What's in store for Asia's fintech in 2017?

AS we kick-start the new year, the jury is still out on whether fintech growth in Asia is merely just hype or it's here to stay. It appears that 2016 has seen a global shift of fintech activities from the UK and US to Asia. Research by KPMG and CB Insights showed that in the third quarter of last year, fintech funding for North America and Europe has dropped, while Asia continued to see increased funding for fintech ventures. In fact, fintech investments in the Asia-Pacific region reached US$10.5 billion in 2016, a record high since 2010, according to Accenture's analysis of CB Insights data.

Given that 2017 may shape up to be one of the more challenging years for financial markets and businesses in Asia as economies contract further and margins shrink, fintech could well save us from another recession. At Singapore's inaugural FinTech Festival in November, managing director of the Monetary Authority of Singapore Ravi Menon said in his opening speech that "in an industry facing the headwinds of lower economic growth and heavier regulatory burdens, innovation must be the way to refresh and re-energise the business model".

In the world of private wealth management and banking, Mr Menon's words about "heavier regulatory burdens" might resonate with many relationship managers, who are increasingly handling more paperwork for know-your-customer (KYC) and anti-money laundering processes. As a result, they are spending less time servicing their clients, who in turn look to external asset managers or in some cases, fintech platforms, to manage and grow their wealth. As their compliance costs rise, more banks are also consolidating. Just a few weeks ago, LGT Group bought ABN Amro's private banking business in Asia and the Middle East. DBS in October announced it was acquiring the wealth management and retail banking business of ANZ in Singapore, Hong Kong, China, Taiwan and Indonesia. This follows suit from its 2014 acquisition of Societe Generale's Asian wealth-management division. And earlier this year, OCBC bought Barclays' wealth and investment management business in Asia.