The fintech market in Asia Pacific
The use of technology to deliver, enhance or “disrupt” financial services is transforming the sector. Whether you are an established institution upgrading the existing financial services that you offer, a new entrant launching a groundbreaking product, or a regulator or an industry body considering whether the current regime is fit for purpose, this overview will help you navigate the complex regulatory framework for fintech products across Asia Pacific.
Fintech has the potential to increase efficiency and reduce costs, to improve access to, and delivery of, financial services, to enhance the customer experience and to create markets in new and innovative financial services products. It also poses risks, including money laundering, cybersecurity, consumer protection and data privacy. However, despite these risks, financial institutions, regulators and challenger companies believe that fintech – and the opportunities it presents – should be embraced.
Fintech encompasses a wide range of financial services and products that intersect with technology. These include peer-to-peer (or P2P) lending, online payments and foreign exchange services, digital wallets and e-money, automated or robo investment advice, artificial intelligence (AI), big data analytics, blockchain and crypto-currencies and many more. While these products and services are all different, they all make use of new or developing technology to provide traditional financial services in a more cost-effective, accessible and consumer-friendly way or facilitate the expansion of new or innovative financial products and services.
The growth of fintech and the expansion of non-financial companies into the heavily regulated financial sector has resulted in a growing need for regulators, the fintech community and the financial services industry to engage fully with developments in this sphere. The vast majority of financial services legislation and regulatory standards predate the rapid advances in technology and consumer demand for innovation. While governments are keen to be seen to be encouraging innovation in a number of jurisdictions, the law has been slower to catch up.
As this overview highlights, the fintech markets in countries across Asia Pacific are diverse and regulatory approaches and appetites vary across the region. A key challenge for continued and consistent growth in the region and its attractiveness to new business, will be the extent to which common cross-border standards and regulatory policy can be developed and co-ordinated, with open capital, talent and data flows. Clearly this challenge is not unique to Asia Pacific and regulators globally are grappling with the same issue. While a comprehensive regulatory framework for the region is unlikely, we have already seen collaboration between individual countries including the cooperation agreements signed between some countries, as described later in this overview. We expect that this approach will continue with further memorandums of understanding and official fintech bridges and with countries adopting policies which have been successfully implemented and tested elsewhere.
Watch this space for developments.
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