By Edmund Ingham, PR & Communications Manager, The Money Cloud
Fintech is a truly global phenomenon, and on behalf of The Money Cloud I am on a mission to explore the scene across SE Asia and China.
In almost all parts of the world, investment into fintech services and products is sky-rocketing, and nowhere is this truer than in Asia and China.
Alongside London, Singapore is widely regarded as the world’s most important fintech hub, but my journey begins in Malaysia, or more specifically its capital, Kuala Lumpur.
Having left London at 3pm on the 2nd July, my flight from Heathrow takes me first to Doha, Qatar, and after an 8-hour stop-over (the joys of low budget flying!), on to Kuala Lumpur, where I arrive at 10pm on the 3rd.
Despite my best efforts (staying awake for the entire duration of the stopover in Doha and subsequent flight), jetlag takes over, and so, when I finally get to sleep at around 6am on the 4th July, I have been able to spend several hours reading up on the latest developments in Malaysian Fintech.
The first thing to understand about the fintech revolution is that many practitioners within the financial services industry see it as a double-edged sword. Sure, fintech is great for young, agile, disruptive tech firms, but the more established financial services industry views fintech as a threat to their hegemony.
According to research from global financial consulting firm PriceWaterhouseCoopers, in 2015 and the first half of 2016, some 11% of all venture capital funding in SE Asia went into fintech; approximately $345 million dollars.
In short, according to a survey conducted by PWC, this has the Malaysian Financial Industry worried, with 82% of respondents, drawn from the country’s banking, insurance, asset management and fintech industries, stating that they were “feeling the heat” from disruptive fintech forces. This compares to 67% of respondents who responded to a similar survey conducted globally, and 73% in Singapore.
Malaysian financial firms believe that they are at risk of losing revenues on account of fintech; 22% of respondents believe that its rise could have a “significant impact” on their business and 33% believe that fintech companies could swallow up more than 20% of their total revenues.
Which 3 sectors are most at risk? In answering this, both fintech firms and more traditional financial service providers are in agreement, according to PWC; the fund transfers and payments industries, consumer banking sector, and general insurance industry.
In answering the question “are consumers ready for fintech”, 42% of the incumbent financial industry respondents in Malaysia agreed they were, and, no surprise here, 78% of respondents based at fintech companies believed they were.
The biggest concerns that respondents had about the threat arising from fintech disruption were twofold. Pressure on margins, and regulatory uncertainty.
What’s also clear is that whilst the Malaysian financial services industry is not quite comfortable with the emergence of fintech, the Malaysian populace as a whole are becoming increasingly receptive.
To prevent a damaging split between existing service providers and emerging ones, the Malaysian government will have a big part to play, because the evidence is everywhere that consumers are already beginning to demand the kinds of services and products that the fintech industry has promised them, and has, to a certain extent, delivered.
To spend time in Kuala Lumpur, as I have done over the past 10 days, it’s hard not to be struck by how comfortable the population is with the latest tech. My English debit card works nearly everywhere, and most minor purchases can be done using contactless technology; from street food stalls to inside the gigantic malls that can be found everywhere across “Mall-aysia”! The tropical climate – hot, humid, and stormy one minute, dry and sunny the next, means Malaysians tend to prefer being indoors than outside.
I have mobile payments, mobile wallets, and contactless payments at my fingertips. I have messaging services, from WhatsApp to WeChat, (the China based messaging service that provides almost every auxiliary service you can think of, from ride-hailing to payments; imagine Facebook, Uber, PayPal and Amazon all rolled into one and you are getting there), readily available, and in terms of infrastructure – well Kuala Lumpur has one of the most striking skyline’s I have ever seen – The Petronas Towers – the highest twin towers in the world – are just two more sky-scrapers in what must be a collection of more than one hundred.
Malaysia is a wealthy and prosperous country, with a thriving financial sector that is also the global centre of Islamic finance.
If you want the evidence, just visit the The Money Cloud Worldwide Instagram account.
The more I travel around SE Asia; and I’ll be heading to Singapore next week, followed by Hong Kong, Shanghai, and other destinations, the more I will post about what I discover. I have learned a lot already so look out for my next post when I will discuss the fintech startup scene here in Malaysia in more detail, the government’s role in bringing fintech to its people, the entrepreneurs bringing the scene to life, and how it all compares to the pace of change back in London.
This promises to be one of the greatest experiences of my life, and I am looking forward to sharing it with you.
Bye, or I should say, “selamat tinggal”, for now.
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