Asia-Pacific (APAC) is a large and diversified area with various levels of market maturity. Regardless of the market’s state of development, fintech innovation is growing at an unparalleled rate throughout the region. In 2022 alone, the fintech industry in APAC garnered $50.5 billion in investments, breaking records and fueling the region’s continuous development despite global economic slowdowns, which indicates that the biggest fintech trends as mentioned below will be something to behold.
Buy Now, Pay Later (BNPL) in Indonesia
Despite recent difficulties surrounding BNPL services, Indonesia’s sector has grown significantly, increasing by 70% to approximately $4.5 billion by 2022. The long-term picture remains positive, with an expected 32.5% growth rate and a market size of $25 billion by 2028. BNPL’s success in Indonesia may be due to its ability to bridge a huge lending gap, particularly in a country where over 65% of the population is unbanked and credit card use is low.
GoTo, Koinworks, and Akulaku are prominent companies driving BNPL in Indonesia, indicating a shift in use from everyday transactions to high-end luxury retail sales.
Digital Banking in Malaysia
In a ground-breaking move in 2022, Malaysia’s Central Bank issued five digital banking licences to increase financial inclusion. As digital banks join the market, consumers have access to more accessible and adaptable financial solutions. The digital banking sector will see how new entrants compete with long-standing established lenders.
Steve Thurley, APAC Managing Director at Credolab, states, “A digital banking transformation is accelerating in Malaysia, amid stiff competition from other countries in the region. To manage the associated fraud risks, banks offering digital services will have to take appropriate measures and collaborate with best-of-breed Fintechs to help fight fraud.”
Embedded Finance in Singapore
Unlike Indonesia, Singapore has a sophisticated financial ecosystem, with banks firmly rooted in the economy and aggressively implementing digital services. Embedded finance, digital banking, and hyper-personalized financial solutions have thrived. Instant payments, cross-border transactions, micro-lending, and financial solutions customised to SMEs are among the core areas of embedded finance innovation.
Fintechs such as Weavr, Shopee, and Xero are driving embedded finance in Singapore by spreading financial services outside conventional borders and improving the consumer experience.
SME Lending in The Philippines
Small and medium-sized firms (SMEs) play an important role in the Philippine economy, accounting for over 36% of total GDP and employing 63% of the workforce. Despite their importance, SMEs frequently face obstacles in obtaining finance. Fintechs are stepping in, providing digital loans through online platforms and using big data to develop alternative credit rating algorithms.
Companies such as Investree, First Circle, and SeekCap are driving innovation in SME lending by leveraging big data to bridge the financial gap and help these critical firms expand.
Open Banking in Australia
Australia implemented the Consumer Data Rights (CDR) law in 2020, ushering in a new era of open banking. This legislation required banks to exchange customer data, with expansion to energy and utility providers in the following phases.
The last step, scheduled soon, will include non-bank lenders under CDR. This integration of information from the banking, energy, and non-banking industries allows customers to effortlessly access financing products and take advantage of the best rates.
Conclusion
Fintech disruptions have entered every aspect of APAC’s financial services, with trends primed to inspire new credit management and access methods. These developments are transforming the financial environment in a variety of ways, including novel payment systems, data-driven financial health insights, and assistance for small companies fueling economic growth. As technology and legislation advance, the viability and development of these trends remain questionable. However, one thing is certain: the APAC area will be keenly monitored as it remains at the forefront of financial innovation.
