UOB releases white paper on state of fintech in ASEAN

UOB has launched the State of FinTech in ASEAN white paper at the Singapore FinTech Festival. The document, produced by United Overseas Bank, with insights from EY and is supported by the Singapore FinTech Association and the ASEAN FinTech Network, aims to help fintech startups navigate their journey in Southeast Asia. It also provides an overview of the factors that have led to the growth of fintech in the region as well as trends in areas such as payments and peer-to-peer lending.

Key takeaways from the State of FinTech in ASEAN white paper include:

- Investments in the Southeast Asian fintech market increased to US$252 million in 2016 compared with US$190 million in 2015, a rise of about 33%.

- Total investment up to September 2017 has already exceeded that of 2016 to reach US$338 million. Most of the funding in the region is from seed and angel investors.

- Payments and mobile wallets are attracting the highest level of funding in ASEAN, registering a tenfold increase from US$8 million in 2012 to US$83 million in 2015.

- As of September 2017, US$117 million has been invested in payment fintech startups in the region. Almost half (43%) of all fintech activity in ASEAN is focused on developing solutions in the area of payments and mobile wallets. This innovation push is underpinned by high levels of mobile usage and rising rates of Internet penetration, an increasingly urban, tech-savvy, literate and young population and a segment of the community underserved by traditional banking solutions.

- Two in five ASEAN fintech startups have chosen Singapore as their home base. They are drawn to several factors, including the country’s ecosystem of diverse players, conducive regulatory environment and its web of international links that promote the exchange of ideas.

The white paper has also identified four areas critical to helping fintech startups in ASEAN succeed: 

- Increased ASEAN-wide cooperation needed to drive digital innovation. The white paper identifies broadband access, unified payment infrastructure and policy harmonisation as some areas which require more development to see positive outcomes.

- Nurturing the right talent. A fintech talent crunch is expected, but the authors of the white paper are optimistic that encouraging science, technology, engineering and mathematics (STEM) education in schools and redirecting university curricula towards entrepreneurship and research can change things. 

Source: UOB white paper. Estimate numbers of incubators, accelerators and innovation labs by country.

- Collaboration between banks and fintechs – the way forward. According to the white paper, banks in ASEAN have embraced fintech with discussions and the exploration of ideas via hackathons or incubators, accelerators and innovation labs. Singapore leads with over 50 incubators, accelerators and innovation labs, followed by Vietnam, Indonesia and Malaysia.

- Abundant supply of fintech funding in ASEAN. Most banks will not take on the credit risk of companies with a track record of less than three years, the white paper points out.

The document concludes that fintechs involved in payment flows, asset management and trade finance are expected to create the greatest impact as trade continues to increase within ASEAN and with the rest of the world. "Promising fintech companies in ASEAN could witness an increase in investment and acquisitions by investors who are looking to ride the next decade of ASEAN growth, as well as ASEAN banks seeking new and innovative digital capabilities," the report states.

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Read the State of FinTech in ASEAN white paper (PDF)

Hashtags: #SFF2017, #SGFintechFest