Fintech: Opportunities and Challenges in APAC

Emerging markets in the APAC region, such as Myanmar, India and Philippines, also offer good prospects and promising opportunities for the Fintech sector. In these countries, significant segments of their population remain unbanked. In Southeast Asia alone, about 438 million people do not have a bank account.  This makes it difficult for their citizens to overcome poverty and for entrepreneurs to prosper, as it is nearly impossible for them to save money or borrow capital. These countries are thus looking to Fintech start-ups to enter their markets, disrupt their finance industry, and cater to the population’s latent and unmet financial needs. With the right technology innovation, Fintech companies can potentially provide non-traditional source of liquidity to consumers and businesses.

However, despite the promising opportunities, there remains challenges that Fintech companies would need to overcome in order to thrive in the APAC region.

Challenges for Fintech in APAC

Traditional financial institutions hold several advantages. They possess brand recognition, years of experience and credibility. However, Fintech, being a relatively new idea, lacks track record and awareness. As such, consumers and businesses are slow in adopting Fintech solutions. 

In developed nations like Singapore for instance, only 2 percent of small and medium-sized enterprises have turned to crowdfunding platforms to access funding.  In emerging markets, such as Indonesia, citizens do not understand the benefits of having a bank or do not see an advantage of saving. 

Earning the trust of consumers and businesses, and increasing awareness are hence major challenges for Fintech companies in the APAC region.

Overcoming these Challenges

A key to standing out from the crowd is to effectively integrate technology into the business operations. As a crowdfunding platform, we at CoAssets understand the risk investors are taking on when investing in a start-up or new project. As such, we developed our very own Risk Assessment Model, CRAM – an automated system that analyses a company’s financial and behavioural data to gain insights into the risk percentage associated with a project. This model has been tested and backtested by us on actual deals. With more data, we will be able to calculate the default risk percentage with greater accuracy. This computerised model has thus created a better structure, enabling us to gain the trust of investors.

Fintech companies must also leverage data to gain a competitive advantage. Some companies study data to predict a loan success, or identify which customers qualify for a loan. At CoAssets, we analyse an investors’ data – garnered from his or her online behaviour – to understand what the next appropriate action is. If the prediction engine says that an investor is interested but for some reason is not investing, the next step for us is to give the investor a call. This has eventually, led to an improved and quicker funding process. 

Fintech companies must also continuously find ways to build credibility. At CoAssets, we have a proven track record of successful projects and we are the first crowdfunding platform to have listed on the Australian Exchange. This makes us the trusted crowdfunding platform in the APAC region. Today, we are continuously looking at innovative ways to build credibility and establish our brand in the market.

Although the Fintech sector is relatively new compared to conventional financial institutions, it has grown from strength to strength in a very short time over the last three years. Governments around the region have also established regulations to embrace and better regulate this nascent sector. In 2017, the Fintech sector in APAC will witness unprecedented growth and I am excited to see what happens.