Southeast Asia is currently witnessing a spur of technological innovation, especially in the Fintech sector, as it rapidly changes the financial services industry.
According to a report by Ernest & Young (EY), countries within the Association of Southeast Asians Nations (ASEAN) have been enjoying factors such as a steady economic growth, a large and youthful population, as well as rapidly increasing Internet and smartphone penetration.
In parallel, a proactive stance of several national regulators has lured in investors to finance almost $1 billion into its Fintech sector since 2013, as the region emerged with a 55 percent in CAGR in equity funding.
However, Thailand, in particular, is well-positioned to capitalize on the new developments in FinTech as the country now home to at least 96 startups in the sector, according to EY report.
Thailand’s Fintech ecosystem includes companies and businesses operating in the digital payments space, blockchain or distributed ledger tech (DLT).
There are several Fintech companies offering financial comparison tools, Insurtech services, retail investment platforms, peer-to-peer (P2P) lending, personal finance solutions, business tools, crowdfunding services, financial education portals, remittance payment services and financial infrastructure providers.
A number of banks in the ASEAN region have taken note of this shift in digital trends, which has pushed them to adopt agile and adaptive business models.
According to a recent report by the Singapore Fintech Association (SFA), these banks have witnessed a threefold growth – over 300 percent – since making the shift into Fintech.
“Digital banking competition in Southeast Asian countries like Thailand should intensify as there’s been a boom in Fintech Investments,” the report highlighted.
According to EY, what’s central to the Thai government’s policies is the Thailand 4.0 economic model which will help the country overcome several economic challenges through innovation and technology.
The model aims to increase research and development expenditures to 4 percent of GDP, increase economic growth rate to full capacity rate of 5 to 6 percent within 5 years and increase national income per capita from $5,470 in 2014 to $15,000 by 2032.
“The government’s attitude toward fintech innovations is pivotal in shaping public sentiment and Thailand’s forward-looking actions and legitimizes technology and its viability,” the report highlighted.
The report also mentioned that based on the top-down technologically progressive developments and decisions, people will become more accustomed to innovation, which will render the country primed for widespread adoption of Fintech.
The Bank of Thailand (BOT) has taken a leading role in creating an enabling environment for FinTech expansion in Thailand. This work has included organizing the 2018 Bangkok FinTech Fair, advancing a National e-Payments Master Plan, and establishing a FinTech regulatory sandbox.
In parallel to the stable growth of digital banking services in Thailand, the country has also witnessed a significant growth in the region’s nascent blockchain and crypto-assets sector.
“Thailand’s Securities and Exchange Commission (SEC) has issued licenses to at least 13 crypto-related companies which now offer digital currency exchanges and serve as brokers and dealers. Thailand and several other Asian countries now have one of the world’s fastest-growing digital asset markets,” said the report by the SFA.
The country has witnessed at least 10 percent of all Internet users have had some sort of investments made within digital currencies, which has pushed Thailand to secure a second spot in the global scenario of crypto ownership behind South Africa.
However, the Fintech scene in Thailand remains small in the ASEAN compared to Singapore and Indonesia; Thai Fintechs accounts for a mere 8 percent of all ASEAN financial technology companies in the past year, according to a report by PwC and SFA.
“Thailand-based Fintechs are also behind other markets when it comes to securing funding. Thai Fintech companies only secured around 1.5 percent of all the capital that was allocated to ASEAN Fintechs this past year,” the report added.
Government support for the sector is increasingly growing in parallel, widely due to Fintech’s essential role during the worldwide lockdown enacted due to the COVID-19 pandemic. In August 2020, the Bank of Thailand had signed a Fintech-focused MoU with the UK government, which is aimed at supporting sustainable economic growth.
Meanwhile, the World Bank has suggested that the Thai government reduce the several inequalities in access to the capital to enable the variations in Fintech development to emerge even more prominently.
“The government of Thailand must also promote significant competitiveness of Fintech connectivity and much-needed cooperation between the traditional Thai banks and Fintech companies, which will help to create much closer cooperation between the regulating agencies to prevent absolute redundancies, as a result of which might obstruct Thailand Fintech development by significant margins,” the World Bank said in a report.
There are a large variety of Fintech startups that have emerged to become popular among locals and expats alike.
