By Wang Zhe
Since last year, financial technology (commonly referred to as fintech) has witnessed a rapid rise in China and the world as a whole. Besides exploring the domestic market, many Chinese fintech companies have quickened their pace of entering foreign markets. Their technologies and products have been exported to foreign markets including ASEAN countries, evoking global attention. Recently, many Chinese fintech giants, including Ant Financial, WeChat Pay, Lufax, New Union Online, Credit China FinTech Holdings Ltd., CreditEase, Dianrong and Fengjr.com have announced plans to explore the Southeast Asian market by offering services such as mobile payment platforms, online financial management and online loans.
Wang Yongli, a senior academic advisor of the China Fintech 50 Forum (CFT50) and a former vice governor of the Bank of China, explained in an interview that although many key financial technologies didn’t originate in China, the country’s enormous population and economic aggregate have still provided opportunity for massive fintech industry growth. In the past few years, China has overtaken developed countries in terms of financial innovation. Similarly, as a region with a tremendous population and a strong economic foundation, ASEAN is expected to have a bright future in fintech development.
Wang stressed that in recent years, as the expansion of China’s domestic market slows down, many internet startups and venture investors have begun to set sight on ASEAN countries with a combined population of about 600 million and mobile internet infrastructure lagging four or five years behind that of China.
As payment in installments becomes more prevalent across Southeast Asia, many Chinese internet startups in the ASEAN market have begun to provide a variety of financial services. Compared to traditional banks, their advantages lie in big data and other technologies. Only 6 percent of Indonesians own credit cards, and that figure is 5 percent in the Philippines and 3 percent in Vietnam. This offers a huge space for the development of fintech enterprises.
Over the past two years, investments received by fintech companies in Southeast Asia hit US$150 million annually, rebounding quickly from their lowest point in 2012. Last year, the number of fintech projects in Southeast Asian countries including Indonesia, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam that received support from venture capital firms increased by 29 percent.
Fertile Land for Fintech Development
Based on their rich experience in fintech development and in exploring the Southeast Asian market, Chinese fintech companies have helped local startups shape Southeast Asia’s fintech industry.
Currently, Ant Financial, Alibaba’s online payments affiliate, has provided Alipay services in Malaysia and invested in Thailand’s Ascend Money and the Philippines’ Mynt. Both are mobile payment platforms similar to Alipay. Through acquiring local enterprises, it has not only quickly solved problems concerning licenses, talent and cultural barriers, but also introduced a mode of inclusive finance into Southeast Asian countries through the export of technologies and experience.
Thailand, with a comparatively developed financial sector, is a good example. In November 2016, Ant Financial acquired 20 percent of Ascend Money. Then, channeling the business model of Ant Financial, Ascend Money began to provide services like offline payments and small loans.
Lufax, New Union Online and CreditEase chose to set up wholly-funded companies and apply for business licenses in Southeast Asian countries. In January 2017, Lu International Financial Asset Exchange (Singapore), an international service platform under Lufax, was registered in Singapore to offer financial management services for investors who own overseas bank accounts and assets.
Indonesia, the most populous country among ASEAN member states, provides fertile land for fintech development. The fintech team of Beijing Yingke Lyun Technology Corp., Ltd. has joined hands with an Indonesian startup to develop a cash-loan mobile app, which is now available on the Google Play app store. The app has greatly impressed local customers with its simple but eye-catching design, pleasant customer experience and fast and real-time online loan services.
“It isn’t an easy task to launch a fintech app in the Indonesian market,” noted Liao Yun, Chief Technology Officer (CTO) of Beijing Yingke Lyun. “Indonesia doesn’t have a mobile internet market as well-developed as that of China, especially in terms of mobile payments, third-party data connection and capital channel connectivity. Despite difficulties such as different hardware and software environments, our technological team spent only two months completing preparations for the app. Moreover, we set up the background risk control and loan approval process. Now, tens of thousands of loans are processed through the app monthly.”
Beijing Yingke Lyun, established in 2013 as a subsidiary of Yingke, a Chinese law firm, is a high-tech company comprised of talent from world-renowned tech giants such as Microsoft, Google, Baidu, Alibaba and Tencent. As early as 2013, the company began committing itself to the research of financial technologies. Since the end of 2016, it has exported fintech.
Generally, Beijing Yingke Lyun cooperates with foreign startups as their technological partners, charging them a small amount of technological service fees and helping them develop relevant systems via equity swapping. After the systems operate for a certain period of time and its foreign partners establish their own technological teams capable of future systems upgrading, Yingke Lyun then completely transfers relevant systems to them.
“Empowered by technologies such as artificial intelligence, blockchain and big data, ordinary people in developing countries like ASEAN member states can enjoy financial services as convenient as those in developed countries,” remarked Yang Tao, assistant director of the Institute of Finance and Banking under the Chinese Academy of Social Sciences (CASS). He also pointed out that the fast upgrading of fintech imposes an unprecedented challenge on global financial security. Fintech development must clarify and adhere to financial sector’s bottom line and fundamental rules, and needs the regulation and guidance of relevant public policies. Financial regulation is a global challenge that needs to be researched and addressed by financial professionals from around the world.