ASEAN FinTech Census 2018

The financial services industry in the Association of Southeast Asian Nations (ASEAN)
region is rapidly evolving as a result of disruption from new-age Financial Technology
companies (FinTechs). FinTechs, which combine innovative business models with digital
technologies to render financial services, are witnessing a visible ascendance in Asean,
as well as around the world. Rapidly expanding economies, young-urban-digitally-savvy
population, increasing mobile and internet penetration, and largely underserved, small-
and medium-sized enterprises (SME) and consumer markets by traditional financial
institutions, are all factors that have led to the rapid adoption of FinTech innovation in
the region.
On the back of strong fundamentals and with FinTech adoption on the rise, Asean as
an engine of economic growth and prosperity has caught the eye of global investors.
Investment in the region’s FinTech sector has surged, jumping 45% year-over-year to
US$366 million in 2017, according to Tracxn.
However, little has been discussed and published about the opportunities and challenges
facing the FinTech industry in the region. To understand the key factors shaping the
industry and bring to forefront the voice of the FinTechs in the region, EY has undertaken
this research initiative and surveyed more than 250 FinTechs in early 2018. Participants
include FinTechs primarily from Asean countries as well as outside of Asean, who are
looking to enter the region. The findings are presented in this inaugural EY ASEAN
FinTech Census 2018.
The Census analyzes the Asean FinTech ecosystem, in addition to providing a platform
for FinTechs to express their views on a range of matters related to adoption, investment,
talent and environment. The report examines in-depth, how governments across Asean
have and can further facilitate thriving FinTech hubs. The Census also provides views
from industry and domain experts on the Asean FinTech ecosystem.
Continued evolution of the FinTech ecosystem will help facilitate the overall growth and
development of the Asean region. EY’s ASEAN FinTech team is committed to working
with industry participants comprising FinTechs, investors, governments, education
institutions, accelerators or incubators to help the region realize its potential and bring
about greater financial inclusion.
Foreword
Liew Nam Soon
Managing Partner, ASEAN Markets
Brian Thung
Managing Partner, ASEAN Financial Services
1

2
Contents
01 Methodology 03
02 Key messages 09
03 Fast facts 11
04 Profiling of respondents 13
05 Company profiling 15
06 Revenue 21
07 Investment 24
08 Talent 29
09 Regulation 32
10 Environment 37
11 The way forward 40
12 FinTech associations in Asean 44
2

Methodology
• EY defines FinTech organizations as ones combining
innovative business models and technology to enable,
enhance and deliver financial services.
• The business activities of FinTechs are broadly classified
under four models: business-to-business (B2B), business-to-
business-to-consumer (B2B2C), business-to-consumer (B2C)
and offline-to-online (O2O).
• FinTechs are further divided into 16 key subsectors including
payments, blockchain, money transfer, data analytics, robo
advisory, amongst others. Refer to page 16 for further details.
Definition of FinTech
01
• Census questions focused on profiling respondents, as well as
gathering information on revenue, capital, talent, regulations,
environment and future growth trends at FinTechs.
• FinTechs firms received an email with a link to an online
survey page. There were 80 questions, with the wide range of
free text, multiple choice, ranking and scoring questions, that
would take no more than 30 minutes to complete.
Survey design
03
• A lists of FinTechs was developed from existing contacts,
directories, industry associations and previous FinTech
events, (including FinTech conferences). These organizations
were screened for FinTech eligibility and contacts were sorted
to remove duplication.
• Outreach channels included marketing the census on
professional social media platforms such as LinkedIn,
marketing on social media handles of FinTechs, as well as
direct emails to key stakeholders and founders.
FinTech outreach
02
• We received 251 responses from across Asean (170
responses) and non Asean countries (81 responses). Non
Asean headquartered FinTechs are the companies planning to
expand their footprint in the Asean market.
• Asean countries surveyed are Cambodia, Brunei, Indonesia,
Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand
and Vietnam.
• The survey was officially closed on 31st January 2018, and
then manual data cleansing exercise was undertaken, with
final output based on analysis of the cleansed data.
• We have applied unweighted averaging of results to offer
insights across key themes and trends. The results are
presented in this inaugural EY ASEAN FinTech Census report.
For detailed results and custom analysis, please refer to our
interactive ASEAN FinTech Census Survey Dashboard on
http://ey.com/sg/eyaseanFinTech.
Analysis and reporting
04
01
3

Thailand
“Nascent but emerging FinTech sector”
Fast Facts:
• # of FinTechs: 128.
• Investment in 2017: US$12M (-40% Y-o-Y).
• Key subsectors: Payments.
• Most active investors: 500 start-ups, Golden Gate Ventures.
• Regulatory Sandbox: Yes.
Malaysia
“Emerging FinTech Hub in Asia”
Fast Facts:
• Investment in 2017: US$75M (15 times increase Y-o-Y).
• Key subsectors: Payments, Consumer Finance.
• Most active investors: 500 start-ups, Cradle, Mavcap.
Philippines
“Drive towards Financial Inclusion”
Fast Facts:
• Investment in 2017: US$78M (13 times increase Y-o-Y).
• Key subsectors: Payments including remittances.
• Most active investors: 500 start-ups, Kickstart Ventures,
Spiral Ventures.
• Regulatory Sandbox: No.
Singapore
“Asia’s FinTech hotspot”
Fast Facts:
• Investment in 2017: US$141M (+68% Y-o-Y).
• Key subsectors: Wealth Management, Alternate Lending,
Payments.
• Most active investors: Startupbootcamp, GMO Venture
Partners, Wavemake Partners.
Indonesia
“Booming digital payments market”
Fast Facts:
• Investment in 2017: US$26M (3.7 times increase Y-o-Y).
• Key subsectors: Mobile payments, Alternate Lending.
• Most active investors: East Ventures, Kejora, 500 start-ups.
Vietnam
“Limited FinTech activity”
Fast Facts:
• Investment in 2017: US$3M.
• Key subsectors: Payments.
• Most active investors: IDG Ventures Vietnam.
• Regulatory Sandbox: No.
4
Source: Tracxn accessed on 9 Dec 2017
FinTech
snapshot:
ASEAN
Thailand
Philippines
Vietnam
Singapore
Malaysia
Indonesia

How FinTech sector is
shaping up globally
The Census results show that a record number of FinTechs (89%) believe that customers are open to adopting FinTech
services and majority of them are optimistic about future growth of the sector (61%). As the financial services sector
navigates its way through disruption and innovations, we have identified key emerging FinTech themes. These themes
will determine how the FinTech sector will shape up globally over the next few years.
Sub-sector specialization
Globally, as well as within each FinTech jurisdiction, we observe
that each FinTech sub-sector is at a varying degree of maturity:
• In Indonesia there are about 78 payments start-ups whereas
c.20-30 start-ups are in the lending, and savings and
investments sectors each, reflecting the latter sub-sectors’
potential infancy.
• In parallel, there are c.25 active payment FinTechs in
Switzerland, and a similar number in Philippines (c.30),
evidencing the differences in scale of the same sub-sector
across global FinTech hubs.
Going forward, this trend will dictate where innovation is leading
i.e., getting significant start-up interest, compared to where
sub-sectors may be potentially getting too crowded i.e., room for
innovation is depleting.
Payments has gained scale in certain markets
• Payments as a sub-sector of FinTech has achieved significant
scale in certain markets — developed countries such as
London (~30% of number of FinTechs) and Singapore (~20%
number of FinTechs), as well as developing jurisdictions such
as China. Some of the world’s largest FinTech unicorns are
from this sub-sector, such as Klarna from Sweden, Stripe from
the United States and Adyen from Netherlands.
• In Asia-Pacific, social media platforms, e-commerce players
and on-demand service providers (e.g., ride-hailing) with large
captive consumer bases, have already or are starting to offer
payments as a differentiated service to its consumers. This
trend has yet to play-out in the western world.
• Current regulatory regimes have started to acknowledge
this — PSD2 Directive in the EU aims to enhance consumer
protection, increase competition and acknowledges that
the payment sub-sector cannot persist as a standalone to
traditional financial services sector.
Payments FinTechs density in Asean countries
Vietnam
33%
30%
29%
27%
21%
Malaysia
Thailand
Philippines
Indonesia
Singapore
47%
Policy support
We observe that there is strong policy support for promoting
innovation and financial inclusion, which has been a key driver in
many markets for the FinTech sector
• Both London and Singapore are proactively backing a FinTech
push and have taken a number of regulatory steps to promote
innovation.
• Other regimes might require more of such support and
FinTech innovation in these hubs has been mostly bottom-
up (e.g., China, India, Indonesia). Only in recent years, they
are ‘playing catch up’ in response to the recent success and
increasing scale of the sector.
Source: Tracxn, accessed on 9 December 2017
5

