Why Asia Is At The Forefront of Fintech Development

It is now a fact that it is one of the most advanced regions in terms of Fintech development in Asia. Financial technology is transforming banking in Asia, making it more accessible and efficient for everyone. Led by new companies, the financial technology in Asia is developing at a very fast pace. 

While the West has been a leader in the banking industry for many decades now, when it comes to Fintech, Asia seems to be taking the lead. Some of the biggest financial hubs in terms of Fintech adoption in the region are China and India, but they are not alone. 

Many other countries in the region, including smaller economies, are taking advantage of the developing Fintech industry. It is easy to say that Fintech technology has already become a very important part of everyday lives in many Asian countries. 

As long as people have their smartphones, they are able to gain access to the growing range of different types of financial services and this is happening at a faster pace than anywhere around the world.

Why is Fintech so Popular in Asia?

One of the fastest-growing regions in the fintech market around the world is Southeast Asia. There are many factors in this growth, one of the main being the fact that the financial inclusion of the region is simply not sufficient. 

In fact, the World Bank data indicates that in Indonesia, for example, only about 49 percent of the population have formal bank accounts. In Cambodia, only 22 percent of the population have bank accounts. 

Similar numbers can be seen for other countries as well. Because of this, it is very hard for locals in the region to save, borrow, or even manage money in an efficient way. Because of such a situation, fintech companies have become very important for the Asian population. 

These companies have managed to improve the financial situation of people in the region. In fact, it was reported that fintech fundraising activities in the region had grown by 143 percent in 2018 compared to the previous year. As for the investment in the industry, it saw an increase of 30 percent.

Supporting Innovation

Better digital connectivity in the region has created numerous opportunities for innovations. As the number of offered services online increases in Asia, the innovations come faster as well. One of the main reasons for this is the fact that the region simply did not have any other choice but to work on innovating the existing banking system, which was not working for everyone. 

The main position of the fintech industry in the region is to empower and support the digital transformation of Asia. Now, Asians have the ability to access and manage their funds in an easier, and more efficient manner. 

Another very important factor for the further development of the Fintech industry in the region is the increasing number of Sharia-compliant services. Thanks to this, the Islamic population of the region has better access to their finances as well.

A great thing about the development of the industry in the region is the fact that most of the markets in the region manage to benefit from the power that fintech has to bring. The increased adoption is driving more innovation, and the innovation drives adoption as well. 

As for the leadership in the region, Mainland China still remains to be one of the main driving forces of fintech development in the region. But, it is not the only country. India is one of the biggest competitions for fintech development for China, a fast-growing market with a lot of room for further growth.

The Future of Fintech in Asia

While the fintech industry has already seen massive development and growth in the region, it still has a lot of room for further growth and development.  While the traditional banking industry suffered a lot due to the Covid-19 pandemic, the fintech industry managed to further grow. The pandemic has once again shown how important the fintech industry is for regions like Asia. 

Many experts actually believe that it is still the beginning of the development of the fintech industry. As the industry further develops and grows, people will see even more new products and services hitting the market. 

It is very likely for China and India to continue being the main hubs of fintech development and growth. However, many other markets in the country are also very likely to emerge as leaders in the fintech industry. One of the countries that are thought to have success in the fintech industry in the future is Singapore, which has already shown huge innovative ideas in the industry.

As more people see the actual benefits of the fintech industry, it is only natural that it will continue its massive growth in the future as well. While in the west, the majority of the eCommerce companies are still considering if it is time for them to expand their services into financial industries, in Asia, specifically in China, that future is already there. Companies like Tencent, Alibaba, and many others, are companies that have already made it thanks to their financial services. 

Fintech has already changed the way people live and do business, make payments, store their funds, invest, or even buy products, but this is only the beginning. Fintech has managed to give access to finances to poor people who previously did not have any access to the banking sector. To further motivate innovation in the industry, many economies have adopted different types of regulatory sandboxes that are helping the industry for its larger adoption.