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Fintech
Opinion
Mohammad Raafi Hossain
Mohammad Raafi Hossain

Eye on Asia | How the future of fintech is rapidly taking shape in Southeast Asia

  • Thanks to grants, programmes, policies and regulations, the region is now a key fintech incubator and an up-and-coming cryptocurrency powerhouse

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A man reads a newspaper with an advertisement of the Gojek-Tokopedia merger in Medan, Indonesia, on May 18. The resulting multibillion-dollar company, GoTo Group, is an emerging player in Southeast Asia’s fintech space. Photo: EPA-EFE
Mohammad Raafi Hossain

As traditional markets struggled to stay afloat during the Covid-19 pandemic, cryptocurrency has been rallying. In April, bitcoin hit a record high of just over US$60,000, almost 10 times what it was worth a year ago.

Retail and institutional investors are beginning to recognise the asset class as a safe-haven alternative in an uncertain economy. Last year, banking powerhouse DBS launched a cryptocurrency exchange. Traditional institutions such as BlackRock are also embracing digital assets, increasing trust and legitimacy in the industry.

Southeast Asia, like the rest of the world, has seen a similar uptick in digital asset activity, with trading volumes on the DBS Digital Exchange increasing nearly 10-fold over the first quarter of this year. Already home to one of the largest pools of cryptocurrency users in the world, Southeast Asia’s saturated mobile penetration rate of more than 100 per cent makes it a natural hotbed for digital asset adoption.

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The region’s US$108 billion tech ecosystem – driven by unicorns such as Grab Holdings and Sea Limited, as well as GoTo, a merger of Gojek and Tokopedia – has established a foothold as an incubator of fintech innovation. The region is also an up-and-coming cryptocurrency powerhouse.
Its grants, programmes, policies and regulations also help draw fintech businesses. Singapore’s S$300 million (US$222 million) grant for deep-tech projects and S$12 million to advance blockchain innovation established a launch pad for pioneering projects and cultivated a strong fintech ecosystem. Fintech licences, such as from Malaysia’s Labuan International Business and Financial Centre (IBFC), are a gateway for start-ups to enter Southeast Asia.

Last year, Labuan IBFC saw a record number of fintech licences approved, introducing three digital banks and 19 cryptocurrency trading platform providers to the region. Indonesia has also issued regulatory clearance for the trading of 299 cryptocurrency assets earlier this year.

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