Taking advantage of geo-political positioning
Challenger hubs are coming up alongside relatively well
established FinTech hubs. Some examples include: Malaysia
neighbouring Singapore, Lithuania near Estonia, where they are
leveraging their geographic proximity to capture any spill-over
from an innovation and talent perspective.
• Malaysia pitches itself as low cost cousin of Singapore. The
cost of living is a third of Singapore, which might see more
companies putting non-client facing jobs like operations,
marketing and technology support in Malaysia.
• Lithuania have been living under the shadow of tech savvy
Estonia and at the onset of Brexit, leveraged its ability to offer
single window clearance for getting EU licenses. For talent,
it offers larger number of trained staff at a lower costs than
Estonia where there is voluminous demand from a vibrant
start-up ecosystem, driving the cost of acquiring and retaining
talent even higher.
Investor specialization
• We have started to observe sub-sector specialization themes
in the investor community as well. As a complex and broad
sector, investors realize that they cannot possibly create
capability or expertise across the space, albeit they must pick
their areas of focus.
• In a survey of 125+ investors in October 2017, all were active
and very interested in the FinTech space. Investors expressed
focus on average in six sub-segments out of a total of 14.
Most sought after specializations include: Data analytics,
Blockchain, Financing, Payment Solutions, RegTech and
InsurTech. Investors have started to build teams around these
capabilities across the globe, or hire experts to differentiate
themselves.
Cumulative investments in top 5 sub-sectors in
South-East Asia (in US$M)
Payments Investment
Tech
InsurTech Consumer
finance
Alternate
lending
269
189
86 83 75
6%
More capital chasing less demand
• In a survey of 125+ institutional investors deeply interested
and active in the FinTech sector in Asean, conducted in
October 2017, it was noted that there was greater than
US$2B in capital commitments available. On the flip side,
Source: Tracxn, accessed on 9 December 2017
a survey of 230+ FinTechs, conducted in the same time-
frame for the same jurisdiction, capital requirements were
established at just greater than US$1Bn.
• Effectively, there is currently two dollars chasing every dollar
in potential FinTech opportunity. At the same time, while
having capital is important, it is not the only factor that will
attract FinTechs.
• In 2017, global VC backed FinTech start-ups raised US$16.6B
across 1,128 deals. This compared to US$13.8B across 1023
in deals. Globally there are 25 FinTech unicorns valued at
US$75.9B.(1)
(1) Source: CB-Insights_Fintech-Trends-2018
Collaboration between financial institutions
and FinTechs
• Till few years ago banks were wary of FinTechs as narrative in
the industry was more around competition between FinTechs
and financial institutions. However, as innovation swept across
continents, both sides realized that collaboration and not
competition is the way forward. FinTechs realized that they
will benefit from deep pockets, regulatory prowess, huge
customer base and trust enjoyed by banks. Banks also realized
that it makes sense to collaborate with FinTechs rather than
try to build everything in-house.
• In Asean, banks have been actively collaborating with
FinTechs to drive efficiency and enhance customer
experience. Most banks have an incubator, accelerator or
innovation lab, which helps drive collaboration with FinTechs.
Some Asean banks have also launched FinTech-focused
investment funds.
Estimated numbers of incubators, accelerators
and innovation labs (by country)
Source: State of FinTech in ASEAN, October 2017
6
Singapore
52
Vietnam
24
Indonesia
20
Malaysia
10
Thailand
5
Philippines
5

7
Shortage of talent
• About 60% of FinTechs in our survey agree that there is
shortage of required talent in their respective countries.
Globally, retaining and attracting high quality technical talent
is observed to be one of the most prevalent challenges faced
by FinTechs.
• Technical talent most sought after includes Data Scientists,
Financial Engineers, Mobile Marketers and Computer
Programmers. Some countries like Australia are attempting
to import technical talent from other countries. London,
New York and San Francisco continue to jostle between one
another for talent, with Singapore and Sweden closing in from
behind.
• A more sustainable solution to talent shortage is to nurture
domestic talent. Hong Kong and Singapore are already
moving towards this direction by partnering with schools to
train students to develop FinTech knowledge and capabilities.
Democratization of access to information and
infrastructure
• To promote healthy competition, drive innovation and benefit
the end customers, new regulations such as General Data
Protection Regulation (GDPR), Payment Services Directive
(PSD2) and MIFID II have been proposed by regulators in
Europe. In the UK, open banking regulation came into effect in
January this year.
• In Asia, Monetary Authority of Singapore (MAS) is
encouraging financial institutions to adopt open APIs as a
key foundational layer for innovation and interoperability.
Hong Kong Monetary Authority (HKMA) has also launched the
draft Open API framework. As more regulators embrace open
banking, it will revolutionize the way the financial services
are consumed and will be a key driver of the FinTech sector in
coming years.
7

8
Summary findings
ASEAN FinTech census gathers insights directly from FinTechs highlighting key areas of growth, opportunities and
potential challenges. The analysis is based on 251 FinTech responses, and is a fair representation of FinTechs across
ASEAN and subsectors. We have analysed FinTechs’ responses on Revenue growth, Capital requirements, Regulatory
support, operating Environment and plans for Future expansion, to come up with the following key insights.
expect next funding round to be
greater than US$1million60%
FinTechs believe that there is a lack
of start-up or FinTech talent in the
country they operate in
60%
FinTechs have revenue growth as an
immediate future goal in coming 12
months
61%
plan to expand beyond home or
current markets87%
78%
believe government should increase
tax incentives, government funding
and talent initiatives to grow and
promote the industry
8

Key messages
• Government policies and actions play a vital role in shaping
up the FinTech ecosystem, and promote innovation and
competition. Governments across Asean have taken steps
to facilitate the development of the sector. 58% of the
respondents want more support from regulators and policy
makers.
• Tax policies, talent and government funding are top three key
areas where about 80% of FinTechs believe that more steps
should be taken to promote the sector.
Regulation
04
• Both historic and future revenue growth indicators are
measure of success of FinTechs. Census shows that
historically 42% of FinTechs registered a revenue growth
of greater than 30%. About 65% of the companies expect a
revenue CAGR of greater than 30% in future.
• As FinTechs plan to grow, Census results indicate that about
68% of FinTechs have runway of less than one year and plan
to raise funds in immediate future.
Revenue
01
• To keep the growth engine running, it is imperative that
FinTechs have enough channels of funding available and are
able to obtain funds easily.
• Our study shows that most of the FinTechs (about 45%)
still rely on self-funding or boot strapping. About 76%
of respondents agree that enough funding channels are
available, but 52% find it difficult to obtain funding.
• In aggregate, 60% of FinTechs expect next round of funding
to be greater than US$1M, and 23% of respondents expect an
IPO in future.
Investment
02
• The skills of the people running the start-ups is key to their
success and so is the future availability of the right talent.
The census finding indicates a shortage of technology and
software, product management, and sales and marketing
skills. The challenge is across countries albeit in varying
degrees.
• Majority of FinTechs (61%) have hired foreign talent and about
35% of faced challenges in recruiting foreign talent.
• Most of the FinTechs still rely on personal connections (57%)
and recommendations (48%) to hire talent.
Talent
03
02
9

10
• Presence of healthy competition and availability of support
networks beyond founders and investors is critical for growth
of FinTechs. About three-fourths of the FinTechs in Asean
believe that they will be able to compete internationally.
• As most of the start-ups have lean operations and relatively
less staff, most of them (73%) feel that co-working space is
beneficial. However, need for accelerators and incubators is
lower in Asean.
Environment
05
• Census results indicate that FinTechs are optimistic about
future. About 64% plan to diversify into other services within
FinTech, and 54% plan to exit in next five years.
• Outside Asean, the rest of the Asia and Europe are two most
important regions for FinTechs to expand into. The USA, UK
and China are the top three preferred destinations outside
Asean.
• Majority of the FinTechs (63%) see greater opportunities of
expansion outside home market However, compliance with
new regulations (57%) is the top concern for the companies
expanding aboard.
The way forward
06
10

