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Asean a magnet for Asian fintech firms
THE Asean region is an attractive target for growth by fintech firms, with Singapore as a clear beachhead for such startups looking into regional expansion.
This is according to the Pulse of Fintech report produced by KPMG, which looked at fintech investment trends in the first half of this year.
"After achieving success domestically, a number of large fintech firms - primarily from China - have set their sights on countries within South-east Asia as the next step in their growth agenda," the report said.
"With a large population, relatively similar macroeconomics, large underbanked populations and a significant number of Chinese people overseas, the region is seen as a strong stepping stone to further global expansion."
The report noted that in China, a number of large tech players have made inroads into the provision of innovative financial services as part of their value proposition. "These technology firms have framed their offerings as a way to extend value to their customers, rather than as a desire on their part to actively seek a role in the financial services market," it added.
KPMG said this trend also comes as a number of China's biggest companies are already making investments globally. In the first half of 2018, for example, Tencent invested in German challenger bank N26.
"Within South-east Asia, Singapore continued to drive regional collaboration - including the development of a regional fintech innovation sandbox. The Monetary Authority of Singapore (MAS) continued to focus on financial inclusion, but has also started to intensify its focus on encouraging insurtech innovation."
The trend of regulatory technology, or regtech, is meanwhile slowly gaining traction in Asia, the report said. This is particularly clear in Singapore, where regulators have been "strongly supportive" of fintech innovation, with much of the regtech focus in Asia around KYC (know-your customer) and fraud prevention.
KPMG said it sees Asia as "well positioned" for continued growth in fintech investment. It is anticipating continued collaboration between organisations in Asia. Such partnerships are aimed at providing embedded service offerings, such as the provision of travel insurance payouts based on flight delay data from airlines.
"There will likely be a strong focus on global expansion among the larger, more mature fintech companies," KPMG added. "Blockchain and artificial intelligence will likely continue to be key priorities for fintech investors, in addition to insurtech and regtech."