Asian fintech enters accelerated innovation phase

When COVID-19 first appeared a year ago, beginners, as well as early investors, could see what the pandemic could mean for the emerging theme of fintech innovation. Instead of threatening new financial business models, the pandemic has driven the future, dramatically accelerating changes in customer behavior and business structure in Asia and elsewhere.

What has been expected over the years has been achieved in months. And with the new data showing that financing volumes for fintech enterprises will peak in the first quarter of 2021, I think we are entering a phase of rapid innovation in the financial world.

It has the potential to deliver better results for consumers and small businesses around the world, and I hope it will be shaped by three related themes that have proven their importance over the past year: platforms, plug-ins, and plumbing.

These issues must form the core of an increasingly robust fintech funding environment. Business investment declined during the initial uncertainty surrounding the pandemic, but increased at the end of last year and resumed growth in the first three months of 2021. 2021: More than half of the total funding raised in 2020. Asian fintechs raised $ 3, 7. . billion in the first quarter, compared to $ 1.9 billion in the last three months of 2020.

Built-in finance, or the integration of traditional retail financial services into platforms used daily by millions of people, gained momentum during the pandemic. Start-ups and early investors have doubled their efforts in this area and – judging by a large amount of recent news – investors and public stock markets later realized.

There are three main components of integrated finance. The first deals with relevant and useful platforms for the daily life of people during the pandemic: the handyman platform that creates profit opportunities, the e-commerce platform that delivers goods to convenience stores, supply chains that connect the farm gate with food. and social media platforms that help people stay in touch.

Of course, these platforms integrate digital payments. They have an increasing number of users, who often have a lot of trust and dedication. It is important to note that it also generates proprietary data and perceptions about users’ needs and behaviors, enabling them to go beyond financial payments for financial services.

When Grab announced plans to merge with the Nasdaq-listed expert of Altimeter Growth, he stressed that financing plans are one of three positive priorities and opportunities. The proposed merger, valued at nearly $ 40 billion, is SPAC’s largest transaction to date and would be the largest share offering ever offered by any company in Southeast Asia.

The deal has attracted more than $ 4 billion in new parallel financing by major investors such as BlackRock and T. Rowe Price, as well as sovereign investors such as Temasek in Singapore, the United Arab Emirates Mubadala, and Permodalan National Berhad in Malaysia.

The second part of integrated financing is plug-ins that increase the high engagement of these popular platforms, payment transaction data, and other customer perceptions. With these plug-ins, platforms can offer a wider, more personalized, and often cheaper range of financial services than was previously possible or available from traditional providers, especially new forms of credit or insurance.

The most visible example is buying now, pay for credit in e-commerce, which is usually subsidized by online retailers who want to increase consumer demand. Due to the strong growth in volume over the past twelve months, the CEO of AfterPay in Australia has publicly considered listing a US stock exchange after a similar move by US competitor Affirm in January. Although less prominent so far, it also creates a strong momentum behind integrated working capital credit to quickly digitize small businesses and supermarkets through logistics delivery and distribution platforms.

The third component of integrated financing is the new type of infrastructure based on application programming. This hydraulic system is needed to connect the new generation of customer and product interfaces with approved scales.

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