FinTech in ASEAN 2022: Finance, reimagined

Youraccount SGD € FinTechinASEAN2022:Finance,reimagined BNPL $ Policies Contents Foreword1 Executivesummary2 Stayingresolute:ASEANfundingbracesforwinter4 Financeeverywhere:BusinessestryonFinTech14 Embeddedpaymentsandrewards22 Embeddedlending24 Embeddedinvesting28 Embeddedinsurance30 Lookingahead:What'snextforembeddedfinance?32 Countryinsights34 References40 JanetYoung ManagingDirectorandHead,GroupChannelsandDigitalisation,StrategicCommunicationsandBrand, UnitedOverseasBank WanyiWong FinTechLeader,PwCSingapore ShadabTaiyabi President,SingaporeFinTechAssociation Foreword InvestmentsinASEAN’sFinTechfirmstrackedlastyear’sbumperfunding,clockinginUS$4.3billioninthefirstninemonthsof2022–higherthanthecombinedsumfrom2018to2020.Whiletheglobaleconomymaybeinforchallengingtimesahead,thenumberssofarsignalavoteofconfidenceinASEAN’sFinTechindustry,alongwithitsrisingmiddleclass. Asdigitalservicescontinuetoproliferateintheregion,morecompaniesarefindingwaystoembedfinancialserviceswithintheirapps.Atravelapptodaymaynotjustprovidelocationreviewsanditineraries,butalsoallowuserstobookandpayfortheirflightsandaccommodation,splitthosepaymentsintoinstalments,buytravelinsurance,andmore.Apartfromtheconveniencetousers,themovetobecomeaFinTech-enabledappcangenerateadditionalincomestreamsaswellascustomerdataforthebusiness. Thisisthepowerofembeddedfinance,anddespitemarkeddevelopmentinvariousembeddedcategorieslikeconsumerpaymentsandbuynow,paylater(BNPL),itsgrowthpotentialremainshigh. Forthisyear’sFinTechinASEANreport,theteamsurveyedmorethan4,000respondentsandspokewithindustryleaderstofindouthowconsumersarewarminguptoembeddedfinance,andhowcompaniesandFinTechscantapintothispromisingsector. WehavenamedthiseditionFinance,reimaginedaswehavereachedaninflectionpointfortheindustry–onewherekeydriverslikeembeddedfinancearecontributingtothecreationofaccessible,user-focuseddigitalecosystems. $ Fundraisingremainsresoluteinthefaceofwinter Fundinginthefirstninemonthsof2022(YTD2022)reachedUS$4.3B–justshyoftheUS$4.5Bfundingreceivedinthesameperiodlastyear,buthigherthanthecombinedsumfrom2018to2020. However,darkcloudslieahead,asthenumberofdealsmadein3Qfelltothelowestintwoyears. Investmentsinlate-stagecompanies(SeriesCandabove)accountedformorethanhalfoftotalfunding,asinvestorsgrewmoreselective,placingagreaterfocusonFinTechswithaclearpathwaytowardsprofitability. Cryptoandblockchain companiessawvibrantdealmaking Cryptocurrencycompaniesmovedintothetopthreerankofmost-fundedFinTechs,afterpaymentsandalternativelending. Intermsofdealflow,oneinthreeinvestmentsinASEANwenttocrypto/blockchaincompanies. SingaporeandIndonesiacontinuetoleadinnumbers Bothcountriescombinedaccountedfor76percentofASEAN’stotalfunding,drivenbymegadeals.Outof163dealsthattookplace,morethanhalf(55percent)wenttoSingapore-basedFinTechfirms. ASEANFinTechseessteadygrowth ASEANremainedanattractivepropositionforFinTechinvestments,amidstexternalpressures.Investmentsintheregionnowstandat7percentofglobalFinTechfunding,upfrom2percentin2018. Executivesummary Executivesummary EmbeddedfinanceistakingrootinASEAN Digitaltransformation,dataavailabilityandadrivetowardsthecashlesseconomyareincreasingdemandformoreholisticdigitaluserexperiencesintheregion–somethingembeddedfinanceexcelsat. Oursurveyresultsindicatethatanaverage70percentofrespondentsinASEANuseappswithembeddedfinance,thehighestbeinginThailandandVietnam(83percent).Ofthosewhousesuchapps,almostthree-quartersusethematleastonceaweek. Indonesiastandsoutasabigmarketforembeddedservices Thehighregionalawarenessofembeddedfinancialservices,alongwithshiftingcustomerneeds,havefannedadoptionofembeddedtechnologywithinmaturedigitalecosystems–includinge-commerce,retail,andfooddelivery. Ourresearchunveiledanencouragingnumberofrespondentswhohaveusedembedded-relatedservices: 57%ASEAN E-commerceplatformpaymentse.g.ShopeePay 74%ID 27%ASEAN 42%ID Buynow,paylater 20%28% ASEANMY,VN Micro-investments 34%ASEAN 47%ID Insuranceone-commercesites/apps 33%ASEAN Insuranceontravelsites/apps 49%ID Stayingresolute: ASEANfundingbracesforwinter Introduction Freshfromlastyear’shigh,ASEANFinTechfundingdisplayedresilienceevenasglobaleventshamperedoptimism. Thatmomentum,however,isslowing. Inlastyear’sFinTechinASEAN2021:Digitaltakesflightreport,wesawhowaprolongedpandemicstillledtorecordFinTechfunding1inASEAN,alongwithaheightenedadoptionofFinTechsolutionssuchase-wallets,cryptocurrenciesandonlineinvestmentplatforms. Thisyear,theongoingRussia-Ukraineconflictandinterestratehikestocombatinflationhavespookedmarkets,increasingexpectationsofanimpendingrecession.Thesefactorshavealsoaffectedprivateinvestmentsgloballyasinvestorspullbackfrom2021highs. Inthisreport,wereviewFinTechinvestmentsintosixofthebiggestASEANeconomies:Indonesia,Malaysia,thePhilippines,Singapore,ThailandandVietnam–alsoreferredtoas‘ASEAN-6’. ThefourotherASEANnations—BruneiDarussalam,Cambodia,LaosandMyanmar—havenotbeenincludedinthefundinganalysisastherewerenodealsrecordedasatthethirdquarterof2022. ASEAN’sshareofglobal