Here Are The Reasons For Fintech’s Rapid Growth In Southeast Asia
Since it’s initiation, the fast-paced, vast world of fintech has wholly reshaped and redefined the wheel of business. A plethora of trends in recent times has punctuated the landscape of fintech. In simple terms, fintech has experienced massive transformation since its inception., providing a platform for digital innovation, customer service, and investment. The fintech revolution has converted most conventional approaches to digital economic transformation right on their heads.
Fintech companies, which are currently startups have grown in terms of numbers from 1000 in 2005 to about 8,000 in 2016 and counting to now. They have even made it better by harnessing technologies which will provide financial services. Currently, fintech is offering services that can cover a wide range of traditional business lines of the banks and retails from loans and credit cards to payments, digital currencies, and cross-border transfers across Asia. So, why is fintech thriving fast in Asia?
The numbers are right there
Being the hugest continent in the world, Asia is quite populated particularly India and China. Among 630 million people half of them are below the age of 30. In south-east Asia, the population is quite high and continues to grow every day. It is estimated that by 2030, the population will be about 373 million. In India, more than 50 percent of the population use smartphones and 20 percent of this group have used most online services pertaining to finances.
Fintech mainly targets the youth in the urban demographic, who are more conversant and anxious to learn about digital mobile solutions especially for personal financial tools and financial services. Generally, Asia has the numbers that fintech needs to propel its agenda to reach the vast regions and all communities.
The fact that Asia has the numbers makes it easier for everything to fall into place. Mobile connectivity has snowballed over the past few years. For instance, countries like Myanmar 93%, Vietnam 131%, Thailand 133% and Cambodia 173 are the leading parties in mobile connectivity in Asia. Mobile phones have become the most common means of communication in the world. Every month, there is always about 3.8 million new subscribers in Southeast Asia and Cambodia alone, a user spends more than 4.4 hours in social media each day.
Another huge booster is the financial technology developed across these countries, innovations like mobile money transfers, alternative financing, and other online based financial tools have captured the attention of Fintech. Data users can now buy things online, subscribe to watch movies, play games, read online materials, learn new skills through websites and even make money through online tools.
Consequently, financial technology has channeled and created opportunities for those busy individuals or minorities who couldn’t get the opportunity to have those privileges. Fintech’s services are all provided online; therefore, their users do not have to enter the brick and mortar locations to access them.
There is an opportunity for the vast unbanked market.
Did you know that there are millions of people who do not have access to traditional local financial services.? Well, about 2 billion people in the world do not have access to banks or formal financial services with about 50 percent of this number coming from Asia. This number is no good news for the market, the economy, and the countries as a whole. Fortunately, fintech has the opportunity to take over this sector, chiefly in Asia where the situation is worse. Asians can now access all financial services from saving money, checking balances, sending, and receiving money and even getting loans. Additionally, these methods are cost-effective and can be accessed anywhere via mobile phone.
The incumbents are powerful
Aside from the 2 billion people lacking local formal financial services, the other remaining number is left in the mercy of local banks. The large but slow-moving institutions have very little to do unless they change how they do things. Everyone wants a more comfortable way out. The same users who spend 4 hours and above to browse have no time to go and line in banks. It would be easier for them if they accessed the banks through their smartphones.
Local banks on the other side have little or nothing to do to counter the whole situation. In most cases, they’re forced to adapt and keep up with the online standards set by fintech. Technology has practically transformed the banking system or is it completely taking over? Take a good example of Amazon; it completely changed how people shop and the entire retail industry had to struggle to keep up or rather compete. In fact, most brick and mortar retail stores fail because they gave Amazon the chance to grow to its current giant state.
The big powerful banks are now trying to bring technology to their system to enable online transactions by their customers. Such changes do not only prove that technology is taking over the finance industry but also encourage it.
There is a predominant strategic contradiction between finance and technology
It is not surprising that the finance industry is strong and dominant. It is one of those slow-moving sectors as many people have entrusted them with their money. The transition from local banking to online banking may not be smooth for some people and fintech has to work harder not to prove their authenticity but provide a base of privacy and security.
The local banks, as well as fintech, needs returns at the end of the day, and the biggest problem here is not the consumer but the service providers. Banks are relatively slow, the bigger they develop, the slower they adapt, this is due to the impatient investors who inflict pressure to get their returns—investors are always anxious regardless of the industry. Fintech, however, is safer since it is promising to be around for a long time. When traditional banks begin adopting new ways, it means there is long-term potential. Asia is a good example, where local financial service providers have adopted Fintech’s techniques to keep up with the competition, and that’s why Asia is a good choice.