articles from micro-channel public number: Suning wealth of information (ID: SuningWealthInsights), Author: Huang Dazhi (Suning financial researcher), from the title figure: Fig. Worm creative.
Looking back at 2019, the P2P sing song that represents the Internet financial model is intertwined with the opening up of traditional finance. There have been new changes in finance, and the development of banks, securities firms, insurance, asset management and other industries are moving to a new stage.
The development of fintech has also presented unprecedented opportunities and challenges. If the central bank’s “three-year plan for fintech” is a fire that ignites the industry, the accompanying rectification of the thunder over big data is a pour of ice water.
Facing the strict domestic regulatory situation, many Fintech companies have invariably set their sights overseas, more precisely, Southeast Asia.
Fintech companies, which started in 2017, have taken root in Southeast Asia, and have taken root in Southeast Asia. There are even many institutions that have grown into unicorns.
Over the past three years, great changes have taken place in Southeast Asia ’s economy, financial infrastructure, and financial regulation. Fintech has also had a profound impact on the financial industry. In the coming 2020, will Southeast Asia be a good place for domestic fintech companies to go abroad?
Economic growth bonus is no longer
Strictly speaking, Southeast Asia includes 11 countries, but generally speaking, because Myanmar, Cambodia, Laos, Brunei, Timor-Leste and other five countries are too backward in terms of economic and social development, infrastructure and economic aggregates, Therefore, no analysis will be made here. (see Table 1) This article focuses on the economic analysis of six countries, including Indonesia, Thailand, Malaysia, Singapore, the Philippines, and Vietnam. Growth and fintech development.
Undoubtedly, demographic and macroeconomic developments are important factors in measuring a country’s status. It is also the number one factor to consider when choosing a fintech company to go overseas. The economic development reflects the construction of infrastructure, which is related to the application of financial technology, and the population reflects the size and potential of the market. Economic development dividends and demographic dividends directly affect the possibility and success probability of fintech going overseas.
First look at the macroeconomic growth. After years of rapid growth, the overall economic growth in Southeast Asia has slowed significantly. In the first three quarters of 2019, the growth rates of the top three economies in Southeast Asia have all declined. Although the Philippines and Vietnam have maintained high growth rates, the total amount is relatively small. > (See Figure 1) .
Specifically, Indonesia ’s largest country in Southeast Asia, the quarterly GDP growth rate hit a new low in two years, and the Indonesian central bank ’s successive interest rate cuts have not recovered the decline in economic growth. The OECD predicts that its annual economic growth will be 5.04%, which is much lower than the 5.3% forecast by the Bank of Indonesia.
The Thai economy, which depends on exports, was severely impacted during the Sino-US trade friction. The Bank of Thailand forecasts a 2.5% GDP growth in 2019, the lowest in five years, and an estimated 2.8% growth in 2020.
In contrast, Malaysia, as the third largest economy in Southeast Asia, has maintained a rapid growth rate. Although the third quarter hit a new low for 2019, the Malaysian government still forecasts its annual economic growth rate to be 4.7%. Same as 2018. The World Bank’s forecast for its 2020 economic growth rate is slightly conservative, at 4.5%.
Singapore ’s growth rate has also fallen. Singapore ’s GDP grew by about 0.7% in 2019, a 10-year low, compared with 3.1% in 2018. Singapore authorities expect economic growth to be between 0.5% and 2.5% in 2020.Singapore’s largest bank, DBS Bank, is even more pessimistic, with a forecasted growth rate of 1.4%
In the Philippines, the economic growth rate rebounded strongly in the third quarter, stimulated by successive interest rate cuts and government infrastructure investment. It is expected to achieve a 6% growth rate in 2019, but it is still lower than the 6.2% growth rate in 2018.
Vietnam and the Philippines are similar. In the third quarter of 2019, economic growth will be higher than in the previous two quarters. Vietnam ’s GDP growth rate rose to 7.31% in the third quarter of 2019. In the first three quarters of 2019, Vietnam ’s actual GDP growth rate reached 6.98%. In 2019, GDP growth was 7.02%, slightly lower than 2018 ’s 7.08%.
To sum up, it can be seen that the economic growth rate of Southeast Asia as a whole has reached a new low in 2019. Although the overall growth rate is still higher than the average level of the world economy, the growth rate has slowed down, and the economic growth rate is expected to decrease further. . Corporate development dividends and demographic dividends brought about by economic development have both declined.
Regulatory arbitrage is no longer
In the early days when domestic fintech companies went abroad, the market in Southeast Asia was the same as China ’s early Internet finance. The new financial model represented by mobile payment enjoys the rapid economic growth of Southeast Asia and the demographic dividend of mobile Internet. Especially in 2017, it can be called the “sea year” of China Mobile Payment.
But just like the development of domestic Internet finance, with the occurrence of a series of vicious collections, beheadings, and bursts of risky events, the policies of Southeast Asian countries have tightened, and the supervision of foreign-funded fintech companies has become more stringent. Strict prudence.
For example, the Indonesian Financial Services Regulatory Authority (OJK) released a blacklist of fintech lending institutions in September 2018, showing Of the 407 blacklisted, more than half were Chinese companies.
In terms of innovation supervision, Indonesia has also imitated Singapore, implemented a “regulatory sandbox” mechanism, and borrowed domestic financial supervision experience to implement license management. Not long ago, OJK issued a batch of online loan registration letters, and a total of 20 platforms were qualified. Three of them are Chinese offshore financial technology companies, including Lufax, 360 Finance, and Xinye Technology. (Original shot loan) .