11
58%
Asking for more regulatory support
Regulation
TalentFinTech leader profile
End customers
51%
serve banks and other financial institutions
Business models:
41%
B2B2C
37%
B2B (inclusive of
B2Government)
60%
agree there is a lack of FinTech talent in the country
they operate in
58%
find tech & software talent insufficient to meet their
needs
40%
have a financial license
Regulatory reforms needed (top 2):
Increase tax incentives for angel investors in early
stage investment
Policy reforms in areas that make it easier to hire
employees
Education:
62%
Masters
86%
of FinTechs have all male founders
Sector profile (top 3)
Fast
facts
03
80%
Respondents are CEO
33%
Payments
25%
Loan app/
financing
21%
Money transfers/
remittances

Revenue
Type of revenue models (top 2):
33%
have average revenue per month >US$50K
Investment
68%
Runway of less than a year before funding runs out
45%
are self-funded
60%
expect next funding size
to be greater than US$1m
Investment in Asean
Fintech (2017)
US$366m
Environment
Globally competitive Biggest competitors
89%
agree public is open
to FinTech
36%
customer acquisition
is a key concern
33%
say traditional
financial service
providers
77%
agree they will be
able to compete
internationally
Outlook
Goals for coming 12 months
87%
plan to expand beyond home or current markets
61%
Grow revenue
45%
Obtain funding
12
Gross domestic product
(GDP):1,2
$2.63t (October 2017)
6th
largest
economy in the world
$7.4t (2030e)
Digital penetration:3
(February 2018)
350.6m
Internet users
58%
Internet penetration
390.8m
Mobile users
1.4x
Mobile connections per capita
55%
Social media penetration
Population:2
646m (2017)
47.6%
urbanized population
Young demographic
profile:2
28.8
median age (2017)
ASEAN
Key Highlights
Source: 1. ASEAN Economic Progress Report, July 2017; IMF
World Economic Outlook, October 2017
2. “ASEAN SMEs: Are you transforming the future?” EY
Report, 2018;
3. “Southeast Asia digital, social and mobile 2018”, ASEAN
UP, 1 February 2018.
Percentage of transaction
52%
Flat fee per transaction
43%

13
Profiling of
respondents
The ASEAN FinTech census collected data from 251 companies across ASEAN providing a good
representation of FinTechs across the region. About 80% of respondents are CEOs with 57% being serial
entrepreneurs.
Gender
86%
of FinTechs have all
male founders
Respondent position
80%
The majority of respondents
hold senior positions with
80% being CEOs
Founder
57%
of the founders are serial
entrepreneurs
Highest level of education
62%
Masters
28%
Undergraduate
8%
Doctorate
2%
High School
Work status
93%
Work full-time
93% of the respondents are full time
employees while 5% work on part time basis
and 2% are equally divided into studying
part time and working on casual basis.
04

14
9 out of 10 founders
are between 26 and 35
years of age
Age of founders (multiple responses)
Note: Analysis is based on data for up to 5 founders for each respondent company
<25 20%
26–35 92%
36–45 77%
46–55 25%
>55 6%
EY is committed to supporting entrepreneurs across their lifecycle and have
supported programs like “EY Entreprenuer of the year”, Singapore Fintech
Festival - Investor Summit. FinTech landscape in Asean is unique in terms of young
age, education level and immense commitment to develop financial product and
services by leverage technology at their core. We partnered with the grassroots
FinTech associations in Asean markets to give a platform to FinTechs to share their
aspirations and areas where they need support from the ecosystem to create a
“better working world”.
Varun Mittal, EY ASEAN FinTech Leader

Company
profiling
05
The Census represents companies across a wide range of FinTech sectors. 68% of respondents are from
Asean whereas 32% respondents are from outside Asean. This latter group represents companies looking
to expand their presence in South East Asia market.
About 80% of companies are in market ready stage out of which 58% were established between
2015–2017.
Headquarter of respondents
Product/Service Stage
Age of company
5%
Thailand
7%
Philippines
29%
Singapore
3%
Other ASEAN
32%
Non ASEAN
10%
Malaysia
48%
4%
Ideation
6%
Prototype
80%
Market Ready
10%
Proof of concept
<1 yr 15%
1–2 yrs
2–5 yrs 23%
5–10 yrs 8%
>10 yrs 6%
2 out of 3 FinTechs were
born in the last 5 years
and nearly half in the last
two years
15
14%
Indonesia

Type of FinTech (multiple responses)
Payment Solutions 33%
25%
21%
18%
16%
13%
12%
11%
10%
9%
7%
6%
6%
6%
5%
4%
17%
Loan application or
financing
Money tranfers or
remittance
Data Analytics
Blockchain or DLT
Robo-Advisory, Personal
Finance Management
InsurTech
(UBI, Telematics)
Trading,
Fund Management
RegTech, Robotics
(e-KYC, AML, Digital ID)
Cloud, Open API
Cryptocurrency
Enterprise Management
Systems
Crowdfunding
Accounting
Digital Identity
Institutional Tools
Others
Others include FX, Credit management system, currency exchange, corporate venture capital, invoicing, etc.
1 in 3 companies are engaged in the payments space, which grows to more than half (54%) if money-transfer or remittance is
included.
16

About 80% of respondents operate on B2B or B2B2C business models. 47% of the B2B respondents derive their revenue through
big banks and corporations whereas 46% of B2B2C respondents derive their revenue through retail and start-ups or SMEs. Banks
and financial institutions form the biggest group of end customers (51%) representing strong collaboration between incumbents and
start-ups.
Number of employees
3%
>250
12%
51–250
38%
11–50
47%
1–10
8.5 out of the 10 FinTechs have headcount of less than 50,
representing a typical start-up profile of these businesses.
Value proposition of the company
(multiple responses)
Better or more effective
solutions
74%
54%
51%
43%
41%
38%
37%
18%
12%
Greater Convenience
Seamless and intuitive
user experience
Financial inclusion
Innovative idea
Speed of transactions
Cheaper pricing
Greater security
Others
Majority of FinTechs aspire to offer better and more effective
solutions to the customers — fit for purpose. This is followed
by greater convenience and enhanced user experience as
respective value-plays.
Note: Others include customers
such as medical professionals,
schools, hospitals
End customers (multiple responses)
51%
Banks and
other financial
intermediaries
47%
Retail consumers
45%
SMEs or start-ups
39%
Corporations
20%
Government
14%
Sophisticated
investors
14%
Others
Note: Others represent 2% of companies that follow combinations
of above models
Business model (multiple responses)
41%
B2B2C
37%
B2B (inclusive of
B2Government)
1%
Online to offline
18%
B2C
17

ASEAN Financial Innovation
Network (AFIN)
The ASEAN Financial Innovation Network (AFIN) has been
established to support Fintech & Financial Institution
integration and enhance financial inclusion. Technology is
transforming financial services and holds potential to improve
efficiency and choice in the sector as well as contribute to more
inclusive economic growth. FinTech innovation also creates
significant opportunity to accelerate financial inclusion and
development across the region.
ASEAN has the necessary assets and skills to accelerate
financial innovation for the benefit of inclusive growth. The
digital transformation of financial services and adoption of
financial technology can help to expand the reach and usage of
financial services across the region. ASEAN encompasses a large
and growing population, several of the fastest growing markets
globally and is home to a growing pool of both capital and
expertise in financial services and Fintech innovation. Improving
access to financial services, particularly for SMEs, across the less
developed markets of ASEAN, can also give a boost to growth
and regional economic integration in this era of digital innovation.
AFIN will be a catalyst in helping these assets across the region to
connect and work together to realize this potential.
Financial inclusion remains a major challenge across the East
Asia Pacific region, especially in ASEAN countries.
For example, the percentage of adults with  formal bank accounts
ranges between 22% in Cambodia and 36% in Indonesia,
compared with the EAP average of 69%. Even lower is the
percentage of adults with debit cards, ranging from 1.7% in
Myanmar to 26.5% in Vietnam. Meanwhile, the percentage of
adults who use debit to make payments ranges from 0.4% in
Myanmar to 8.5% in Indonesia, compared with the regional
average of 14.8%. Digital transformation and innovative
technologies promise to offer viable means to overcome the costs
and physical barriers to financial inclusion.
The aim of AFIN is to foster the development of a more
robust and innovative market for Fintech services across
ASEAN. AFIN will help financial institutions to more easily and
cost effectively experiment with and test Fintech innovations,
providing technical guidance and fostering knowledge sharing
among members of the network. For Fintechs and other
specialized service providers, AFIN will also facilitate interaction
with new financial institutions and entry to new markets in which
their expertise and services can help address financial inclusion
challenges. Through testing and learning between these parties,
AFIN will help enhance stakeholders’ understanding and insight
into the challenges of Fintech adoption and needs of the financial
sector across the region.
18

