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Look to Asia for fintech trends in 2021-2022

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Asia is the global leader in fintech, according to a survey of 27,000+ digitally active consumers in 27 markets. And in Asia, China and India are big leaders – over half their active adult consumers use fintech services regularly. Asia sets the pace and it’s not slowing down.

In 2019, digital financial services earned $11 billion in Southeast Asia. That’s expected to grow to over $38 billion, or 11% of all financial services revenue, by 2025. Demand for fintech solutions is stronger than ever, so 2021 and 2022 are key years for retaining relevance and for new innovation.

Major trending areas include automated finance, mobile payment and, of course, blockchain. And not everything’s about machines – Asia’s huge workforce will play a major role.

Digital payment solutions

The COVID-19 pandemic pushed companies to improve automated services. In China, Alipay rolled out digital tools to support local businesses in Wuhan. This helped revive the city after the strict lockdown.

Malaysia offered WeChat Pay in 2020. It’s the first country outside China to use WeChat in the local currency. Local banks like Hong Leong Bank and Maybank were quick to link up. WeChat could expand this model elsewhere.

In Hong Kong, ZA Bank Ltd was the first virtual bank to launch a digital-only banking service. It offered a 6% opening rate on all deposits.

Meanwhile Japan, slower in shifting to cashless transactions, saw app-based payments finally go mainstream in 2020. Options include Rakuten Pay, LINE Pay, and PayPay backed by the SoftBank Group. The country was overwhelmingly cash-based just 2 years ago.

Vietnam has seen the most growth with mobile payment users increasing by 24% in the past year. The adoption rate in Thailand was 67%. China still leads, with 86% using smartphones for payments.

There are at least 150 e-wallet providers in Southeast Asia alone. Most of these apps are run by tech giants like Grab, Tencent Holdings, Singapore Telecom, and AirAsia.

More open banking solutions

The pandemic also sped up adoption of fintech banking apps and solutions, as in-person banking was often limited or unavailable. Online banking advanced. The trend has spread to investment, as seen with the Singapore Exchange (SGX).

Singapore Financial Data Exchange answered by launching the world’s first public–private open banking solution. Singaporeans could now keep track of their finances in one simple platform.

Other Asian countries are also working to build open banking structures. DBS Hong Kong introduced digital banking to provide easy access and less paperwork for SMEs.

Better financial literacy and inclusion

The World Bank notes financial inclusion is a good way to reduce poverty and improve economies. Industry’s role as a financial leader is important in poorly developed and emerging markets.

South Asia has some of the world’s lowest levels of financial literacy, but Asian fintech startups are seeking to change this and increase financial inclusion. They include Julo (Indonesia), ZigWay (Myanmar), and Wing (Cambodia). They’ve designed easy-to-understand games and products to help consumers learn how to spend, save, and invest better.

Regarding financial inclusion, Jeff is an app providing loan services in Vietnam. The app aims to open lending services to people likely to be rejected by traditional banks.

Growth of blockchain and cryptocurrency

Look to Asia for the future of blockchain and cryptocurrency. NASDAQ reports more than 31% of all cryptocurrency transactions from mid-2019 to mid-2020 were in East Asia.

Asia is a crypto mining hub, with 65% of the global Bitcoin hashrate centered in China. The South Korean market has high use of altcoin, with over 30% of convenience stores already accepting digital money. There are also large crypto exchanges in Asia trading at nearly four times higher volume than North American exchanges.

In the Philippines, the mobile game Axie Infinity is creating a way out of poverty. Created by a Vietnamese startup, it features a farming simulation. It uses Ethereum Blockchain as its currency, which helps players learn about the currency, and how to manage their finances.

Shifting employment trends

COVID-19 spurred many businesses to digitize, which shifted employment trends. In Singapore, software engineers are in high demand and experiencing net job growth. There’s higher demand for skilled fintech talent in Hong Kong as well.

Other countries are also in search of tech talent. According to CXC Global, businesses in Thailand, Japan, and Hong Kong are searching for staff in data sciences and online communications.  

Companies, however, aren’t rushing to replace employees – 37% of companies in Asia Pacific are making sure staff are onboard with changes, and RPA responsibilities are defined.

Asia fintech isn’t slowing down

Fintech adoption continues to expand in Asia as it becomes part of everyday life, irrespective of economic status. The fintech market in APAC is expected to grow at 72.5% annually through 2025, continually showing dynamic growth and adaptation, moving at speeds Western countries may not match.

Find out more about the fintech trends driving the future of finance in Asia, at FinovateAsia this week, June 22 - 23, all online. 

Adam Goulston, MS, MBA, is a U.S.-born, Asia-based content marketer and copywriter. His Japan-registered company Scize helps globally-sighted business and organizations communicate their value in universally clear language.

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