Fintech in the Asia Pacific region (APAC) is booming, with help from Asian governments, according to a newly released report by Forrester.
The government is playing a pivotal role in driving fintech investment in the region. Specifically, governments in both Singapore and Hong Kong have become the catalysts for fintech investment.
Their interest in developing fintech has fostered a conducive environment for the growth of the fintech ecosystem.
Fintech companies in APAC are gradually moving away from a provocative posture as a challenger to banks to favoring collaboration. This move has helped incumbents to improve their customer experience and operational excellence.
"I see 'fintech' and 'banks' as synonymous. I don't see them in conflict with each other," Sopnendu Mohanty, Chief Fintech Officer, Monetary Authority of Singapore(MAS).
Sandbox initiatives for fintech development
Both MAS and the Hong Kong Monetary Authority (HKMA) have launched sandbox initiatives to encourage fintech experimentation in a controlled environment.
Nineteen out of the 52 fintech companies that presented at the recent FinovateAsia 2016 in Hong Kong and the Global Fintech Hackelerator (FinTech Festival) in Singapore were security and risk companies.
Mobile banking and payment fintech companies continue to be the favourites of venture capital (VC) investors.
The report indicates insurtech as the next frontier for fintech innovation. Asian insurtech is still in its infancy but more startups have arrived on the scene due to the growing demand for personalised services.
"When fintech companies take an approach that is more collaborative than disruptive, it risks giving the financial services sector a false sense of security. Financial services institutions don't feel threatened by startups that are not out to disrupt but to collaborate, seemingly cementing the financial institution's position as the undefeated incumbent," says Zhi Ying, author of the Forrester report.
"Truly disruptive fintech companies, such as Ant Financial and JD Finance, have yet to expand further in Asia Pacific other than China, so financial institutions in the region still have time to accelerate innovation with startups to reap the benefits of collaborative fintech," she added.
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