The services and operations of AFIN will center on an API
Directory and Industry Sandbox. This technology platform
will provide information about API based services providers,
their business and technology to potential users. It will also
enable financial institutions and Fintechs to set up and operate
segregated and secure testing environments in which their teams
can cost effectively undertake initial assessments as well as
design and integration work. This will enable many of the smaller
financial institutions across the region to more readily learn about
and test with Fintechs, while having access to support from AFIN
and other users.
AFIN will promote convergence towards compatible API
standards but is not setting API standards or access rights
for the market. AFIN is working hand in hand with industry and
regulators across the region to at this early stage of market
development and will promote structured dialogue among these
stakeholders about the role that API standards play in market
development and their implications for technology, operations
and business models. Whereby AFIN will encourage users to work
towards common frameworks and approaches, AFIN will not
pretend to define or impose standards. However it is expected
that through practical experimentation and development, AFIN
may help to facilitate and accelerate emergence of commonalities
that are favourable to API banking.
19

Financial Institutions across the region have asked AFIN to prioritise onboarding Fintech services into the sandbox in certain
areas, including
• KYC: banks are interested in solutions that can help to digitize client on-boarding processes and enable them to more easily provide
services to un- and under-banked SMEs and individuals.
• Credit scoring: financial institutions would like to be able to experiment with a wider range of alternative credit scoring analytics
solutions and service providers, in particular those that will strengthen risk management for lending to target groups for financial
inclusion.
• SME lending solutions: appropriate products and services to support lending to SMEs, merchants and other small businesses are a
core interest for financial institutions seeking to expand access to finance.
AFIN is actively seeking Fintech services providers working in these areas and with an interest to support collaboration and financial
inclusion with banks across ASEAN.
20

Revenue
06
Average revenue per month (rpm) in US$
Average past revenue CAGR (last three years*)
• Most players with average rpm
exceeding US$50k belong to
the payments, trading, RegTech
and loan application/financing
subsectors.
• Majority players in emerging
subsectors such as blockchain and
robo-advisory are still operating at
a small level with less than US$1K
average rpm.
• Revenue growth highlights proven
demand for FinTech in Asean. 41%
of FinTechs have registered average
CAGR in revenues of greater than
30% in the last three years.
• 14% of respondents have registered
nil revenue CAGR as the census
also includes players with products
or services in prototype or proof of
concept or ideation stage.
<1K 1K —
10K
10K —
50K
50K —
100K
100K —
500K
500K —
1M
>1M
19%
23%
25%
12%
13%
5% 3%
The census covers a
wide range of FinTechs
with rpm ranging from
<US$1K to >US$1m.
<0% 1–10% 11–30% 31–70% 71–150% 151–
300%
301–
1000%
>1000%
14%
23% 22%
10% 11%
8%
10%
2%
*or since founding
21

Profitability
Expected revenue CAGR
0% 1 —
10%
11 —
30%
31 —
70%
71 —
150%
151 —
300%
301 —
1000%
>1000%
2%
9%
25%
21%
18%
11%
14%
1%
The census features FinTechs
with varied revenue models
52%
Percentage of transaction
30%
monthly or annual subscriptions
(SaaS) based on users
14%
monthly or annual subscriptions
(SaaS) based on usage
8%
“Freemium” model
8%
Percentage of funds outstanding
or invested per annum
53%
of FinTechs
earn <US$1K
average profits
per month
41%
of FinTechs are
yet to break
even
7%
Others*
*Apart from the above mentioned
models, FinTechs have specified
one-time application development
or implementation fee as a standard
revenue model. Others include % of
assets under management, profit and
loss sharing, performance fees etc.
Revenue model
FinTechs who are currently generating profits, took approximately 2
years to break-even. In case of FinTechs who are still unprofitable, 82%
are expecting to take less than 2 years to break-even.
FinTechs mentioned revenue growth as an immediate future goal in the
coming 12 months.
61%
Forward looking revenue projections
43%
Flat fee per transaction
22

How long will the CAGR last?
100%
90%
64%
31%
22%
4%
4%
3%
2%
2%
Up to 1 year
2 years
3 years
4 years
5 years
6 years
7 years
8 years
9 years
10 years
31% FinTechs expect their
growth to sustain beyond 3
years
Runway before funding runs out
68% FinTechs have
a buffer of less than
a year before their
funding runs out
1 month 1–6
months
6 months —
1 year
1–2
years
2–3
years
3–4
years
2%
28%
38%
21%
6% 6%
Average cash burn rate per month (US$)
<100K 100K —
200K
200K —
300K
300K —
400K
>400K
80%
13%
2% 3% 2%
• Most FinTechs whose funding is expected to runout in less than a year are looking to acquire funding of US$1-5m in their next
funding round.
23

Investment
07
FinTech funding trend in Asean
Funding
(value) CAGR:
92%
2012 2013 2014 2015 2016 2017
14
10
30
36
71
86 85
67
27
190
252
366
Source: Tracxn accessed on 9 Dec 2017
Value (US$ m) Volume
Fund raising landscape
Raised as much
as needed
36%
Never raised
21%
Couldn’t raise
enough
14%
Tried but failed
3%
Currently
raising
18%
Over-
subscribed
8%
24

• While funding growth has jumped
exponentially in the region and
44% of the FinTechs have been able
to raise as much funds as needed
(or more), most respondents have
found fundraising to be difficult.
• Notably, start-ups face credit crunch
at the outset, as most traditional
financial institutions are reluctant to
lend to companies with track record
of less than three years.
• In Singapore and Thailand, it is
relatively easy for FinTech players
to access a variety of funding
channels.
• FinTechs in Malaysia and Philippines
require additional support to get
access to funding in order to fully
leverage the variety of funding
channels available to them.
Asean is witnessing visible growth in FinTech fund-raising. In 2017,
investments in the ASEAN FinTech market jumped 45% to US$366m
compared to US$252m in 2016.
37% 11%High Easy
24% 52% DifficultLow
39% 37% ModerateMedium
Ease of obtaining
funding
Availability of funding
channels
Asean FinTech players are
looking for growth-stage
equity to continue scaling
their businesses
FinTechs responded that obtaining funding is an immediate future goal
in the coming 12 months
45%
respondents have
raised capital only
through a single round
of funding
63%
• Majority of respondents acquired
funding of less than US$500K
in their last capital-raising cycle.
Going forward, respondents are
optimistic about funding growth as
47% of FinTechs are looking to raise
between US$500K to US$5m.
• 48% of the smaller-sized FinTechs
(i.e. players with average rpm less
than US$100K) expect their next
funding size to be less than US$1m.
• 63% of the larger FinTechs (players
with average revenue per month
greater than US$100K) expect their
next funding to be greater than
US$5m in size.
Amount of funds raised to date (US$)
<500K 500K —
1M
1M —
5M
5M —
10M
10M —
20M
20M —
100M
>100M
48%
14%
23%
5% 7%
2% 1%
Last funding size (US$)
<100K 100K —
500K
500K —
1M
1M —
5M
5M —
10M
10M —
20M
20M —
100M
>100M
27% 27%
14%
20%
5% 5%
2%
1%
25

Venture Capital (VC) presence across Asean
28%
payment FinTechs
to be US$1m–5m while
24%
expect higher range of
US$5m–10m
34%
loan application or
financing FinTechs
to be US$1m–5m
40%
robo-advisors expect
next funding size to be
US$500K–1m
Source: State of FinTech in ASEAN, UOB
Next expected funding size (US$)
<100K 100K —
500K
500K —
1M
1M —
5M
5M —
10M
10M —
20M
20M —
100M
>100M
4%
15%
21%
27%
16%
8% 7%
2%
Funding avenues (multiple responses)
45%
Self-funded or
boot-strap
33%
Angels
29%
Friends or family
22%
Venture
capital firms
8%
Private equity
firms
5%
Government
funding
3%
Debt
funding
2%
Public listing
and bank credit
• Other than the traditional funding
avenues, FinTechs have also received
funding through accelerators, token
sales (ICOs), grants as well as from
family offices, parent companies and
strategic partners.
• Notable Corporate VC funds in South
East Asia.
Siam Commercial Bank
Digital Ventures
US$50m
Mandiri Capital US$37m
Kasikorn Bank Beacon
Fund
US$29m
Indonesia
37%
63%
Malaysia
58%
42%
Phillippines
87%
13%
Singapore
23%
77%
Thailand
67%
33%
*Based on country currently headquartered in
Note: Chart is representative of 154 respondents
Yes, enough VCs No, need for more VCs
26

