FINTECH TRENDS IN ASIA
While the United States often gets much of the attention for fintech growth, Asia is actually where a lot of the real innovation is happening. Indeed, consulting firm PWC says, China and India are spearheading advancements that are shaping global trends in financial technology. 
FINTECH CONTINUES TO GROW
A key reason for the innovation in Asia is that fintechs are developing solutions to address the needs of the underbanked and unbanked, which PWC says has the highest percentage of unbanked population in the world. The rapid adoption of new technology by consumers is also helping to power fintech ahead. 
Globally, EY said, emerging markets are leading the way in fintech adoption, with at least 87 percent of consumers adopting it in both China and India. The most commonly used category of fintechs is money transfer & payments, with 75 percent of consumers using it overall and an astounding 95 percent in China using at least one of these services. The most commonly used services in this category, EY said, are peer-to-peer payments, non-bank money transfers and in-store mobile payments.
Looking ahead, PWC expects four sectors in Asia to be especially strong. One is alternative lending, which will see continuing investments in microfinance that will fuel economies in developing markets. Another is wealth management, where wealth managers have an opportunity to partner with fintechs to leverage each other’s strengths and build products for tech-savvy wealthy individuals. Given the central role that regulators have had in driving the fintech agenda in both Singapore and Hong Kong, 
PWC believes that there will also be a rise in government and non-governmental initiatives in regtech. And finally, insuretech will grow beyond internet-first and digital insurers as investors channel funds into new technologies such as claims management and customer onboarding.
On the financial front, CB Insights said, Asia is home to 6 of the 29 fintech unicorns globally, including China’s Tuandaiwang, Tongdun Technology, 51Xinyongka, and Lu.com, as well as India’s Policybazaar and Paytm. And while fintech IPOs in Asia Pacific have generally been as sparse recently as in the rest of the world, KPMG noted that Australia is an exception following Prospa’s successful IPO in June and could see other fintechs considering IPOs.
CHINA LEADS THE WAY
Despite CB Insights data showing an 87 percent drop in fintech investment deals in China this year, due largely to a lack of megadeals as well as regulatory tightening that has led to the closure of thousands of peer-to-peer lenders, China continues to lead in fintech in Asia. While much of the focus so far has been on money transfers through payments systems such as Alipay and WeChat Pay, KPMG said less mature areas of fintech such as microfinance, consumer finance, AI, cloud solutions, big data and blockchain are growing rapidly. One example is new consumer-facing financing vehicles called mutual aid platforms, such as Shuidihuzh, which let users contribute as little as half a cent to a pool of funds that pays out when a consumer needs financial assistance. Regtech is also poised to grow, given the strong focus by the Chinese government.  
INDIA FOLLOWS FAST
India, which recorded $285.6 million in investments in fintechs in the first half of this year and overtook China, is also growing rapidly. As in China, growth stems in large part from a lack of financial infrastructure.
Beyond the payments revolution led by startups such as Paytm, key sectors that fintechs are moving into include blockchain, AI-based chatbots for conversational banking, AI and big data for risk modelling and customised solutions for consumers, robo-advisors for wealth management, and payments security. Mobile lending startups for SMEs and consumers are growing fast too, as they tailor services to unbanked and underbanked consumers as well as to enterprises.
ASEAN IS A KEY OPPORTUNITY
With a large unbanked segment among a population exceeding 600 million, ASEAN is a key location for fintechs too. A significant challenge, though, is that ASEAN is a diverse group of countries with different regulatory regimes and fragmented populations. That said, regulators have come together to develop ways to nurture cross-border solutions and have set up initiatives such as the ASEAN Fintech Network to increase cross-border collaboration and an ASEAN Financial Innovation Network which created a platform called API Exchange.
  
 After starting with payment solutions, fintechs in ASEAN are following the typical cycle of moving into sectors such as lending and insurance. While Singapore continues to be in the lead among the ASEAN countries, Fintech News noted that digital payments are booming in Indonesia, Islamic banking is growing in Brunei, and Thailand is embracing blockchain.  
WHAT'S NEXT
Looking ahead, Bookaka founder Jun Tagama told Entrepreneur magazine that three major fintech trends may define Asia’s future.
First, the emergence of smartphone data as a credit-scoring standard may give fintechs a better way to determine the creditworthiness of the unbanked and give them access to finance. Next, artificial intelligence (AI) is combining with the wisdom of the crowd to transform analytics. And finally, the uninsured will become the next unbanked and fintechs will start to deliver the insurance that individuals need to protect their families in regions such as ASEAN, where insurance penetration of 3.4 percent of GDP is well below the global average of 6.3 percent.
With innovations truly meeting customers’ needs markets across the region being so large, fintechs in Asia look well placed to continue their global role in leading advancements in financial technology solutions.
ARTICLE WRITTEN BY: RICHARD HARTUNG
Richard Hartung is the Managing Director & CEO of Transcarta Pte Ltd. He is also an advisor to the startups for Plug and Play's APAC Fintech Program.
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