A payment management platform that allows people to transfer money to third-party bank accounts, save regular customer card numbers, and return money to customers. It’s a payment management system that suits SMEs and makes it simple to send transfers to multiple bank accounts.
Jitta offers an investment platform designed for financial advisors and individual investors. The platform simplifies financial analysis so that investors and advisors can make knowledgeable decisions. It also has a ‘crowd wisdom’ feature for professionals and successful investors to share knowledge and investment advice within a community of supporting individuals.
Masii allows users to compare various car insurance and credit card offerings to find the right one for their needs. This site was identified as the top site for expats living in Thailand to compare both health and car insurance rates and coverage, as well as credit card rates.
FlowAccount was designed as a cloud-based accounting program specifically to serve the needs of SMEs in managing their expenses. The user has an account where they can upload photos of their receipts and invoices. The program also generates and sends professional-looking invoices. It can collaborate with partners and track payments.
MTN Rwanda launches mobile money FinTech services
MTN Rwanda announced late last week the launch of a FinTech subsidiary called Mobile Money Rwanda LTTD, to provide and manage mobile money services throughout the country.
The announcement – which was made as the operator received approval from National Bank of Rwanda to launch the FinTech service – also places Chantal Kagame as its Chief Executive Officer to drive business development, strategy, innovation, and day to day operations of the company.
According to a statement by the South African courier, the setting up of Mobile Money Rwanda Ltd is in line with MTN Rwanda’s strategy to lead digital solutions while contributing to the national economic strategy on enhancing cashless transactions that offer convenience and security to all Rwandans.
“We are very glad to announce the establishment of Mobile Money Rwanda Ltd as a wholly owned subsidiary of MTN Rwanda. One of the key pillars in our strategy is to establish platforms that our customers find valuable. This restructure will ensure that the Mobile Money business remains agile, well poised for future growth and accelerated innovation. Mobile Money has matured over the last ten years in Rwanda, and this marks a pivotal milestone in our journey toward a cashless economy,” MTN Rwanda CEO, Mitwa Ng’ambi said in a statement when speaking about the new standalone firm.
In parallel, Kagame highlighted the company’s commitment to enhance the MoMo user experience and keep innovating products and services aligned with their digital ambition.
“The transition process to a standalone business has now kicked off and we look forward to cementing Mobile Money Rwanda Ltd as a key FinTech player in the Rwandan market,” she added.
The South African-based telco already provides FinTech services under the name of MoMo, a service that has been in operation since 2010. According to figures by the company, MTN currently boasts about six million subscribers.
MTN claims the largest market and value share in the increasingly competitive telecoms sector of Rwanda.
The announcement comes in line with MTN’s ambition to expand within the large African market, as the courier placed a bid to receive an operating license in Ethiopia, as the country looks to liberalize its telecoms sector and digitize its economy.
Prior to Chantal’s appointment, she held the role of Chief Business and Corporate Affairs Officer since she joined MTN in 2018. She is a senior Telecom Executive with over 19 years of experience in Multinational Telecommunications.
She has a track record of excellent achievement in areas of Executive Leadership, Sales and Distribution, Mobile Financial Services, Strategy Development and Execution, Corporate Affairs and Credit Management.
Prior to joining MTN Rwanda, Chantal was the Deputy CEO/COO at Tigo Rwanda for 3 years and Head of Sales, Distribution and Corporate Affairs at the same company from 2011 to 2015.
The establishment of Mobile Money Rwanda Ltd does not in any way affect nor change the delivery of services to current Mobile Money customers. Mobile Money customers will continue to enjoy access to the wide range of MoMo products and services, the over 30,000 Mobile Money agents and 60,000 MoMoPay merchants across the country.
MTN foresees an even brighter future to further expand and deepen its offerings to the public in line with Rwanda’s vision to become a fully cashless economy.
UK to explore Central Bank digital currency
The Bank of England and the British Treasury have announced the joint creation of a Central Bank Digital Currency (CBDC) Taskforce to coordinate the exploration of a potential new form of digital money issued by the Bank of England and for use by households and businesses.
While the announcement was made by Chancellor of the Exchequer Rishi Sunak as part of the UK Government’s response to the Kalifa Review, the new digital currency would be alongside cash and bank deposits, rather than replacing them.
Aims of the task force
In addition, the Taskforce aims to ensure a strategic approach is adopted between the UK authorities as they explore the digital currency, in line with their statutory objectives, and to promote close coordination between them. The Taskforce will:
- Guide evaluation of the design features a digital currency must display to achieve our goals.