• VC funding is South East Asia is largely focused on seed and Series A stages. But as sector is growing/scaling, Private Equity
players are getting involved to provide late-stage growth equity.
• In Singapore, the government is seen to provide attractive incentives to VCs to encourage risk-taking, including reduction of
regulatory red tape, protection of intellectual property and allocation of public money for early investments.
• Indonesia is also seeing strong funding activity from local conglomerates, as well as foreign players, although activity may be
restricted to a smaller sub-set of large-ticket deals.
• Risk-taking needs a further boost in Philippines, Thailand and Malaysia.
Level of funding support provided by government
Indonesia
Malaysia
Phillippines
Singapore
Thailand
26% 39% 33%
17%58%25%
20%47%33%
50% 19%27%4%
6%40%26%29%
77%
FinTechs mentioned
that government
funding schemes are
not easily accessible
52%
FinTechs want
government funding
to be made more
accessible
What aspect should the government work on to improve funding? (multiple responses)
Indonesia Malaysia Philippines Singapore Thailand
Make funding more accessible 38% 43% 67% 59% 10%
Come up with more assistance schemes 35% 29% 20% 11% 30%
Wider range of criteria 6% 29% 7% 14% 10%
Up the amount of incentives 9% - - 2% 10%
Increase amount of government funding 9% - - 7% -
Others 3% - 6% 7% 40%
While most FinTechs in Asean want easier access to government funding, players in Thailand want more assistance schemes and
limited government involvement in funding.
Government should not be involved beyond creating a culture that rewards private
funds and individuals to take risks. Let private companies do it but create a culture
where the business leaders of the country are willing and excited (peer pressure)
to make investments in new business models! Give awards in a very public way to
people and funds who champion entrepreneurship
Masii.com, FinTech firm headquartered in Thailand
27
2%
No support Low Medium High

Stages of FinTech,
by Larry Cao, CFA, Director of Content, CFA Institute
FinTech has taken the financial services industry by storm.
According to Google Trends, current interest in FinTech globally
is ten times as high as that three years ago. There’s been much
talk about disruption, particularly earlier in this period. So how
would FinTech industry develop? Would it replace or enhance the
financial services industry?
We believe there are clear patterns emerging in FinTech’s growth,
both in terms of the popular areas of activities and in the stages
of development.
State 0: The Pre-FinTech Years
Recall how everything looked before FinTech came onto the
stage?
The IT departments at financial institutions have universally been
big spenders. The money went not only to hardware and software
vendors but also to in-house teams.
The regulatory burden makes it extraordinarily hard to update
systems at a financial institution. Often management would have
to sacrifice user friendliness out of concerns that putting in a
new system could give rise to system stability issues. Moreover,
financial institutions adopted one size fits all approach over the
years. They have also not been aggressive as a group in serving
the unbanked and underbanked.
Typical Stage 0 Companies: Financial institutions. They purchase
and develop technology solutions at their will.
Stage 1: The Early Days
Some entrepreneurs smelled opportunities. They wanted to offer
services with improved user friendliness by leveraging low-cost
technology. It helped them to reach out to the unserved and
underserved segments, which financial institutions were not able
to cover profitably.
Peer-to-peer lending, mobile payment, and robo advice are the
three areas with the most activities around the world in the early
days of FinTech development.
Typical Stage 1 Companies: FinTech start-ups and VCs. Together
they have created much buzz and disturbed the sweet dreams of
a sleepy industry. The disruption talk was overblown though. In
most markets, successful FinTech start-ups have chosen to serve
the unserved and underserved.
Stage 2: The Power of Collaboration
The most significant development that signals the entry into
stage 2 for a market is the active collaboration between powerful
players from both the financial services and technology sectors.
We hypothesized that “the collaboration between powerful fin and
powerful tech is the most promising path to powerful FinTech” in
May 2016. Although this is still in the early stages, we believe this
type of collaboration is promising for three reasons:
1. Mutual respect. Stage 1 is marked by the mutual “despise”
of financial service executives and technology innovators.
Starting down the collaboration path alone is significant as it
indicates that both parties have come to realize that they can
help each other.
2. Domain expertise. The fundamental reason is of course
success in both finance and technology requires deep
expertise built up over time with a variety of entry barriers,
or “moats”. Equal partners may benefit from the balanced
perspective and access to domain expertise.
3. Culture. Both fin and tech professionals agree that their
corporate cultures are dramatically different. Partnerships
allow them to work together without having to adopt the
other party’s culture.
Typical Stage 2 Companies: Leaders in financial services and
technology.
Stage 3: Nirvana
The financial services industry is clearly in transition. We believe
that, in the end game, the industry will be dominated by linkups
between financial institutions and technology innovators. A small
number of FinTech start-ups will also make it to the finishing
line. As for the legacy systems, the more likely scenario is that
customers will move their businesses to successful Stage 2 and
Stage 1 companies over time as eventually operations running
the legacy systems will become unprofitable.
A technology luminary has famously said, “We tend to
overestimate the effect of a technology in the short run and
underestimate the effect in the long run.” We believe it applies
equally to the case at hand. Although we believe collaboration
is the name of the game at this point, the risk of long term
disruption is real. FinTech players worldwide will serve their
shareholders, clients, and employees well by actively plan and
execute a strategy that will improve their chance of success
through the three stages of FinTech development.
28

29
Talent
08
Availability of talent • Talent shortage is the key
challenge facing FinTechs
in Asean. About 60% of
companies feel there is a lack
of required skills.
• 88% of companies in Thailand
and 73% each in Malaysia and
Philippines said that there is
shortage of FinTech talent in
the country.
• FinTechs in Indonesia and
Thailand unanimously agreed
that hiring the right talent is
a key challenge. On the other
hand, companies in Singapore
face relatively fewer
challenges, though 7 out of 10
respondents still believe that
there are issues in hiring right
talent.
• For a flourishing FinTech
ecosystem, it is imperative
that Asean countries create
an intra-Asean support system
that promotes easy movement
of talent within the region.
60%
of FinTechs feel that there
is a lack of suitable talent in
the country they operate
Trouble hiring talent who meet the needs and growth of the
industry (Yes responses)
Thailand 100%
Overall 77%
Singapore 70%
Phillippines 82%
Malaysia 100%
Indonesia 90%
29

• Lack of domestic talent means that 61% of
FinTechs have recruited foreign talent.
• On positive side, countries like Singapore,
Malaysia and Thailand have made it easier
for FinTechs to hire foreign talent. However,
companies in Indonesia face difficulties in this
regard.
• To further promote the sector and ensure
right skills are available, Asean countries
need to develop a policy framework that
accommodates the mobility of foreign talent
through simple and flexible immigration
policies and programmes.
Recruitment of foreign talent
Issues faced in recruiting foreign talent
(Yes responses)
61%
of FinTechs have recruited
foreign talent
Thailand
Singapore
Malaysia 41%
Indonesia 62%
Overall
Asean
35%
43%
33%
24%
FinTechs mentioned growing
employee base as immediate
goal in the coming 12 months
Areas with insufficient talent
Technology and
software
58%
Product
management
21%
Others include industry
specific, business development,
combination of banking, finance
and technology
Sales
17%
Marketing
16%
Design
14%
Operations
12%12%
Operations
Compliance
12%
Finance
11%
Strategy
10%
Legal
8%
Others
7%
Human resource
4%
Management
4%
30

Top three areas with talent shortage by country (multiple responses)
• Majority of FinTechs find technology talent
insufficient to meet their needs. This is
followed by product management skills. As the
industry matures, talent pool shortages are
now evident in sales and marketing areas as
well. These challenges remain similar across
FinTech subsectors, whether its payment or
data analytics firms.
• Legal, human resource and management skills
are least difficult to find.
• Technology and software skills remain a
challenge across most of the countries. In
Malaysia, FinTechs feel there is insufficient
talent in sales and compliance whereas
shortage of finance professionals is quite high
in Thailand. Indonesia and Singapore face
shortage of product management skills.
• To nurture talent, Asean countries should
encourage STEM (science, technology,
engineering and mathematics) education in
schools and universities. A review of infocomm
curriculum should be undertaken. Education
institutions should develop FinTech specialized
courses and programs.
• Governments should also develop government
funded initiatives for skill development and
promoting start-up culture.
Top recruitment avenues (multiple responses)
57%
Personal
connections
45%
LinkedIn
48%
Recommendations
40%
Jobs portal
20%
Company
website
13%
Contacts through
FinTech associations
Tech & Software Product Management Design Marketing
Compliance Sales Finance
71%
31%
Indonesia
23%
23%
Malaysia
73%
27%
27%
Philippines
41%
24%
18%
53%
19%
14%
Singapore
75%
50%
33%
33%
Thailand
31

