Fintech investments in Asia-Pacific (APAC) have increased dramatically, from $880 million in 2014 to $3.5 billion in 2015. With a financially fragmented region presenting a wide-open field of opportunities to improve corporate and customer-facing payment systems, it is unsurprising that 40% of those investments went directly into payments.
Ripple partner Accenture recently published a brief report based on investment data from global venture finance analytics firm CB Insights. The report links the considerable increase in APAC fintech investments to use cases for distributed financial (often called “blockchain”) technology, particularly in cross-border payments.
The payments sphere has traditionally been dominated by banks. However, commercial giants like Alibaba in China and alternative payment platforms like Paytm in India are adapting to meet the needs of the emerging real-time ecosystem in APAC nations. Although customer-facing solutions proliferate, Jon Allaway, Senior Managing Director of Accenture Financial Services in ASEAN suggests corporates are also seeking fintech solutions to their day-to-day delays:
“While banks need to be mindful of market-share dilution from competitors in the consumer and merchant payment and lending space, moving forward, there are still opportunities in business-to-business (B2B) payments, particularly in trade and invoicing, and there is a need for new payment solutions within the sharing economy.”
Accenture zeroes in on the advantages of increased speed and reduced costs offered by distributed financial technology and its applications for payments, singling out BitSpark, a Hong Kong based remittance startup that uses this technology to simplify payments in a market This is especially relevant in APAC, where the World Bank projects that remittances in 2016 will reach a volume of $154 billion. Accenture predicts that this application of distributed financial technology like BitSpark is just the tip of the iceberg and will soon be indispensable in APAC nations for clearing and settlement, collateral management, payments, and reconciliation:
Accenture concludes that APAC customers will continue to demand banking services that “weave together their fintech threads,” and that the first of these is logically in payments.
Read the full report here.