With crypto companies in the news, global geopolitical tensions continuing and Singapore’s stature as a financial hub growing, The Asset spoke to Nischal Tanna, founder and group CEO at global digital solutions company TransformHub, to get his views on trends in the Asian fintech sector in 2023.
First, with the steady rise of banks, institutional investors and family offices investing in the environmental, social and governance (ESG) and sustainability sectors, and with Singapore becoming a green finance hub, Tanna predicts a steady increase in technology working its way into these sectors and more fintechs beginning to work on solutions related to these sectors.
Secondly, he expects to see increased digitization of banking, financial services and insurance across the Asia-Pacific region. This move, he says, will reduce the gap between the developing and the developed markets in Southeast Asia, giving unbanked or underserved customers, and especially small and medium-sized enterprises (SMEs), access to products and services comparable to those on offer in developed markets.
“That is something that digitization/fintech will influence this year, there are still a lot of opportunities out there in countries like Indonesia, Thailand and in Asean [Association of Southeast Asian Nations] frontier markets,” Tanna notes. “While Singapore fintechs focus on the established mature Singapore market, they could also add much more value by putting underdeveloped sectors in Southeast Asia at the top of their agenda.”
“There is a lot of exploitation at times in developing economies in terms of extending credit to SMEs or individuals, so there’s still so much to do, and fintechs can help alleviate and disrupt that misbehaviour,” he adds.
Thirdly, artificial intelligence (AI), which is used, for example, in robo-advisory offerings, will continue its forward momentum, Tanna believes. And, as the technology develops greater accuracy and advanced functions, he expects to see more robo-advisory activity and offerings targeting mass affluent and retail consumers in less developed Southeast Asian markets.
While most high-net-worth customers still prefer face-to-face investment advice, he notes, that still leaves the untapped hinterland of potential and younger investors to cultivate.
“Robo-advisers can push into the low value market,” he shares. “That is an area where companies should try to target with fully automated investment assistance. And, because of ongoing technology advances, the market entry risk is now lower.”
However, one question on Tanna’s mind that is going to take time to answer is whether investors’ appetite in 2023 will still be healthy enough to give the fintech sector the financial backing it needs, given recent high profile e-commerce and crypto failures.
After months of media coverage on its internal crisis, the troubled Singapore-based fashion-tech company Zilingo, backed by notable investors, including the city-state’s investment fund, is reported to have entered liquidation. This high-profile failure comes hot on the heels of the collapse of cryptocurrency exchange FTX late last year, which has also rattled the local start-up and crypto sectors.
As 2023 unfolds, a number of challenges from 2022 still cast a shadow over the year ahead, including geopolitical uncertainties, concerns in public markets, and higher-for-longer interest rates, which could all weigh heavily on the minds of fintech investors and, in turn, make it more difficult for some fintech to raise funds this year.