Regulation
09
• About 78% respondents said that it is either moderate or difficult to conform to local financial sector regulations.
• Companies in Thailand and Indonesia find local regulations too onerous whereas Singapore-based firms find regulatory
confirmation relatively less complex than other markets.
Responses by country
Indonesia 65%
Malaysia 75%
Phillippines 44%
Singapore 49%
Thailand 60%
Level of support given by regulators to assist
FinTech start-ups in getting started
FinTech start-ups in Asean are
asking for more support from a
regulators and policy makers.
58%
Asking for more support
How hard is it to conform to local regulations?
31%
10%
59%
Indonesia
45%
10%
45%
Malaysia
56%
11%
33%
Philippines
43%
32%
25%
Singapore
18%
18%
64%
Thailand
Easy Moderate Difficult
32

Average legal fees in a year (USD)
30%
15%
10%
45%
<10K 10K —
30K
30K —
80K
>80K
On an average
legal fee
spends seem
reasonable
across Asean
countries.
Effectiveness of open banking protocol
More than 70% of the respondents support open banking as
it offers a myriad of opportunities for start-ups players. Open
APIs allow FinTechs to access customer data, leverage sector
knowledge or infrastructure, and design new customized/
personalized products at much lower cost. Additionally, it
promotes continuing collaboration with financial institutions.
72%
FinTechs believe open
banking is effective
Potential growth initiatives
Top 2 counties with
highest net effective
Increased tax incentives for angel investors
in the early stage investment scheme
51% 17%27% 5% 78%
76%
Government mandated open data
protocols (Open API)
30% 18%45% 6%
78%
Policy reforms in areas that make it easier
to hire employees, e.g., payroll tax reform
and skilled migration visas
34%44% 15% 7%
61%
Opportunities to pitch for Government
tenders and projects
29% 29%32% 9%
Capital gains tax relief for tech start-ups
first incorporated in your country
73%39% 19%35% 8%
57%
Educational materials and information
sessions about best practices for cyber
security
19% 32%38% 11%
78%
Increase budget for government
funding initiatives, such as accelerating
commercialisation for early stage companies
44% 17%34% 5%
Measures that recognise the difficulties of
having to bootstrap initially, like free public
transport and school fees etc.
60%30% 31%30% 10%
66%
Creation of more referral arrangements
between national regulators and regulators
in other markets
29% 26%38% 7%
Net
effective
Thailand Indonesia Malaysia Philippines Singapore
Very effective Fairly effective
Not very effective Not at all effective
33

78%
Respondents feel increase tax incentives, talent initiatives and government funding are effective
steps to grow and promote the industry
Key takeaways:
Government support, policy and regulation are key to foster innovation and create a sustainable financial services ecosystem.
Governments across Asean countries have initiated a number of steps to promote FinTechs in their countries. Going ahead, regulators
need to maintain this policy momentum and have continuous dialogue with ecosystem players to ensure financial markets remain
competitive and secure. We explored a range of potential growth options with FinTechs in the region, which they believe are most
effective.
• About 78% of the participants agree that “increasing tax
incentives for angel investors in the early stage” is top growth
initiative. 90 % of FinTechs in Malaysia and Philippines believe
that such move will be very effective.
• More than 70% of companies said that ‘capital gains tax
relief for tech start-ups incorporated in their country’ will be
positive for the industry.
Tax tops the list
01
• 78% of FinTechs said that increase budget for ‘government
funding initiatives, such as accelerating commercialization for
early stage companies’ is a key potential growth initiative.
• Respondents from Philippines and Singapore particularly gave
high weightage to this initiative.
Government funding
03
• FinTechs believe there is a lack of availability of skilled labour
in Asean. They also face huge challenge in hiring foreign
talent.
• 78% of companies feel that ‘policy reforms in areas that make
it easier to hire employees, such as payroll reforms and skilled
migrant visa’ are required to grow the talent pool.
• More than 90% of firms in Indonesia, Malaysia and Singapore
consider this as an important initiative.
Talent reforms
02
• About 66% of the FinTechs believe that ‘creation of more
referral agreements between national regulators and
regulators in other markets is crucial for developing the Asean
financial services sector.
• Building an Asean FinTech ecosystem could be challenging
given it is a huge complex heterogeneous market. However,
given the potential of the region, it is imperative that all
market participants, including regulators, collaborate and
work towards shared goals.
Referral agreements
04
34

For a long time, London was considered the place to be for
ASEAN’s FinTech companies wishing to make it big in Europe.
However, with Brexit just around the corner, Britain’s capital is
about to lose the key advantage of being the gateway to Europe
for non-EU players. The question is how can a country with three
times fewer people than London take its place as the continent’s
FinTech hub?
It takes a blend of a forward-thinking educational policy and
hassle-free migration options to create a climate where talents
flourish and want to stay. When it comes to Lithuania, it offers
both a growing number of local IT specialists and a simple way to
import talent via the EU Blue Card program. Entrepreneurs from
non-EU regions like ASEAN can also apply for a special Startup
Visa, approved by the country’s government.
Despite its relatively small population of less than 3 million,
Lithuania has an impressive number of tech-savvy professionals,
2000 of whom already work in FinTech companies. Latest data
from the country’s Statistics Department shows that there are
more than 31,000 IT specialists in Lithuania, with almost 9,000
in the making. The vast majority has no trouble working in an
international environment, as 84% of young talents are proficient
in English. Cases of companies like Singapore’s InstaReM and UK’s
Revolut are solid proof of this.
Revolut, the UK-based challenger bank, had their office opened
in Lithuania last year. Having applied for a European banking
licence from the Bank of Lithuania, Revolut is planning to
further strengthen and expand their Baltics’ office in Vilnius.
Lithuania not only helps develop Revolut’s solutions but also
is the company’s third largest market globally. This shows that
Lithuanians are not just financial technology creators but also
one of the early adopters.
Fastest gateway to the EU market
Talent aside, there is another reason why Lithuania is riding the
wave of the FinTech revolution. The Bank of Lithuania, the body
that regulates the whole FinTech ecosphere, is a government
institution ready to embrace next-gen technologies. One might
think of Lithuania as Europe’s Singapore — both are small in
size but progressive in terms of innovations. And, being a part
of the EU market, Lithuania is able to issue a license valid in 28
countries faster than anyone else.
Lithuania: Gateway to Europe
Is Vilnius the new London?
• Population: 2.8M
• Capital: Vilnius
• Member of WTO, EU, Eurozone, NATO
Lithuania
Lithuanian talent has been building Revolut from
the very beginning. The company has always had
close ties with the country and the launch of our
local team is another step towards strengthening
our relationship.
Andrius Biceika,
Revolut Country Manager for the Baltics
35

The Bank’s payment system — CENTROlink — can be praised for its
non-discriminatory nature, as it offers equal terms for payments
to all players — banks, credit unions, and non-bank institutions.
This approach allows companies like Revolut, Contis Group
and InstaReM, among many others, not only to reach 34 SEPA
countries with ease but also to directly issue IBAN accounts.
The ease of starting operations can be measured in the time
it takes to get all the required permits. Registering a company
takes three days, and a Payment Institution or Electronic Money
Institution license can be received in just three months, 2-3
times faster than in other EU jurisdictions. The country’s value
proposition is enriched by other features, including remote Know
Your Customer (KYC) procedures, a sandbox regime for FinTech
startups in their first year, as well as one of the lowest corporate
tax rates in the EU.
Having a ready-to-use regulatory sandbox (with a blockchain
version in the nearest future), Lithuania can help ASEAN FinTechs
to develop and test their solutions on the spot before deploying
them to the entire EU market. Newcomers can all benefit from
the positive regulatory environment, creative and tech-savvy
workforce, and access to the 512-million-strong European
market.
The Bank of Lithuania is responsible for the financial
market development, thus we decided to roll out the
red carpet for new entrants to inspire competition in
the financial sector,
Marius Jurgilas,
Member of the Board of the Bank of Lithuania
We were looking for a perfect HQ location in the EU.
In Lithuania we found a FinTech-friendly and fast
regulator, as well as excellent international-grade
talent. With all this, Lithuania is hands-down the best
European base for cutting-edge FinTechs.
Prajit Nanu,
co-founder and CEO, InstaReM
After my first visit to Vilnius I just felt that this city
is a small version of Silicon Valley and this was
absolutely unexpected. The city, its infrastructure, the
prevalence of technology made an impression on me.
Jared Isaacman,
CEO, Harbortouch
36

