes it an ecosystem where Asia is leading in innovation when it comes to fintech.
This year saw growth of opportunities for companies and countries trying to digitize banking services in Southeast Asia. Several fintech businesses in Southeast Asia raised funding this year both to jump on the train of e-commerce growth and to serve non-banking populations, particularly Tier III and rural areas.
Some of the examples are Thailand’s Omise, Singapore’s Coda Payments and 2C2P, Vietnam’s OnOnPay, India’s PayTM and more.
Mobile and Internet penetration:
There is a spike in mobile and internet penetration in Asia, a growth that has been steady since the last decade. Coupled with a higher potential to grow than ever before, Fintechsare suddenly looking to expand their reach and companies are looking to expand their market in the coming 5 years. The internet penetration of countries like Japan and South Korea have surpassed 90% and many countries are inching towards that number with a hike in internet penetration YoY.
In an Indian report on smart phone and feature phone trends released by mobile marketing association (MMA), it has been revealed that Mobile surpasses TV with time spent on Smartphones up by 55% from 2015. Women are more engaged than men on Smartphones spending 2x time on YouTube & Gaming, and a whopping 75% of Feature Phone users are from the upper SECs. This clearly outlines the growing acceptance of mobile as a medium of consuming content and accessing services in India, a trend reflected in all developing countries of Asia.
These factors and trends, when taken into consideration, truly makes Asia truly the hottest destination for Fintech.