This Country Has the Most Buoyant Fintech Ecosystem in the APAC RegionASEAN is seen as an expansion opportunity for fintech entrepreneurs

A 2018 fintech study shows that ASEAN is seen as an expansion opportunity for fintech entrepreneurs. The report was conducted by the Australia-based Westpac Banking Corporation and Austrade, which shows that Singapore has the most buoyant fintech ecosystem in the region, followed by Indonesia and Malaysia. The report, however, shows that there are certain regulatory challenges which are hampering the growth across the region.

"There are myriad opportunities but at the same time fintech companies often face regulatory challenges, as well as cultural barriers and a lack of talent and knowledge of local markets, leaving them in limbo as they try to expand into new countries," underscores the report.

Burgeoning Opportunities

The Economist Intelligence Unit (EIU) conducted a survey with two Australian firms to assess corporate attitudes towards fintech in ASEAN, all of whom had an interest in operating in the region. The survey was based on 25 executives, out of which half of the respondents said they want to expand in ASEAN countries in the next three years.

76 per cent of fintech executives said their top motivation for doing business in ASEAN was to expand their customer base. This was followed by expanding the same product opportunity in new markets (56 per cent) and new product opportunities in new markets (52 per cent).

"In order to enter ASEAN markets, the most common strategy has been to form a distribution or other strategic partnerships (44 per cent)," says report.

While speaking to respondents, the report quotes Simon Lee, CEO of Assembly Payments, an Australian-based fintech payments provider, who talks about her expansion strategy.

"Our strategy is to find global banks that share the same vision as us and partner with them to provide next-generation unified commerce solutions to their customers," says Lee.

What Hampers the Growth?

A lot of factors are responsible for the slow growth of fintech in other regions of Asia. Not only cultural barriers are hampering the growth, but many regulatory hurdles are destructing the growth of the fintech ecosystem.

Government policy (licensing requirements and regulations) are said to be the biggest barrier to introducing new products or services in ASEAN, says the report. "Many people assume it can be done relatively easily but the culture is diferent and you have to make sure you have local staff," says Julian Fenwick, managing director at Governance Risk & Compliance Solutions in a report.

Other factors like lack of people with the requisite skills, lack of relationships/contacts in the region, lack of funding, lack of access to distribution channels, risk-averse culture, lack of technology capability, lack of co-ordination amongst departments, lack of innovative ideas and poor understanding of consumer needs also contribute in slow growth in different regions.

However, the report concludes that every ASEAN market is growing in terms of size, online access and smartphone penetration, which would give rise to fintech space in the ecosystem.