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Thu, February 3, 2022 | 12:24
Economy
Korea urged to tap ASEAN fintech boom
Posted : 2017-11-27 17:36
Updated : 2017-11-27 17:37
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By Kim Jae-kyoung

SINGAPORE -- South Korean fintech startups should speed up their entry into the ASEAN market as the region is emerging as one of the most promising places for online and mobile payment services, experts said, Monday.

President Moon Jae-in, on his trip to Southeast Asia early this month, vowed to strengthen economic ties with the 10-member economic bloc in Southeast Asia to diversify his country's diplomatic horizons.

Among many areas for cooperation, financial technology (fintech) is one of the future-oriented industries that should be developed as a growth engine for Korea, they said.

Korea's top financial regulator, the Financial Services Commission (FSC), is seeking to make Seoul a fintech powerhouse by exporting more financial technology abroad.

Given the region's growth potential and Korea's strategic pivot to Southeast Asia, ASEAN, which refers to the Association of Southeast Asian Nations, is seen as one of the best places to achieve that goal.

"We should look for business opportunities in the ASEAN region because the market has great potential," said a senior executive of a Korean fintech firm who recently attended the Singapore Fintech Festival, declining to be named.

"Korea is not an ideal place where fintech firms can find business partners as well as investors to fund new technologies due to regulatory hurdles. In this regard, the ASEAN region can be a good place to foster our business."

ASEAN's fintech market is expected to generate huge opportunities for Korean fintech startups in two aspects.

First, it is promising from the demographic perspective ― rising digital consumers and a highly under-banked population.

According to Bain & Company, in the past year alone, the number of online-engaged consumers in Southeast Asia has surged by 50 percent to 200 million people.

In particular, digital consumers in this region have a special feature. The online retail market in the U.S. and Korea first grew with the expansion of PC-based shopping but in Southeast Asia more consumers access the internet via smartphones.

Also, the region's young and under-banked population creates optimistic prospects.

ASEAN has a population of over 630 million, and about half of them are aged under 30. But more than 50 percent of them do not have access to banking services.


For this reason, funding for fintech startups in ASEAN is surging.

According to a recent report, "State of Fintech in ASEAN," investment in the ASEAN fintech market stood at just $14 million in 2012, but that figure jumped to $190 million in 2015, $252 million in 2016 and $338 million in the first nine months of this year.

The report was produced by the United Overseas Bank in cooperation with EY, the Singapore FinTech Association and the ASEAN FinTech Network.

"ASEAN as an engine of economic growth and prosperity has caught the eye of global investors and there is an abundant supply of early-stage funding in the region," the report said.

Second, there are growing expectations that fintech will play a role in the integration of ASEAN member states following the launch of the ASEAN Economic Community (AEC) at the end of 2015.

The AEC is an agreement among the 10 member nations to create a single market with free flow of capital, goods, and skilled labor through deregulation by 2025.

In their latest move, ASEAN countries are seeking to use fintech to deepen financial inclusion across ASEAN, which consists of Brunei, Cambodia, Indonesia, Malaysia, Myanmar, the Philippines, Singapore, Laos, Thailand and Vietnam

To that end, the Monetary Authority of Singapore (MAS) and the World Bank's International Finance Corporation have teamed up to set up the ASEAN Financial Innovation Network (AFIN).

The goal of AFIN is to help banks and fintech firms in ASEAN collaborate, so as to broaden and deepen access to digital financial services across ASEAN.

"It will allow banks to search for and connect to innovative fintech offerings, while giving fintech firms an opportunity to scale up their businesses across borders," MAS Managing Director Revi Menon said in a speech at the second fintech festival in Singapore.

"AFIN will provide a powerful platform to extend financial services to the millions of under-banked people in ASEAN."

At the festival held from Nov. 13 to 17, many financial experts shared the view that ASEAN integration is difficult to achieve but there is a growing area of cross-border integration driven by fintech firms, and that is related to payment technologies such as e-wallets.

They said that in terms of integrating people into the banking system, there is a huge opportunity in emerging ASEAN markets that have large un-banked and under-banked populations.

"Korean fintech firms can find opportunities to work with major banks in the region to help them revamp their business models and offer simpler services while increasing financial inclusion," said a senior researcher at a Korean IT firm on condition of anonymity.


Emailkjk@ktimes.com Article ListMore articles by this reporter



 
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