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Fintech is emerging in Asia
Hong Kong held its fintech week in early November and last week Singapore organized maybe the biggest fintech event in the world: the Singapore Fintech Festival. Fintech means many kinds of technology solutions and disruption for the finance industry. Now it has started to have impact on Asia too. And Asia has opportunities to become the center of fintech globally.
In practice fintech means many services, e.g. mobile payments, online money transfers, online lending and investing services, robo-advisors, digital investment banks, and real estate crowdfunding. It is not only new services, but it is also how to make the existing finance services more effective and, for example, replace old IT legacy systems with cloud based solutions and open API ecosystems.
London has been an important fintech hub, and in the US Silicon Valley and New York are also important fintech centers. After the Brexit referendum also other places in Europe such as Berlin have started to target a ‘fintech hub’ status. Now we can also see Asian cities are becoming more important competitors in this race.
China has probably the world’s leading fintech market, if we measure total volume of the business. A challenge has been that it has been very lightly regulated and there has also been quite a lot of fraud compared to other markets. But now China also plans to increase control and regulation and the market is probably getting to a more stable state. However China is not yet to a place to offer these services globally, though it may be in the future.
Hong Kong and Singapore are the traditional finance centers of Asia. Both of them now also want to be fintech centers. Some other places in Asia have also got active, for example, Malaysia most recently granted licenses to new services like equity crowdfunding and p2p finance and it is interested to be a global Islamic fintech hub, and Japan is also getting active to enable and promote new digital finance services to also activate its economy.
Singapore Fintech Festival was organized by the Singaporean finance regulator, MAS. The event had more than 11,000 participants, including people from new startups to the leading banks and consulting firms. It was probably the biggest fintech event organized. Someone compared it to “Woodstock for fintech.”
The event including 2-day fintech conference, 1-day regulation technology (regtech) conference, fintech startup hackathon, fintech awards and many other smaller events. Compared to the events in the US and UK, the focus was probably more on big finance institutions and less on startups. Fintech includes many categories and aspects, and one way to categorize it is 1) fintech based services that can disrupt the finance market, and 2) fintech solutions that can make the production of existing finance services more effective. Traditionally, especially Silicon Valley has been really keen to find companies that can disrupt a market (like Uber is doing for transportation and Airbnb for accommodation), and in some other places focus is more to make better solutions for existing business.
The Singapore event was an excellent summary of fintech solutions and services and a great place to meet fintech thought leaders globally. Asia has excellent position in many fintech services, e.g. contactless payments are very advanced here. Many Asian fintech startups target to work with banks and sell solutions to banks. At the same time it is also good to get more startups that are really willing to disrupt the business models too. Finance services need more modern technology, cloud based solutions, open APIs, better usability online and mobile, but it also needs new business innovations to offer more value to customers and also services where the customer really feels the finance services are to help and serve them.
Fintech is a big opportunity for Asia. Effective finance services can boost the whole economy. It also includes opportunities for startups and existing finance companies. Brexit and the political changes in the US can also be an opportunity for Asian companies and countries in this market, if they slow down development in the UK and the US due to factors including less immigration of startup talent and more obstacles to offering services internationally. Asia has good opportunities to take a very prominent role in the fintech market.