2019 FinTechSpace

HIGHLIGHTS FROM THE ASEAN FINTECH ECOSYSTEM

BENCHMARKING STUDY

Chih Shan Luo

Managing Director, FinTechSpace

shanluo@iii.org.tw, shanluo@LinkedIn

Market Analysis - Project Rationale

“The emergence of FinTech start-ups across ASEAN has progressed at an unprecedented pace, with more than $485 million invested in 2018 across 68 deals, a 143% year-on-year growth when compared to

2017 and more than four times larger than 2016”

Firm-level data from 208 Fintech Firms across ASEAN region:

Cambodia, Indonesia, Malaysia, Myanmar, Philippines, Singapore, Thailand & Vietnam

Fintech Taxonomy based upon 10 Over-arching Models, each with 3 – 5 sub-categories:

Digital Payments, Digital Lending, Investment Crowdfunding, AI/ML/Big Data Analytics, Digital Asset Management, Trading and Capital Markets, Personal Financial Management, Enterprise Technology for Financial Institutions, Enterprise Financial

Management & InsureTech

26% of Firms were operating in 2+ Models

88% firms have Customers & are Revenue Positive

2

The Landscape - Geographic & Model Breakdown

• Singapore (29%) & Indonesia (17%)

• ROW 18%

• 32% Digital Lending

Of which 53% P2B Lending

• 26% Digital Payments

Of which 67% Mobile Money/P2P Transfers

• 21% Capital Raising Crowdfunding

Of which 44% Donation CF

3

29%

17%

11%

10%

7%

4%

3%

1%

18%Singapore

Indonesia

Malaysia

Thailand

Philippines

Cambodia

Vietnam

Myanmar

Others - ROW

Customers Served by ASEAN Fintech Firms

B2B Emphasis w/ +50% from SMEs & Corporates

Some Models more adept at servicing business customers: • 45% of AI/ML Firms, 46% of Enterprise Tech Firms

are Corporates

• 34% of Digital Lending firms are SMEs

Single Largest Customer Demographic are Individuals

• 52% Digital Payments (in particular Wallet & Money Transfer firms)

• 48% Digital Lending firms

• 43% AI/ML/Big Data firms

4

Financial Inclusion: A good business strategy

5

Highest Proportion of Unbanked Customers from Philippines (36%) & Indonesia (21%)

Global Findex Survey denotes 66% unbanked population in Philippines, 51% Indonesia

25%

19%

12%

10%

2%

17%

16%

47%

30%

13%

10%

28%

51%

31%

56%

62%

77%

50%

8%

3%

2%

16%

11%

5%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Digital Payments

Digital Lending

Capital Management

Personal FinancialManagement

Asset Management

Complete Data Set

Unbanked Underbanked Banked Unknown

Technology - The Backbone of most FinTech Firms

6

Firms Actively Pursuing In-house R&D Activities:

Speed of Service (80%) & Ease of Customer Use (83%) Identified as High Priority

Regulation Enables the Fintech Ecosystem

7

42%

30%

24%

12%10% 10%

9%7% 7% 6% 5% 5%

Banking/financialservices

Platform is notregulated

Money servicebusiness

Insurance business Data processingbusiness

Other Credit business Securities business Deposit business Microfinancebusiness

Investmentbusiness

Designatednonfinancial

business

46% Firms View “Changes in

Regulation” as Very High Risk Factor

Regulatory Overview

Key FinTech sectors

Digital payments

• Flourishing in ASEAN, with regulators and government leading the push for QR and mobile payments

• Singapore’s Payment Services Act and Thailand’s Payment System Act are great examples of adaptive regulation

Equity crowdfunding

• Bespoke regulations have been issued in many jurisdictions to support the operation of equity crowdfunding platforms as an alternative means for fundraising

• In some jurisdictions such as Laos, Myanmar and Vietnam, regulators still apply existing security laws and regulations to equity crowdfunding activities

Cryptocurrency

• The Central Banks in Southeast Asian countries have all adopted a cautious stance towards the rise of cryptoassets and specifically cryptocurrencies

• Bespoke regulation have been proposed in a number of jurisdictions, such as the Royal Decree on Digital Asset Businesses in Thailand and the Guide to Digital Token Offerings in Singapore.

