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Fintech Postcard: Thailand

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An overview of Thailand's Fintech landscape and investment opportunities, presented by Paul Ark (Managing Director of Corporate Venture Capital at Digital Ventures) at the Next Money Asia Fintech Finals on 30 Jan 18.

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Fintech Postcard: Thailand

  1. 1. 1 FINTECH POSTCARD: THAILAND PAUL ARK MANAGING DIRECTOR, CORPORATE VENTURE CAPITAL DIGITAL VENTURES, A SUBSIDIARY OF SIAM COMMERCIAL BANK JANUARY 2018
  2. 2. SHAMELESS PLUG (Blockchain, San Francisco) (Social payments, Tel Aviv) (Geolocation, Hong Kong) (Indoor positioning, Helsinki) (New York) (Singapore) (Hong Kong) (Singapore) US$ 50 MILLION CORPORATE VC FUND INTERNATIONAL DIRECT INVESTMENT FUND OF FUNDS DOMESTIC INVESTMENT
  3. 3. MACRO & BANKING LANDSCAPE
  4. 4. MACRO OVERVIEW – ASEAN’S LEADING 6 COUNTRIES PENETRATION% IN = Internet MO = Mobile MS = Mobile Social SO = Social Media BK = Banked CC = Credit Card THAILAND 69M PPL, $407BN GDP IN 67% MO 133% BK 78% MS 62% SO 67% CC 6% MALAYSIA 31M PPL, $296BN GDP IN 71% MO 139% BK 81% MS 65% SO 71% CC 20% INDONESIA 261M PPL, $932BN GDP IN 51% MO 142% BK 36% MS 35% SO 40% CC 2% SINGAPORE 6M PPL, $297BN GDP IN 82% MO 147% BK 96% MS 70% SO 77% CC 35% VIETNAM 93M PPL, $203BN GDP IN 53% MO 131% BK 31% MS 43% SO 48% CC 2% PHILIPPINES 103M PPL, $305BN GDP IN 58% MO 126% BK 28% MS 52% SO 58% CC 3% 639M PEOPLE $2.6 TRILLION GDP 306MM ON SOCIAL MEDIA 133% MOBILE PENETRATION Thailand is a well-banked but largely cash-driven economy; its high mobile phone and social media penetration makes it ripe for fintech innovation Source: World Bank, AseanUp
  5. 5. DIGITALLY-SAVVY, MOBILE-FIRST POPULATION Thais are among the world’s most voracious consumers of social & digital media content, and are twice as likely to access the internet via a mobile device than a PC As of May 2017 Source: Facebook, Google Thailand, Thoth 47 million users 2% of global accounts 11 million users 2 of the Top 10 most Instagrammed locations in the world 9 million users 3 million active users 50% of online time daily #1 in SE Asia and top 10 globally by watch time and content upload
  6. 6. THAILAND’S BLOATED BANKS In a different era, large numbers of staff & branches were a sign of strength. Today, they are a source of vulnerability Source: Bank of Thailand, Bangkok Post 400 branches 15,000 staff
  7. 7. ONLINE PAYMENT METHODS Source: Digital Ventures 3% 97% US 6% 33% 61% China 67% 21%12% SE Asia 96% 4% UK Credit/ Debit Cards, PayPal Cash on Delivery Others i.e. wallet, online transfers, OTC Credit cards dominate online payments in western countries, and mobile payments in China, but in Southeast Asia, cash is still king
  8. 8. STARTUP & FINTECH ECOSYSTEM
  9. 9. CAGR119% $3.1 $9.7 $42.7 $33.2 $86.0 $156.6 2012 2013 2014 2015 2016 2017 THAILAND’S STARTUP ECOSYSTEM Thailand’s startup ecosystem has grown 50-fold since 2012. However, the ecosystem is still embryonic, accounting for less than 5% of Southeast Asia’s funds raised each year. #FUNDED STARTUPS 2012 2015 2016 2017 3 60 75 90 #VC & CORPORATE INVESTORS 2012 2015 2016 2017 1 56 74 96 THAI STARTUP TOTAL FUNDS RAISED (USD MILLION)
