Asia continues to dominate the world in FinTech adoption, according to the most recent EY Global FinTech Adoption Index, which was based on a survey of 27,000 online users across 27 regions. FinTech tool use among consumers and small enterprises in the region has soared over the past two years, especially in China, India, and the financial hubs.
FinTech is also growing quickly in Southeast Asia, with record investment taking place in the region. In an effort to promote innovation, increase efficiency, and provide services to the unbanked people, central banks throughout Asia are in the process of opening up the heavily regulated financial sector. The Covid pandemic saw a major increase in the number of online transactions being made, and this rise in digital payments has continued even after the pandemic has subsided.
One of the big questions over FinTech in Asia is whether international companies are capable of breaking into the market. Currently, several European and North American fintech firms have begun moving into this fast-growing and densely populated region. However, they face a lot of challenges in doing so. Marketing to Asian consumers is a big challenge due to the differences in tools used in the region. According to a local Link Building Agency, more international fintech companies are looking to enter the market.
Challenges Facing International Companies in the Asian FinTech Market
According to current studies, more than 70% of Southeast Asia’s population is either underbanked or unbanked. Even if the Covid-19 pandemic and other factors have spurred development and adoption in the payment sector, there is still a lot of room for growth in fintech.
Sectors such as investment, lending, savings, and decentralized finance can all see further growth over the coming years. This presents a huge opportunity for fintech organizations. However, it’s not without its challenges.
Entering the Asian market has been described as being like building a whole new company, and each country presents its own unique set of regulations, culture, and challenges for companies to navigate. In China, regulations can be severe, and even major businesses such as Ant Group can fall foul of them. Digital marketing techniques also differ in China, where Baidu is the preferred search engine of choice, and many social network platforms used in the Western world are unavailable.
Aside from regulations, existing competition also provides a barrier that can make it difficult for international fintech companies to gain a foothold in this exciting market. The level of competition varies wildly depending on the specific country and type of fintech in question, but many companies are already well established and shouldn’t be underestimated. Southeast Asia offers some of the toughest competition, as regulations have allowed new fintech companies to thrive in recent years.
International companies must also think about the market they’re entering. They can’t expect the same formula that works in Europe or North America to also work in Asia. It’s important to adapt the product for the local market and ensure that needs are met. For example, e-Wallets and QR codes are very popular in Asia, and releasing a fintech product without these would likely result in failure.
Global Processing Services (GPS) is a great example of a European fintech company that has found success in Asia. It recently announced the launch of its Asia Pacific hub in Singapore and has succeeded by offering B2B solutions to existing fintech companies. GPS has been instrumental in the success of major firms such as Revolut, Monzo, and Starling and has now provided services for Railsbank in Asia. While fintech firms search for a platform partner to aid them in scaling worldwide, the newest Singaporean Hub will support existing client expansion and regional client demands.