By John Pennington

In the Asia-Pacific region, the fintech market is projected to reach US$72 billion by 2020. In Southeast Asia, the market is growing quicker in some countries than others.

Singapore continues to lead the way, for example, but others are making progress. Digital payments are booming in Indonesia, Islamic banking is bringing fintech opportunities to Brunei, and Thailand is embracing blockchain.

In 2019, Cambodia and Vietnam are set to make big strides towards becoming cashless economies. Vietnam’s government targeted going cashless by 2020. Mobile payments are increasing fast. GrabPay’s expansion in the region will have a huge impact on Cambodia.

Banks will continue to work with fintech companies…

Fintech development typically happens in waves. It starts with payment solutions, then moves onto lending before branching out to other sectors, such as insurance. This is now well underway across Southeast Asia and poised to continue in the year ahead.

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Some banks have already realised that they are better served by working with fintech rather than seeing it as competition.

In Thailand and Vietnam, major banks are ready to collaborate with fintech companies to better serve their customers.

while making use of new technologies and protocols

How banks use artificial intelligence (AI) could become one of the developing fintech stories in 2019. If banks can successfully implement AI solutions, then they can make significant progress. “The use of AI is important to us and business sectors as companies can use AI to solve problems, or at least make better decisions,” explained EY’s ASEAN Financial Service Partner Brian Thung.

Open banking, another development experts think will come to the fore in 2019, could well continue to develop in Southeast Asia. Open banking forces banks to provide their data in a secure, standard form. Fintech companies can harness that data to build new products. With access to this data, the pace of fintech development will increase rapidly. Accessing consumer data is key to making inroads into the creation a safe and secure P2P and B2B lending space, among other sectors.

The accumulation of data will dominate the 2019 fintech landscape

Data is key to driving new fintech products in 2019. Any fintech offering lending or insurance services relies on data to perform accurate risk analysis. It allows them to make predictions about user behaviour and tailor their services accordingly.

The better data there is, the more relevant and cost-effective a product will be. “Open banking and APIs will open up one of the world’s oldest and most exclusive industries to intense competition and collaboration which aims to give consumers more options and better services,” explainedSmita Gupta, Finastra’s Asia Pacific Head of Marketing and Strategy.

The next step for fintech companies is to start to look at using alternative data points. Deriving, analysing and using data from other sources such as social media behaviour will further improve their products and could be a key area of focus for 2019.

Cross-border initiatives could drive fintech development forward

One of the things to monitor in 2019 will be how countries in ASEAN work with their neighbours to advance fintech solutions.


China and Singapore already announced they will deepen their fintech links. They will share information which should accelerate progress in both countries.

They will also cooperate on regulating fintech activities that are carried out in both countries.

Singapore occupies an undisputed position as ASEAN’s leading fintech hub. Linking up with China will enable it to compete with others in the wider region including Hong Kong and pursue global expansion. Others in the region can then benefit from forging their own links with Singapore.

Some have already done so. They are also working on other collaborations. Cambodia, Laos, Myanmar, Thailand and Vietnam have committed to work together on a cross-border fund transfer scheme. It will allow people to use QR codes to transfer money and pay lower fees than they currently do. It is due to roll out next year. Its success or failure may determine whether other collaborations are seen as worthwhile.

Blockchain development is an area to watch in 2019

ASEAN is open to blockchain in a way that other regions are not. Southeast Asian countries, led by Singapore and Thailand, are ready to move away from Initial Coin Offerings (ICOs) and instead focus on Securities Token Offerings (STOs).

Unlike ICOs, governments can regulate STOs. This helps create a more transparent market and prevent fraud. The move could also help facilitate access to global financial markets and start to close the gap between Europe and Asia.

Singapore is also breaking new ground by using blockchain in the energy sector. Blockchain start-up Electrify has created a peer-to-peer energy market. Consumers can use it to buy electricity at cheaper rates.

Elsewhere, Malaysia has the largest blockchain centre in Asia. Blockchain can deliver improved efficiency, logistics and security. Expect all countries in Southeast Asia to step up their efforts to innovate, regulate and develop their blockchain capabilities in 2019.

2019 promises fintech progress but there will also be challenges

Fintech development in 2019 will come from all areas and it will differ from country to country. However, significant challenges remain. Many banks across the region are not yet ready for fintech. Digital banking and open banking could change that in the long-term, but in the short-term, banks must continue to collaborate with fintech companies.

Fintech regulation remains a challenge across the region but one that ASEAN nations are meeting. The introduction of Singapore’s Payment Services Bill was a landmark that could boost fintech development. The region watches eagerly to see whether it will stimulate growth.

It is those sorts of developments that ensure that prospects for ASEAN fintech expansion in 2019 are good. Considerable investment is expected in the coming 12 months. The more fintech becomes an established part of the financial landscape, the more potential it has to grow – in 2019 and beyond.