  10. 10. FINTECH’S PLACE IN THE THAI STARTUP ECOSYSTEM CAGR: 119% $3.1 $9.7 $42.7 $33.2 $86.0 $156.6 2012 2013 2014 2015 2016 2017 #FUNDED STARTUPS 2012 2015 2016 2017 3 60 75 90 THAI ECOSYSTEM FUNDS RAISED (USD MILLION) $0.02 $0.4 $3.2 $13.7 $31.6 $60.4 2012 2013 2014 2015 2016 2017 THAI FINTECHS FUNDS RAISED (USD MILLION) CAGR: 383% #FUNDED FINTECHS 2012 2015 2016 2017 2 8 12 15 Source: Techsauce, news posts Through 2017, fintech startups account for 17% of total startups funded, but fintech as a category accounts for 40% of total startup funding, representing the 2nd highest-funded category behind e-commerce.
  11. 11. THAI FINTECH ECOSYSTEM Fintech startups comprise about 3 to 4% of the country’s estimated 2,500 startups, but received about 40% of venture funding (including ICOs) in 2017 Source: Techsauce, Thai Fintech Association, Bangkok Post
  12. 12. THAI FINTECH FUNDING Payments, 90% Financial Management, 1% Trade & Investment Advisory, 3% Insurance, 2% Peer to Peer Lending, 1% Others, 3% Disclosed Funding by Category (2011-2017) Source: Techsauce The lion’s share of fintech funding has gone to a small handful of payments startups
  13. 13. DIGITAL BANKING BY THE NUMBERS Source: Bank of Thailand, The Asian when mobile banking accounts overtook internet banking accounts 2015 26 56 million mobile banking accounts, vs. 18 million internet banking accounts million mobile banking transactions, vs. 21 million internet banking transactions US$ billions in mobile banking transactions, vs. US$77 billion for internet 14 87% 3-year CAGR in mobile banking transaction value, vs. 12% for internet banking 40 million mobile e-wallets issued by telcos, messaging platforms & fintechs
  14. 14. GOING CASHLESS: NATIONAL E-PAYMENT PLAN PromptPay: New Settlement Infrastructure EDC Rollout: Increase Card Acceptance Points P2P Payments Merchant Payments Bill Payments • Enable P2P payments via mobile phone number or national ID number • Reduce or eliminate the costs of domestic P2P payments and spur mobile banking usage • Launched January 2017; 28 mn unique users by year-end (40% pop) • Increase payment options for smaller merchants via distribution of EDC/ payment terminals • MOUs signed by Thailand’s 7 largest commercial banks in March 2017 • Over the next 9 months, 560,000 additional EDC devices were distributed throughout the country, increasing the number of POS terminals by 140% • Facilitate cashless commerce; displace cash as medium of payment • Creation of national standards for QR codes • Launched in October 2017; banks have aggressively marketed payments & QR code programs to lock in merchant accounts • Streamline invoicing and bill payments via biller ID scheme (based on corporate tax ID + 2-digit suffix) • Reduce operating & cash management costs for businesses • Launched Q4 2017 • The Bank of Thailand has mandated a complete industry migration from legacy payments infrastructure to the PromptPay settlement infrastructure by year-end 2018 BOT is aggressively pushing a cashless agenda, implementing in 2017 key initiatives proposed only a year earlier
  15. 15. REGULATORY DEVELOPMENTS Thailand’s regulators are never pioneers, but should be given credit for being very fast followers Dec 2016 Thailand’s Digital Economy Promotion Agency launches $6.2m fund to invest startups & SMEs. Revenue Dept. grants tax exemptions to VCs making investments in 10 specific sectors. Registration effective from Jan 2017 – Dec 2018. BOI Launches SMART Visa to attract foreign investors, employees & entrepreneurs: 4 year-permit to work/invest in Thailand in select high tech industries. Jan 2018 Electronic Transaction Development Agency (under ICT Ministry) announces plans for National Digital ID to support e-KYC and identity verification. Nov 2017 Jan 2017 Mar 2017 SEC Launches regulatory Sandbox for Robo Advisory, Algorithm Trading, Fintech & Blockchain for securities trading applications Feb 2017 Revenue Dept. grants 5-year corporate income tax exemption for new startups in 10 business sectors. BOT Launches Regulatory Sandbox for Payments, Loans, and Funds transfers use cases. Live Q12017. Source: Bank of Thailand, Bangkok Post, Digital Ventures