- Coordinate exploration of the objectives, use cases, opportunities, and risks of a potential UK CBDC.
- Support a rigorous, coherent, and comprehensive assessment of the overall case for a UK CBDC.
- Monitor international CBDC developments to ensure the UK remains at the forefront of global innovation.
The Taskforce will be co-chaired by Deputy Governor for Financial Stability at the Bank of England, Jon Cunliffe, and the Treasury’s Director General of Financial Services, Katharine Braddick.
Commenting on the announcement, John Whelan, MD Digital Investment Bank & Innovation, Banco Santander expressed his excitement “to see this development from the Bank of England supporting the opportunity to use tokenized cash assets on next generation payment systems, enabling on-chain wholesale exchange of value.”
In parallel, the Bank of England announced the establishment of a CBDC Unit, which will lead its internal exploration around the currency, as well as leading the Bank’s external engagement on CBDC, including with other UK and international authorities.
Banks searching for digital currency
“We’re launching a new taskforce between the Treasury and the Bank of England to coordinate exploratory work on a potential central bank digital currency (CBDC),” British finance minister Rishi Sunak told a financial industry conference.
Other central banks are also looking at whether to set up digital versions of their own currencies, essentially widening access to central bank funds which only commercial banks can use at present. This process would speed up domestic and foreign payments and reduce financial stability risks.
While China is a front-runner to launch a CBDC, the European Central Bank said it was studying an electronic form of cash to complement banknotes and coins, but any launch was still several years away.
Bitcoin millionaire puts money on Greens in German election
A German software developer who made a fortune from bitcoin has given the environmentalist Green Party one of the biggest political donations in the country’s history in hopes it will win this year’s national election — and consider banning the digital currency.
Moritz Schmidt’s donation of 1 million euros ($1.2 million) to the Greens made headlines this month, as the party traditionally receives only small sums. Such a large gift is rare in German politics. Parties in the country receive most of their funding from members’ dues and state aid linked to election results.
“I have benefitted immensely from the bitcoin bubble. It’s been a wild ride, and the proceeds are unearned riches really,” Schmidt told The Associated Press in an email interview this week. “I’ve been sort of waiting for the right opportunity to donate a larger sum.”
The 39-year-old from the northeastern town of Greifswald, who hadn’t previously featured on any lists of major political donors, said he bought “a couple thousand euros” worth of bitcoin in 2011, shortly before it crashed, wiping 90% off the value of his holdings. Since then, bitcoin and other cryptocurrencies have repeatedly surged and slumped on investors hoping to turn a quick profit.
The value of a single bitcoin has dropped from over $64,000 to about $50,000 in the past ten days.
Schmidt, who made about 2 million euros ($2.4 million) by gradually selling his bitcoin over the years, said he learned in 2017 that the virtual currency consumes a vast amount of electricity. While the details are hotly debated by bitcoin fans and critics, experts say the power required to generate and trade cryptocurrencies is considerable.
“Being an energy hog is built into the bitcoin system,” said Schmidt.
The Greens advocate strong environmental policies to curb greenhouse gas emissions and fend off the threat of climate change.
Schmidt, who is cautious about the Greens’ prospects of winning the election outright despite their current high poll ratings, says he decided to help fund their campaign rather than donate toward an environmental project because “giving it to a political party that has environmentalism as its core value will have a much bigger impact.”
The Greens nominated 40-year-old lawmaker Annalena Baerbock as their candidate Monday to succeed long-time conservative leader Angela Merkel as chancellor in the Sept. 26 election. While the party doesn’t mention bitcoin’s environmental footprint in its program, it does want such currencies to be “traceable” — making bitcoin less attractive to many of its fans.
“I don’t think regulation will do anything unless it crashes the price down to levels that make bitcoin uninteresting as an asset and unusable as a global currency,” said Schmidt. “I believe that, in effect, bitcoin will need to be banned.”
Schmidt dismissed comments that suggested he might be trying to redeem himself for having traded in the cryptocurrency.
“Had I looked for absolution, I’d have turned to the Catholic Church,” he said.
BERLIN (AP) — By FRANK JORDANS Associated Press
Follow AP’s coverage of climate change: https://apnews.com/Climate
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