Environment
10
Competitiveness of Asean FinTechs • Though the start-up industry
faces challenges from
multiple fronts, FinTechs
in Asean are quite upbeat
about the outlook and their
ability to compete with
established players.
• More than three- fourths
(78%) of the companies feel
that Asean FinTechs can
compete globally.
• 67% of FinTechs believe that
they can win against other
international players.
• There are mixed views on
quality of FinTechs. 43% feel
that there is lack of quality
FinTechs in the region
whereas 23% disagree.
49%
29%
15%
7%
1%
44%
23% 25%
6%
2%
32%
11%
34%
19%
4%
Asean FinTechs will be able
to compete internationally
Asean FinTechs will be able
to win against international
FinTechs
Lack of quality FinTechs
in Asean
Agree NeutralStrongly Agree Disagree Strongly Disagree
Biggest competitors (multiple responses)
33%
Traditional financial
services provider
20%
Other FinTechs in same
country
32%
Other FinTechs in
same region
3%
e-commerce and
telcos
37

Other FinTechs in
the same country
Other FinTechs in
the same region
Traditional financial
service providers
Ecommerce
and telcos
Others
Indonesia
46%
29%
21%
4%
Malaysia
30%
20%
30%
5%
15%
Singapore
8%
35%
37%
5%
15%
Phillippines
22%
44%
22%
11%
Note: 12% of the companies feel their biggest competitors
are FinTechs from other countries.
• Incumbents remain the biggest competitors
to FinTechs as customers are still more
comfortable banking with traditional
institutions or the propensity to move may still
be low
• About 32% of FinTechs consider FinTechs in
the region as key competitors. Asean FinTechs
face strong competition from more established
FinTech players, particularly Chinese players,
who have been aggressively expanding in
South East Asia.
• For Indonesia, the biggest competitors are
other in-country FinTechs as the sector is
thriving due to a largely underserved banking
population.
Internal Challenges (multiple responses)
• Availability of the right talent (39%) is the biggest challenge facing FinTechs. This is followed by product development and
fundraising.
• Talent-related challenges are being faced equally by small companies as well as larger players (more than
US$500k rpm).
• Challenges such as product development (25%) and convincing investors (22%) are more persistent for companies that are
earning less than US$50k rpm.
39%Attracting the right talent
25%Product development
22%Convincing investors of start-up potential
17%Maintaining high performance culture
14%Product market fit
18%Creating suitable systems and process
15%Business model viability
Note: For detail results, please refer to our ASEAN FinTech Census Survey Dashboard
38

External Challenges (multiple responses)
• Customer acquisition is the top external challenge faced by FinTechs. Companies across the spectrum have mentioned this
as a key problem as customer acquisition costs may be too high and propensity of customers to move too low.
• As discussed earlier, FinTechs find it difficult to obtain funding. Additionally, banking industry’s organisational complexities
make it difficult for FinTechs to on-board and build relationship with these institutions.
36%Customer acquisition
33%Lack of funding
30%
Building partnerships with banks
and other Financial Intermediaries
24%
Building relationships and
channels to market
25%Access to private funding/investors
23%Government or regulatory issues
Note: For detail results, please refer to our ASEAN FinTech Census Survey Dashboard
• Accelerators and incubator programs have not been
very successful with FinTechs in the region with only
39% and 30% of companies requesting assistance from
accelerators and incubators, respectively.
• Companies getting assistance through these
programs are even lower. Though such programs help
entrepreneurs to gain access to network, business advice
and financing, it at times could hamper business growth
given the commitment needed from the founders to
these programs.
• 73% of the companies feels that co-working spaces are
beneficial as it becomes difficult for FinTechs in an early
stage to set up a standalone office.
• Co-working space culture is more popular with FinTechs
that have raised less than US$500k in funding till date.
• Just below half of the respondents (49%) have shifted
to co-working space in the past. Among those who has
shifted, 50% are companies that have raised less than
US$500k.
• However, companies that have raised more than US$5m
have evolved toward renting their own office space.
Accelerators and Incubators (Yes Response) Co-working space
Is company ready to compete globally or be ready to do so in the next 12 months?
Accelerators Incubators
Requested
assistance
Provided
assistance
39% 30%
37% 25%
Has your companies shifted
to co-working space
Co-working space
is beneficial
73%
Yes
49%
Yes
• 77% of the companies feel that they have the right
set of skills and technologies to compete globally or
will be ready in next 12 months.
77%
Yes
39

Future exit plans
Note: Data is representative of respondents who have plans to exit
The way
forward
11
54%
FinTechs plan to exit in the next five years
Note: Data is representative of 203 respondents
FinTechs with IPO plans across sub-sectors*
Proposed exit strategy
35%
23%
14%
6%
6%
Acquisition
IPO
Trade Sale
Merger
Hold
Asean FinTechs with current monthly average
revenue above US$500K have IPO plans for the
future
• Most Asean FinTechs, especially those with average
rpm less than US$50m, have mentioned acquisitions as
their proposed exit strategy. While FinTechs with higher
average rpm (especially from US$500K to US$1m) have
IPO plans for future.
• The trade sale route is mainly being looked at by FinTechs
with current average rpm of less than US$1K as a future
exit strategy.
30%
Payments
31%
Loan application/
Financing
34%
Money transfer/Remittance players
40

Are you planning to expand into other
countries?
87%
FinTechs plan to expand beyond
home/current markets
How do you plan to scale your company?
36%
FinTechs plan to scale into a niche offering
(Singular Service)
64%
FinTechs plan to diversify into providing other
services (Multiple Services)
Note: Data is representative of 184 respondents Note: Chart is representative of 203 respondents
• 87% FinTechs plan to expand internationally. Notably, 32% have an immediate goal to expand overseas in the next 12
months.
• Most FinTechs in Thailand (92%), Singapore (78%) and Malaysia (73%) have plans to expand beyond home markets. While
players in Indonesia (49%) and Philippines (47%) are less keen on expanding outside, with large latent demands still untapped
in home markets.
• More than 90% of FinTechs operating in sub-sectors such as payments and data analytics are keen on expanding
internationally. Crowdfunding FinTechs (21% of respondents) are more focused on local markets.
• 55% respondents are looking to expand internationally by diversifying to offer multiple services
41

Having been conceptualized as a result of a distressing personal
experience of an enterprising individual, today Singapore-based
InstaReM is a leading digital cross-border remittance service
provider, reaching over 3.21 billion people across four continents.
Thanks to InstaReM’s unique payment mesh and an extensive
network of 8000+ banks built over last four years, businesses
and individuals in Asia-Pacific are able to remit money to 60+
countries worldwide. InstaReM promoters attribute their success
largely to its ASEAN roots.
The InstaReM story began as a quest to address a decades-old
universal challenge. Realizing that international money transfers
— dominated by Money Transfer Operators and Banks — were
opaque, time-consuming and expensive, Mumbai-based Prajit
Nanu, along with Michael Bermingham, a veteran in regulatory
compliance in Asia, EU and US, decided to build a solution
that promised to provide quick and transparent cross-border
money transfers at close-to-live exchange rates. Thus, InstaReM
was incorporated in August 2014 on the premise of instant
remittances.
A seed funding of US$ 500,000 from Global Founders Capital
in January 2015 helped the duo develop their money transfer
platform. Another US$5 million in Series A funding from Vertex
Ventures, Fullerton Financial Holding and Rocket Internet in
March 2016 helped them build a payment mesh, and partner
with a network of banks across the globe. Early successes with
an innovative money transfer platform and regulatory licenses
in Asia-Pacific enabled InstaReM to raise another US$ 13
million in July 2017 in Series B round from marquee investors
like GSR ventures, SBI-FMO ventures, Vertex Ventures and
Fullerton Financial Holdings. This made InstaReM shift gears by
strengthening its global payment infrastructure, acquiring new
licenses and building a global team.
“Our strategic decision to base InstaReM in Singapore has paid off
well. As the financial hub of the region, Singapore has a FinTech-
friendly regulatory framework and was a good springboard for us
to expand into the Asian markets. InstaReM’s ASEAN base gives it
a distinct competitive edge. Singapore, along with other ASEAN
members also has some of the largest expatriate and migrant
communities in Southeast Asia who happen to be our target
demographic,” says Prajit.
With Asia-Pacific operations having stabilized by end of 2017,
InstaReM is ready to spread its footprint globally in 2018. The
ASEAN company is now looking to grow aggressively by launching
operations in the high-traffic remittance markets like European
InstaRem:
Aiming to Solve World’s Cross-Border Remittances Challenge
Union, United States, India, Japan, Indonesia, Thailand and Latin
America in the coming months.
Europe is going to be the next major destination for InstaReM.
For expansion into this important market, InstaReM has chosen
Lithuania over London, the traditional FinTech hub in Europe.
“InstaReM has been one of the first FinTechs to discover the
potential of Lithuania. Apart from a supportive regulatory regime
for FinTech, Lithuania also offers a great geographical advantage.
Reaching out to the rest of Europe is easy from Lithuania as the
EMI licence issued by the Bank of Lithuania allows operations in
the common market of the EU by passporting through the SEPA
region. This makes Lithuania a viable alternative to London as a
preferred FinTech destination in Europe,” says Prajit.
42

