Banks to boost financial technology projects in Asia-Pacific as China drives investment
Spending in the region up 517 per cent in the first quarter to US$2.7 billion, according to estimates
Major banks are poised to escalate their participation in financial technology (fintech) projects across Asia-Pacific as mainland China continues to drive these investments in the region, according to industry experts.
Global management consulting company Accenture has estimated that fintech investments in Asia-Pacific grew 517 per cent in the first quarter to US$2.7 billion, up from US$445 million in the same period last year, on the back of initiatives in the world’s second-largest economy.
Total Asia-Pacific investments in fintech last year more than quadrupled to reach a record US$4.3 billion, the firm said. The region is now the world’s second-biggest geographic market for fintech investments after North America.
“We’re having fintech discussions at financial institutions across Asia as executives want to know about the latest, cutting-edge solutions to invest in, develop or buy that can streamline services for their customers,” said Jon Allaway, a senior managing director at Accenture.
That sharpened interest has led to an increase in the number of financial institutions backing Accenture’s FinTech Innovation Lab Asia-Pacific this year to 20, from 12 last year.
Now on its third year in Hong Kong, the lab is an annual mentorship and “accelerator” programme for entrepreneurs and start-ups developing advanced technologies for the banking industry. Applications for this 12-week programme start today and close at the end of next month.
The 12 principal financial institutions that have partnered with the lab include Bank of America Merrill Lynch, BNP Paribas, Commonwealth Bank of Australia, Credit Suisse, Generali, Goldman Sachs, HSBC, JP Morgan, Maybank, Morgan Stanley, Sun Life Financial and UBS.
They are joined this year by China Citic Bank International, China Construction Bank (Asia), Macquarie, Nomura, Standard Chartered, Siam Commercial Bank, Societe Generale and Sumitomo Mitsui Financial Group.
Raymond Cheng Siu-hong, HSBC’s chief operating officer for the Asia-Pacific, said early-stage fintech companies “bring creativity, agility and new technologies which we can test, refine and apply at scale”.
“This year, our intention is to explore more opportunities to use fintech products in our strategic locations, like the Pearl River Delta, to provide simpler, better and faster financial services to our customers,” Cheng said.
In a statement sent to the South China Morning Post, HSBC said it aims “to generate US$1 billion of profit before tax from the Pearl River Delta in the medium term, 10 times the current pre-tax profit from the region”.
The bank said it was building in the Pearl River Delta – comprising Hong Kong, Macau and Guangdong province – “a full-scale, digitally-driven retail banking and wealth management business and an expanded commercial banking business”.
Accenture’s FinTech Innovation Lab Asia-Pacific, which will begin its programme in August, is focused on so-called disruptive technologies for the financial services sector. These include big data, analytics and cognitive computing, security and identity management, risk management and compliance, digital marketing and social media; cloud computing, online payments, blockchain technology and “Internet of Things” applications.
“What’s interesting is that major enterprises in China are making investments into start-ups overseas, such as Alibaba’s investment in Paytm last year,” said Beat Monnerat, the head of Accenture’s financial services business in the Asia-Pacific.
New York-listed e-commerce giant Alibaba Group, which owns the Post, last year joined affiliate Ant Financial Services Group, the operator of Alipay, in making a widely reported US$575 million investment in Paytm, India’s largest mobile payment platform.