Despite challenges of funding pressure, rising interest rates, and inflation, the long-term outlook for fintech in the Asia Pacific region remains promising, according to insights shared by Discover Global Network at this September’s Global Fintech Fest (GFF) in India.
The three-day conference in Mumbai’s Jio World Convention Centre – organised by the National Payments Corporation of India and industry association Payments Council of India – gathered policymakers, regulators, bankers and thought leaders from across the global fintech community.
Billed as the world’s largest fintech conference this year, GFF hosted 900 speakers from 30-plus countries, more than 100 product launches, 80 whitepaper releases and a footfall of 65,000 delegates from over 100 countries.
As a thought leader in the industry, Discover Global Network shed light on the promising long-term outlook for fintech in the APAC region with insights from its Fintech State of the Union report. Surveying consumers, fintech vendors and venture capitalists globally, the report provides a 360-view of perspectives and emerging payment trends shaping the fintech ecosystem.
In a fireside chat, Chris Winter, head of international markets APAC, Discover® Global Network, joined forces with Jordan McKee, head of fintech research at S&P Global Market Intelligence to highlight the growth prospects for fintechs in the Asia Pacific region despite the challenging economic environment.
Notably, 94 per cent of venture capitalists have a strong growth outlook for fintech over the next five years, placing it in the top three emerging tech sectors favoured for investment.
Good to collaborate
Partnerships are emerging as a crucial strategy for fintechs to drive growth and differentiate themselves. Investors are placing strong emphasis on companies’ partnership strategies, with partner ecosystems ranking as the number one investment strategy shift made by VCs over the past 12 to 18 months, cited by 55 per cent of respondents.
For fintechs, partnerships and technology capabilities are tied as the top factors believed to be critical to the success of their organisation.
The insights also highlight the top areas where fintechs believe they could benefit from the support of a partner, including financial investment, access to customers, technology enablement, technology/core infrastructure development, and credibility. Moreover, among fintechs that rely on payments networks, 93 per cent have increased their reliance due to the current economic environment – rising to 98 per cent for fintechs headquartered in India.
“[Collaboration] plays a pivotal role in driving innovation and growth,” commented Winter. “One major strength of Discover Global Network is the ecosystem together. A lot of what we do is introducing [industry players to one another] to help provide value-added services, or enhanced services, to their customer base.
“This collaborative approach is central to our strategy in the Asia Pacific region, where forging alliances and creating synergies is instrumental in advancing the payments ecosystem.”
One of the standout findings from the fireside chat was the significant digital payment maturity in the Asia Pacific region. The report’s data revealed that an impressive 96 per cent of consumers in Asia had used at least one digital payment service over the past 90 days, outpacing North America (86 per cent) and Europe (80 per cent).
Notably, digital wallets gained widespread adoption, with 73 per cent of consumers in Asia relying on them for their transactions in the past 90 days. In fact, various payment methods in Asia exhibited robust usage frequency growth, indicating the region’s comfort with emerging technologies.
Intriguingly, the report unveiled the prevalence of QR code payments in some APAC markets. As India is a hub for global tourism, this is a trend that might not be as prominent in a cardholder’s home market. QR codes have integrated into daily transactions in APAC, offering a convenient and efficient payment method.
In APAC, QR code payments rank as the second most frequently utilised digital payment method in the last 90 days, coming in just behind digital wallets. The prevalence of QR code payments in this region far exceeds that of other global regions. A substantial 70 per cent of individuals in APAC have conducted QR code payments within the past 90 days, a figure more than 50 per cent higher than that observed in North America and Europe.
These insights underscore the adaptability and readiness of consumers in the Asia Pacific region to embrace emerging payment technologies, positioning APAC as a leader in cryptocurrency usage, connected commerce purchases and biometric payments.
In fact, 72 per cent of consumers have used a real-time payment experience in the past 90 days-rising to 90 percent in India.
Next-generation payments and fintech experiences, such as real-time payments and open banking, also remain highly favoured among consumers. Younger individuals, especially those in Asia who heavily rely on financial services apps and digital payment platforms, are best positioned for swift adoption of these innovative financial solutions.
“Our report reveals that in some APAC markets, QR codes are prevalent, which may not be the case in a cardholder’s home market,” said McKee. “These QR codes have become an integral part of daily transactions in APAC, offering a seamless and efficient way for consumers to make payments.”
Enhancing security and trust
The GFF chat also shed light on the factors influencing the preference and usage of emerging financial experiences in the Asia Pacific region. Security and fraud prevention took centre stage as consumers emphasise the need for better fraud controls and the utmost importance of personal information security.
This heightened focus on security has paved the way for fintechs in Asia to seek partnerships, particularly in the realm of payment data security.
Payment tokenisation and secure provisioning of payment credentials also emerged as pivotal areas of interest for fintechs in Asia, reflecting their commitment to ensuring secure financial experiences for consumers.
Interestingly, banks played a crucial role as trusted partners in this evolving landscape. They were regarded as the most trusted providers for all emerging payment experiences among consumers in Asia, affirming the pivotal role of collaboration between fintechs and traditional financial institutions in advancing the fintech ecosystem in the region.
Delve into more insight into global trends in payments.