43
Top preferred
countries
outside Asean
for expansion
Future expansion — Geographies
j
23%
Americas
16%
MEA
41%
Rest of Asia-Pacific
(Including Australia)
32%
Europe
92%
ASEAN
16% USA
15% UK
13% China
Note: Analysis based on aggregation of top 3 preference
for each respondent
Reason for expansion (multiple responses)
21%
63%
18%
15%
11%
7%
5%
Greater opportunities
for expansion
Strategic shift in
customer focus
More funding available or
Easier to obtain funding
Lower operating costs
Ease of attracting or
retaining talent
Better access to expertsor
mentors in the industry
Others
Top concerns (multiple responses)
57%
50%
39%
31%
21%
17%
15%
6%
Compliance with new
regulations
Customer acquisition
Fitting products into
their market
Adoption rate
Customer data
governance or protection
Incumbent competitor
Scalability of current
technological platform
Others
• FinTechs wants to expand their business globally in order
to expand their reach, acquire new customers, access
funds and attract skilled talent.
• However, compliance with new regulations is the biggest
hurdle that FinTechs face in such expansion to newer
markets. For more than 50% companies customer
acquisition is also a big concern.
• In Asean, Indonesia (19%) is the most favored destination
for expansion outside home country. This is followed by
USA (16%) and UK (15%).
Asean, with a population of 600 million people, and
China and India to its east and west is the bridge
between two of world’s largest markets. Initiatives
like Asean FinTech Innovation Network would enable
FinTech start-ups to scale across countries and
achieve democratization of access to the financial
services ecosystem for providers and consumers. It
is a powerhouse of innovation, which is getting cross
pollinated through commercial and cultural bridges to
emerging markets globally.
Varun Mittal,
EY ASEAN FinTech Leader

FinTech
Associations in
Asean
12
Singapore FinTech Association (SFA)
Singapore FinTech Association (SFA) is a cross-industry and non-profit organization the
purpose of which is to support the development of the FinTech industry in Singapore, and to
facilitate collaboration among the participants and stakeholders of the FinTech ecosystem
in Singapore. SFA is a member-based organization with its members representing the full
range of stakeholders in the FinTech industry from early stage innovative companies to
large financial players and service providers. To further its aim of developing the FinTech
industry in Singapore, SFA also partners with institutions and other associations from
Singapore and globally to cooperate on initiatives relating to the FinTech industry.
FinTech Philippines Association (FinTech PH)
FinTech Philippines Association (FinTech PH) is an independent industry association
representing the interests and growth of the FinTech community in the Philippines. FinTech
PH aims to position the Philippines as a hub for technological innovation in financial
services.
As the representative voice of the burgeoning FinTech community in the Philippines,
FinTech PH seeks to accelerate the growth and success of its members by attracting
investment and partnerships domestically and abroad, advocate for effective and future-
focused regulation, cultivate interest and technical skills to promote innovation, organize an
inclusive community of startups and institutions, and promote the goals of the industry.
44

Indonesian FinTech Association (AFTECH)
The Indonesian FinTech Association (AFTECH) is an industry-body that seeks to promote
technology-centric financial services to promote financial inclusion. The Association brings
together unified voice of the industry and continues to establish itself as a facilitator of
conducive ecosystem through strategic initiatives and collaborations among stakeholders in
the financial sector.
The activities of the Association are broadly divided into two areas. First, relates to policy
and regulatory affairs. The working groups regularly publish working papers, position
papers and regulatory inputs to government agencies. Second, relates to community and
communication development. The Association has an internal routine workshop inviting
experts to discuss current issues, such as Expert Gym and Expert Lab.
In January 2018, the Association in partnership with UnionSPACE (co-working space)
launched FinTechspace, Indonesia’s first dedicated co-working space.
Thai FinTech Association
Thai FinTech Association was formed in July 2016. The Association gathers members from
the private, public and financial sectors to promote Thailand’s FinTech potential.
The Association help facilitate ecosystem collaboration, which includes all stakeholders
including FinTech start-ups, financial institutions, regulators, accelerators, venture capital
and other business partners. It aims to reduce cost of financial transactions, increase
accessibility to financial products and services, promote fair competition, and support
Thai FinTech startups to compete and expand to global market. The association is playing
key role in setting up National FinTech Sandbox and liaising with main relevant parties to
develop National FinTech Roadmap to promote the sector.
FinTech Association of Malaysia (FAOM)
FinTech Association of Malaysia (FAOM) was launched in November 2016. It is founded by
a group of entrepreneurs, founders, enthusiasts and community leaders. The association
aims to be a key enabler and a national platform to support Malaysia to be the leading hub
for FinTech innovation and investment in the region. It also supports FinTech innovation
by engaging with industry players and regulators in policy making, provide professional
development opportunities to its members and partner with other FinTech hubs across the
world by connecting with stakeholders locally and globally.
Vietnam FinTech Association
Vietnam FinTech Association is a non-profit association, and the center of gravity for
FinTech in Vietnam. As the largest Vietnam FinTech association their mission is to create
an ecosystem that enables Vietnam to leverage the potential it has to become a world-class
FinTech Hub. Their vision is to be the driving force in creating a world-class FinTech hub in
Vietnam.
45

Contacts
Jan Bellens
Global Deputy Sector Leader, Banking & Capital Markets
jan.bellens@sg.ey.com
Liew Nam Soon
Managing Partner for EY ASEAN Markets
nam-soon.liew@sg.ey.com
Brian Thung
Managing Partner for EY ASEAN Financial Services
brian.thung@sg.ey.com
Varun Mittal
ASEAN FinTech Leader
varun.mittal@sg.ey.com
Jaslyin Qiyu
EY ASEAN Financial Services Brand, Marketing and
Communication Leader
jaslyin.qiyu@sg.ey.com
Ankita Srivastava
EY Banking and Capital Markets Knowledge Analyst
ankita.srivastava@in.ey.com
Varun Parmar
EY FinTech Strategy
varun.parmar@sg.ey.com
Danil S Handaya
Financial Services Country Leader
danil.s.handaya@id.ey.com
Evan K Wiradharma
Financial Services Advisory Country Leader
evan.wiradharma@id.ey.com
Indonesia :
Chan Hooi Lam
Financial Services Assurance Country Leader
hooi-lam.chan@my.ey.com
Shankar Kanabiran
Partner and Financial Services Advisory Leader
shankar.kanabiran@my.ey.com
Malaysia :
Vicky B-Lee Salas
vicky.b.lee-salas@ph.ey.com
Christian G Lauron
Financial Services Advisory Leader for the Philippines
christian.g.lauron@ph.ey.com
Philippines :
Thailand :
Roungkarn Sriprasertsuk
Financial Services Advisory Partner
roungkarn.sriprasertsuk@th.ey.com
Ratana Jala
Financial Services Assurance Partner
ratana.Jala@th.ey.com
Duong Nguyen
duong.nguyen@vn.ey.com
Vietnam:
46

EY | Assurance | Tax | Transactions | Advisory
About EY
EY is a global leader in assurance, tax, transaction and advisory
services. The insights and quality services we deliver help build trust and
confidence in the capital markets and in economies the world over. We
develop outstanding leaders who team to deliver on our promises to all
of our stakeholders. In so doing, we play a critical role in building a better
working world for our people, for our clients and for our communities.
EY refers to the global organisation, and may refer to one or more, of
the member firms of Ernst & Young Global Limited, each of which is a
separate legal entity. Ernst & Young Global Limited, a UK company limited
by guarantee, does not provide services to clients. For more information
about our organisation, please visit ey.com.
© 2018 EYGM Limited.
All Rights Reserved.
ey.com/sg/eyaseanFinTech
APAC no. 07316-175GBL
ED None
This material has been prepared for general informational purposes only and is not intended to
be relied upon as accounting, tax or other professional advice. Please refer to your advisors for
specific advice.
ey.com

ASEAN FinTech Census 2018

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