  16. 16. THAILAND FINTECH OPPORTUNITIES
  17. 17. #1: TOURISM Intersection of fintech, tourism/travel, and even health represent a relatively untapped US$50bn market opportunity Source: Publicar, Zion Research (Million) (USD Bn) Rank 2015 2016 Country of Origin (Million) % Rank 2015 2016 1 France 84.5 82.6 China 8.8 27% 1 United States 205.4 205.9 2 United States 77.5 75.6 Malaysia 3.5 11% 2 Spain 56.6 60.3 3 Spain 68.5 75.6 Japan 1.4 4% 3 Thailand 44.9 49.9 4 China 56.9 59.3 Korea 1.5 5% 4 China 45 44.4 5 Italy 50.7 52.4 Laos 1.4 4% 5 France 44.9 42.5 6 UK 34.4 35.8 India 1.1 3% 6 Italy 39.4 40.2 7 Germany 35 35.6 Russia 1.09 3% 7 UK 45.5 39.6 8 Mexico 32.1 35 Rest of the world 13.81 42% 8 Germany 36.9 37.4 9 Thailand 29.9 32.6 Total 32.6 100% 9 HK 36.2 32.9 10 Turkey 39.5 n/a 10 Australia 28.9 32.4 Thailand 2016 Tourist arrivalsInternational Tourist Arrivals International Tourism Receipts Thailand is a Top 10 global travel destination, and the leading travel destination in Southeast Asia Over 50% of visitors to Thailand come from within a 4 hour flight radius Of the US$50bn in tourism receipts, US$4.3bn are from medical tourism, representing 8.6% of Thai tourism, and 7.8% of the US$55bn global medical tourism market
  18. 18. Finance #2: ENTERPRISE BLOCKCHAIN Blockchain has moved past a point of conversation, seminars and conferences; Thai corporates and government agencies are testing and piloting blockchain for a variety of use cases • International remittances • Contract management • Trade finance • Bond issuance & settlement Energy Government Retail • Peer-to-peer energy trading • Blockchain & IoT devices to capture real-time data of train arrival times • Tracking of high value/ luxury shipments • Digital currency
  19. 19. Thailand’s Convoluted Customer m-Commerce Journey #3: SOCIAL COMMERCE 51% of online shoppers purchase directly through social media. However, a significant portion of Thai e- commerce is not recorded, as a large number of online boutique merchants sell without any payment acceptance scheme 3. Seller & Shopper agree on item, Seller shares bank account details via messaging platform. 5. Shopper sends proof of payment and provides mailing address to seller via messaging platform 6. Seller ships product and provides tracking number on messaging platform. 2. Shopper reaches out to Seller via messaging platform. 4. Shopper switches to mobile banking app or nearby ATM to make the transfer. 1. Shopper discovers a potential product purchase on an Instagram or Facebook storefront
  20. 20. THANK YOU
  • waleeporns

    Jul. 11, 2018
  • Kathiriiv

    May. 12, 2018
  • JulianMengual

    Mar. 17, 2018
  • AxelWinter

    Jan. 31, 2018
  • JeanFrancoisGOUMY

    Jan. 30, 2018

An overview of Thailand's Fintech landscape and investment opportunities, presented by Paul Ark (Managing Director of Corporate Venture Capital at Digital Ventures) at the Next Money Asia Fintech Finals on 30 Jan 18.

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