Fintech innovation is bridging financial divides in Asia Pacific - report
A new report from Findexable shows that fast-paced fintech innovation in Asia Pacific has a measurable, positive impact on access to financial services in the region.
The report, Asia Pacific Fintech Rankings: Bridging Divides, is powered by Mambu and provides an APAC-centric deep-dive into the Global Fintech Rankings released mid-2021. It highlights the vital role fintech innovation has in closing the gaps between the banked, underserved and unbanked, particularly in countries with low levels of formal financial inclusion but high levels of smartphone ownership and internet penetration.
"The 2022 rankings of Asia Pacific fintech hubs are testament to the region's diversity, ingenuity, and commitment to innovation," says Findexable CEO and co-founder, Simon Hardie.
"With 45 hubs across the region (one third more than in 2020), fintech firms across Asia Pacific are proving fintech is the engine of the digital economy. More importantly, as this report shows, fintech companies are showing that building successful businesses should go hand in hand with contributing to broader financial inclusion and development goals."
Myles Bertrand, managing director at Mambu, says they've seen an incredible acceleration in the rate of fintech innovation across the region over the past year. While some of that was a direct result of the pandemic, the adoption of new financial technologies is now primarily driven by consumer demand.
"Consumers across Asia Pacific have experienced how digital banking technologies can make their lives easier, with a huge range of faster, more convenient and much less expensive ways to manage their money," says Bertrand. "So, we're seeing a rapidly growing number of previously unbanked consumers who are now able to participate in the formal economy."
Bryan Carroll, CEO of Vietnamese digital-only bank TNEX agrees, he adds, "We have customers whose annual income may be less than $2,000. These are people who, in the past, wouldn't be able to afford banking."
The report includes in-depth looks at Vietnam and Indonesia and commentary from several Asia Pacific fintech leaders. It identifies the countries and cities leading the fintech charge in the region, including Jakarta, which jumped 27 places in the city rankings this year, and New Zealand, which rose 15 places in the country rankings to sit inside the top 10 for the first time.
It also unpacked new financial technologies, particularly in the payments space, that are changing how people across the Asia Pacific region manage their money, where cash has been relegated from its long-held position of king.
But while fintech innovation is increasing at pace, Findexable says old roadblocks remain, and new barriers frequently arise. The report highlights some issues faced by fintechs due to the region's complex regulatory framework and the disparity in the economic maturity of different countries.
"Asia is home to nearly half of the top 20 global fintech hubs identified in the report, but the differing regulations from country to country can be a hindrance to multinational growth in the region," says Bertrand.
"Each country's central bank or government has its own agenda, so fintechs need to work collaboratively with the regulators in each country to understand their concerns and to help support the creation of mutually beneficial ecosystems that support innovation."
He says that's what's going to truly drive continued improvements in financial inclusion.