The FinTech industry has grown exponentially in the last few years. Many FinTech startups have shown remarkable growth and are earning market valuations. Some of the companies have already touched a billion-dollar valuation while several more are following suit. Although the sector has created a technological revolution in the finance industry, it comes with its own set of challenges, from regulatory to fundraising and competitive issues.
Traces of the 2008 recession can be seen in the way people are saving or spending money. What’s more is that the bridge between advanced technology and the end-user is far and wide in some countries, thereby affecting the FinTech ecosystem.
If one checks the situation in Central Asia, the internet penetration is only 50% compared to Southeast Asia’s impressive 63%. Here, the benefits of mobile banking are not fully enjoyed by the people it is intended for.
The Kazakhstan model – the Baiterek Hackathon
Kazakhstan in Central Asia is an exception with 14.14 million active users or an internet penetration of 76%. Therefore, if Central Asia’s FinTech space has to be recalibrated, the Kazakhstan model can be imitated or those from the region’s better-performing neighbors such as Southeast Asia.
By 2030, the country’s population is expected to reach a staggering 20.5 million people, becoming the 67th largest country in the world. Institutions like The Housing Construction Savings Bank of Kazakhstan (HCSBK) have been working in various areas of social policy that is aimed at providing its citizens affordable and quality housing.
One initiative started by HCSBK under the leadership of Baiterek National Management Holding, and in partnership with Qaztech Ventures, is the Baiterek Hackathon. The objective is to bring together the most skilled developers and encourage them to come up with innovative next-gen solutions that address FinTech-related issues in Central Asia.
Central Asia can mirror a similar model by providing avenues such as Hackathons to brilliant developers and finding fresh solutions.
Southeast Asian FinTech trends to follow
For Central Asia to truly embrace the possibilities of the FinTech sector, financial trends must be cultivated and nurtured. Southeast Asian FinTech startups often begin with one business idea, either e-commerce or messaging apps or ride-hailing. Once the single businesses take off with a large number of users, they enter the FinTech space through services like mobile payments, insurance, or cross-border payments as a means to expand one’s market. In fact, the region had integrated the use of AI and using chatbots to transform a business’s interactions with customers. The expansion of FinTech across industries such as manufacturing, healthcare, automobiles, media, and, most notably, the financial sector is also noteworthy.
The concerted efforts of the government and non-government institutions have also helped the region expand the FinTech industry’s reach. For example, ADB Ventures in Vietnam – a country with a large unbanked population — has been spearheading programs that have strengthened the country’s FinTech sector. Countries like the Philippines, Indonesia, and Myanmar, who witness inbound markets for remittances from overseas workers, have come to rely mainly on cross-border transactions through mobile payment services made available.
Southeast Asia’s tremendous growth in the FinTech ecosystem has been made possible through the initiatives that provide an essential platform for co-creation and innovation. Central Asia, with a thriving economy, is home to highly skilled thinkers and developers. It must harness their hunger for change and build a better and stronger FinTech space.