Other sectors reviewed: P2P lending, InsureTech, Self-regulation mechanisms, Relevant policies & engagement.

8

Regulatory Innovation Initiatives

Innovation offices

9

Regulatory Innovation Initiatives

Regulatory sandboxes

10

Regulatory Approaches

11

P2P Lending Equity

Crowdfunding

Digital Payments ICO/Crypto InsureTech

Indonesia Regulated under

bespoke regulation

Regulated under

bespoke regulation

Regulated under

bespoke regulation

Regulated under

existing

legislation

Regulated

under existing

legislation

Malaysia Regulated under

bespoke regulation

Regulated under

bespoke regulation

Regulated under

bespoke regulation

Regulated under

bespoke

regulation

Regulated

under existing

legislation

Singapore Regulated under

existing legislation

Regulated under

existing legislation

Regulated under

bespoke regulation

Regulated under

existing

legislation

Regulated

under existing

legislation

Thailand Regulated under

bespoke regulation

Regulated under

bespoke regulation

Regulated under

bespoke regulation

Regulated under

bespoke

regulation

Regulated

under existing

legislation

Key Findings from Country Profiles

• Regulators in Southeast Asian countries welcome emerging technologies within financial services. However, there are challenges in balancing market simulation and risk management through adequate regulation;

• The majority of regulators across the region have signed cooperation agreements to share information on FinTech sectors in their respective markets;

• All of the regulators have responded to developments within FinTech markets with some form of bespoke regulation for specific sectors. As an examples, 80% have introduced bespoke regulation for digital payments;

• Regulators also continue to use pre-existing regulation for other sectors. As an example, 90% have used existing regulation for the InsureTech industry;

• The over-regulation by authorities may have contributed to preventing growth and development of certain sectors; and

• Regulatory harmonization is significant in terms of FinTech development in the region, and efforts are underway to encourage and further facilitate this, specifically involving cross-border initiatives.

12

About Singapore

13

• Digital Payment（34％）, Digital Lending（23％）和 Enterprise Tech（18

％） are the top 3 in fintech categories。

• Over Half (57%) firms considering「Predictive Analysis」is the Key tech for

their business operation。

• Cyber Attack ranked as the biggest risk (46%)

• About Half (31 out of 61) SGP-based fintech companies expand their

business to other ASEAN markets…Singapore is the Springboard for fintech

firms in the region

About Taiwan

14

• Enterprise Tech (37％), AI/ML/Data（33％）和 Enterprise Financial Managment（33％）

are the top 3 in fintech categories。

• Over Half (16 firms) choosing more than three categories for their business, tend to

develop cross disciplinary

• Top 3 R&D focuses are:「Predictive Analysis」(77%), RPA (50%), Blockchain/DLT (32%)

• 72% Taiwan-based fintech firms plan to open their business to ASEAN markets, 73%

seeking for healthy fintech ecosystem as their first priority

2019 FinTechSpaceSources: National Development Council(2018 Nov.), World Economic Forum(2018 Nov.), Global Entrepreneurship and Development Institute(2017 NOV), The Global Competitiveness Report 2018 (2018 Oct, WEF)

SUPER INNOVATORS in the world

(WEF, 2018 Oct)

4th

44%

Tech Talents(2018 graduates stat)

Global Tech Firms Favorite R&D Center

The Global Entrepreneurship Index(2017)

3th/APAC Region(28)

ProductInnovation

HighGrowth

RiskCapital

About Taiwan

16

Corporate Lab

AcceleratorProgram

Digital Sandbox

26 Sets of FAPIs

10+ F.I.s

Regulatory Clinic

80+On-site 1/pw

70+ startups

Innovators Need OnO Innovation Environment

17

Corporate Lab

AcceleratorProgram

Digital Sandbox

26 Sets of FAPIs

70+ startups

From Tech To Fin,

From Zero To Open Banking

#1 Aggregator @ Open Banking

(1st phase O.B./ 20 Banks)

18

Corporate Lab

AcceleratorProgram

10+ F.I.s

Regulatory Clinic

80+On-site 1/pw

70+ startups

Regulatory Sandbox Is The Last Mile

Top Online Community @ Wealth Management

Regulatory Sandbox

P2P Fund Exchange

2019 FinTechSpace

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