How is the FinTech ecosystem evolving in Southeast Asia?

by bold-lichterman

Southeast Asia stirs up envy with a market of over 650 million people. According to a study published by Google and Temasek (Singapore sovereign fund), the market can be summarized through a few figures:

  • 220 million Internet users, with growth of 3.8 million per month to reach 480 million in 2020,

  • 70% of the population under 40,

  • Strong and sustained growth of 5.3% of GDP for the next 10 years.

According to a study published by Bain, there are 150 million online consumers, or 37.5% of the population aged 16 and over. Offering a large margin for e-commerce sites but also online payments. On the other hand, according to Alibaba last April, only 3% of retail sales in the region are made online, offering significant growth potential. For comparison and according to eMarketer, Japan has a penetration rate of 69% in terms of online shoppers and in China 15.9% of retail sales are made online.

Since 2014, the interest of the Alibaba group in the region has grown steadily. In July 2014, Alibaba acquired a 10.32% stake in SingPost (national postal service provider in Singapore) for $ 220 million, followed in April 2016 by the acquisition of a controlling stake in Lazada (e- trading platform in Southeast Asia) for $ 1 billion. In November, Alibaba via Lazada acquired the online grocery store Redmart, giving itself privileged access to Singapore. On the other hand, following the acquisition of Lazada, Alibaba merged the internal payment platform HelloPay with its unicorn Ant Financial (previously named AliPay). More recently, Alibaba through Ant Financial invested in Thailand in Ascend Money offering another entry point in Southeast Asia for the Alibaba group.

The competition has only just begun, although local players are present such as Tokopedia, Carousell, Reebonz, Zalora… in Singapore. But the fragmentation between e-commerce sites and marketplaces remains important and many players got lost, such as Rakuten which closed its marketplaces in February in the markets of Singapore, Indonesia and Malaysia. Zalora has withdrawn from Thailand and Vietnam.

The development of online payments is closely linked to that of e-commerce and marketplaces. This is reminiscent of the intimate relationship between eBay and PayPal.

Stripe and Adyen respectively an American unicorn and a Dutch unicorn arrived in Southeast Asia in 2015 in order to take advantage of the rapid growth of e-commerce and therefore of online payments, which began in particular with AirAsia (airline at low cost) in 2001, which initially only accepted online payments.

PayPal arrived in 2007 by opening its international headquarters in Singapore and in May launched its own incubation program for start-ups in the region. Following the underlying trend initiated in the industry by banks such as DBS, UOB or OCBC which have their own accelerator in the city-state.

Local actors are not left out. MOL, one of the oldest company in the sector was created in 2000 and was listed on the Nasdaq between October 2014 and April 2016. It offers a variety of services including MOLPay CASH which offers the possibility for people without bank account or credit card to buy MOLPay CASH in convenience stores, in order to make purchases online.

Telecommunications companies have also entered the payments market, notably with SingTel and its SingTel Dash offer, an all-in-one mobile payment solution.

Regulators such as the Singaporean government via The Monetary Authority of Singapore (MAS) released a consultation paper in June 2016 on proposed guidelines for a “regulatory sandbox»Which will allow financial institutions as well as non-financial actors to experiment with financial technology solutions (FinTech).

However, despite a population prone to novelty and increasingly digital, a large number of people remain unbanked or without a credit card, leaving an important place for payment on delivery.

Omise (store in Japanese) started as an e-commerce site in Thailand. One of their main challenges was payment, so they pivoted to becoming a payment gateway. They raised $ 17.5 million in July to expand their services in Southeast Asia.

Grab (previously named Grab Taxi) and Go-jek, the two main VTC applications in the region have also developed in the payments sector. Go-Jek acquired MVCommerce, the company behind mobile payments service PonselPay in October. For its part, Grab has signed a partnership with the Lippo group to launch GabPay, allowing any mobile user to use the Grab app to pay not only for their daily transportation needs, but also for other lifestyle services. .

Finally, bitcoin is also used in the region by several start-ups such as CoinPip, a platform for transferring money abroad to employees, partners and independent entrepreneurs. As well as BitX a bitcoin wallet which received an investment from Naspers in July 2015.

Photo credit: Fotolia, royalty-free stock images, vectors and videos

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