For the next chapter in our series, which takes a look at the major trends affecting finance, we focus on Asia and consider some of the key developments driving the growth of Fintech in the region. In particular, we look at the role entrepreneurs like Janos Barberis (founder of SuperCharger Hong Kong) are playing to help create the right environment for change.
The Forgotten people of Asia
Asia has long known to be a land of contrasts. It’s the largest continent on earth and its varied geographies make it a diverse boiling pot of peoples and culture. It terms of scale, the content is home to a burgeoning population of over 4 billion people, that’s approximately 60% of the world’s population.
In some way’s it has long been a victim of its size. Government and industry have often lagged far behind in implementing the infrastructure needed to serve so many people. This has led to inequality in many areas, including finance.
According to Global Findex, the rate of unbanked people as a percentage of total population is 21% in China, 47% in India. The numbers for South East Asia are just as striking. According to a report by KPMG, only 27% of the region’s 600 million people have access to basic financial services.
There’s even a term for those who don’t have access to the basic financial services – the unbanked. In the developing regions of Asia, traditional banking services have failed to reach those in need where access to bank branches is limited to major towns and cities.
Without the means to save and borrow, the unbanked are condemned to a life of poverty and a poor standard of living, which in the 21st century, cannot be right.
Fintech as a source for financial inclusion
There is hope, however, Asia has a strong and growing mobile ecosystem (see fig. 1). Smartphone penetration is increasing year on year across and falling unit prices make devices available to a wide cross section of society.
In fact, mobile technology has been one of the key drivers of growth for the mobile payments market in the region. It allows the previously unbanked to send and receive money via mobile accounts. AliPay has some 450 million users in China, Paytm’s wallet has 122 million users in India and Smart Money’s E-wallet has 6 million users in Philippines.
Therefore, entrepreneurs who want to create a positive social impact, can. By pioneering innovative services like e-commerce, payments, p2p transfers and lending on mobile, they can help to liberate swathes of people from poverty.
And with investment in the region growing at a significant rate, there is strong support for continued growth of new Fintech services. According to an Accenture report, investments in financial technology in the Asia-Pacific surpassed the U.S, doubling to $11.2bn in 2016 from $5.2bn in 2015.
Actors of change
In that respect, it’s critical that there are projects in place that help support forward-thinking Fintech entrepreneurs. The Fintech Supercharger Hong Kong is one such project. Founded by Janos Barberis, it has grown to become Asia’s leading Fintech accelerator.
It’s a hub for entrepreneurs and early-stage Fintech start-ups to receive the support they need to grow and develop into entities that will serve the underserved. The accelerator attracts the best talent from across the region and has become a vital construct of Asia’s growing Fintech ecosystem.
The right regulation can help to accelerate the development of Fintech
As the growth Asia’s Fintech ecosystem continues to accelerate, the infrastructure that supports it will need to develop in tandem. One of the key areas of this development will be to manage the regulatory implications of Fintech. Of this, Janos is an expert.
He has co-authored several academic papers and is currently doing his Ph.D. at Hong Kong University. Needless to say, he plays a central role in the mapping the regulatory future of Fintech in the region. For example, he sits on the advisory board of the Securities & Futures Commission, and is co-editor of the Regtech Book, to be published in 2018.
Governments in the region understand acutely the transformative impact Fintech can bring to their economies. Countries like Singapore and Hong Kong are taking the lead in ensuring they are major global players in the development of Fintech. For example, The Monetary Authority of Singapore (MAS), Singapore’s central bank and financial regulator, has launched a number of initiatives such as the regulatory sandbox to promote Fintech development.
It’s ecosystem building programs like these that closely align with CFTE’s core values of creating the right infrastructure to enable people to thrive. If Fintech is to reach its full potential, not just in Asia but also globally, education will be key to bringing a greater depth of understanding to how we effectively leverage emerging technologies.
Working with great minds like Janos will help CFTE be at the leading edge of thinking and will ensure the courses we offer are relevant in today’s changing world.