In addition to Indonesia, the Finance Division of VietnamTechnology supervision policies are also tightening. Although at present the National Bank of Vietnam (Central Bank, SBV) has not yet issued relevant laws, but consumer loans are subject to license management. Cash loans are also about to usher in stricter regulatory policies. SBV is also evaluating draft amendments to Notice 43 regarding more stringent management of financial company operations, such as tightening the cash loan interest rate on total outstanding loans to 30%, and stricter management of borrowers (Existing customers only) and debt claims.
It can be seen that, with the attention paid to the fintech industry by countries around the world, Southeast Asia has passed the early period of regulatory arbitrage. Countries are adopting stricter fintech supervision policies in accordance with their national conditions and learning from the experience of other regions. Difficulties in applying for licenses and compliance costs for overseas companies are increasing.
The rise of local forces
In addition to the impact of economic growth, population, and regulation, domestic fintech companies’ competition in Southeast Asia has become increasingly fierce, not only among domestic companies, but also in Europe, the United States, and other places and Southeast Asian local finance. The rise of science and technology forces.
In various regions of the world, Southeast Asia ’s vast market space and rich demographic dividends are widely regarded as a new blue ocean for fintech startups, attracting fintech institutions from all over the world, and the amount of fintech financing has hit record highs. .
According to CB-insights statistics, between 2016 and 2018, the amount of FinTech financing in Southeast Asia increased from US $ 125 million to US $ 559 million, a growth rate of more than 350%. As of the first three quarters of 2019, fintech financing in Southeast Asia has reached US $ 701 million. (see Figure 2) .
Among these traditional financial institutions, due to the earlier deployment of fintech in Southeast Asia, it has already occupied a relatively important position. For example, in Vietnam ’s consumer financial market, FE Credit (Far East International Commercial Bank, one of the largest commercial banks in Taiwan) has occupied more than 45% of the market Share, with the second-ranked Home Credit (Gitzo Consumer Finance) , the third-ranked HD Saison (Saisen) The fourth-ranked M Credit occupies more than 85% of the total market share, and the degree of market monopoly is extremely high.
In addition to these, The influx of foreign capital and the entry of leading fintech companies are forcing local finance, credit system construction, and new fintech companies to move forward, enabling Southeast Asian local Internet giants and traditional finance Institutions, start-ups, etc. also have a big advantage in the field of fintech.
Here is an obvious example. The penetration rate of bank accounts in Jakarta, Indonesia is rapidly increasing, and the number of investment and financing is also rapidly increasing, second only to Singapore. And those local financial institutions and new enterprises are also learning from the concept of Internet finance and developing rapidly. Typical Southeast Asian technology unicorns like Grab and Go-Jek have entered the field of fintech services, such as online payments, online lending, and consumer finance.
For example, Singapore’s electronic payment institution NETSPay, online lending platforms Funding Scieties, Seedin, Capital Match, etc. Among them, Funding Scieties is currently the largest P2P network lending platform in Southeast Asia. Danamas, Investree, KIMO, Amartha and other lending platforms in Indonesia. Among them, Danamas under Cotai Group is the first institution in Indonesia to obtain a P2P operating license.
Due to the complex and diverse customs of Southeast Asia, these fintech companies born in the local area have more comparative advantages in the competition.
If it is said that the initial entry of fintech companies was to reduce dimensionality, then it seems that the competition between foreign capital and local forces is already on the same technological level.
What are the opportunities for FinTech 2020?
Undoubtedly, compared to the past, when choosing to go to Southeast Asia, we have already faced a completely different macro environment and regulatory background. It seems that Southeast Asia is not the best choice. But at the same time, driven by factors such as strong financial regulation, financial openness, and the peaking of the Internet’s demographic dividend, it is an inevitable choice for Fintech to go abroad to gain a wider development space.
So, are there other better options for FinTech companies?
The market already has signals.
First of all, Southeast Asia is still an option. According to the data from the Southeast Asia Digital Financial Services Report jointly launched by Bain, Google and Temasek, Southeast Asia ’s Internet economy is still growing rapidly, reaching 300 billion U.S. dollars by 2025, and still more than 75% of consumers lack banking services. All these provide objective conditions for new players.
But again, raising the threshold is an indisputable fact. For example, the requirements for license plates, capital strength, and technical strength, especially license plate management, are the main factors restricting new players from entering.
Second, in addition to the demand for electronic payment and borrowing in Southeast Asia, more new requirements have been created for asset management, insurance, and technology output. As a matter of fact, some companies have already started to engage in insurance or asset management business in Southeast Asia.
Again, there are still new opportunities in individual countries. Although Southeast Asia is considered as a whole, the development gap between countries is very obvious. The early tide of the sea was concentrated in Indonesia, Singapore and other places, but with the rapid development of the Philippines, Vietnam, Myanmar, Cambodia and other countries, the improvement of infrastructure and financial environment also provides a certain development space for financial technology. Especially Vietnam, its economic growth momentum is still very strong, and demand for electronic payments and loans has maintained double-digit growth.
Finally, explore new fintech fertile ground. Such as Russia, Japan, South Korea and other Northeast Asia regions, India, Nigeria, Kenya and other African regions, and Latin America and other regions. Of course, in different regions, FinTech companies choose different ways to go overseas.
It is undeniable that China’s fintech is already leading, but the further the pace of “going out”, the more complicated the environmental impacts it faces. At the same time, the export of technology, capabilities, standards, and market cultivation all require a large amount of continuous investment in time and capital. These factors will not decrease with different target choices, Only to varying degrees.
From this perspective, the opportunity of this hot land in Southeast Asia is still there, and the first half of fintech overseas is not over. The Southeast Asian market and the fintech companies in which it is located may change with the future. I am optimistic about this.
Because pessimists are often right, but optimists are often successful.