April 2017
Fintech’s Mark on Asia’s Corporate Treasurers
It cannot be denied that financial technology (fintech) has been the recipient deep interest from media, investors and entrepreneurs since the inception of the concept.

With the ever increasing attention that the segment is receiving, it is evident that the banking industry’s digital transformation is already here and corporate businesses are coming to grips with how they can transform their businesses to adapt to this.

Revealing the precise point at which fintech engagement is the strongest and why this is so provides a glimpse into what the future would look like for global treasurers. Data suggests that investors poured US$4.5 billion into fintech companies in Asia in 2015, which was far higher than investments in their peers in Europe. India is one of the fastest growing startup environments in the Asia Pacific region, second only to China in deal size and number of deals. Currently there are over 40 active venture capital funds making significant investments in the region.


Seeing the importance of fintech in their businesses, corporate treasury departments have already committed a portion of their current budget for newer fintech solutions, as revealed in the Treasury FinTech Index conducted by GTNews and East & Partners.

Singapore has emerged as the Asian leader in the fintech adoption race, committing an average of 11.6 percent of their technology spend to fintech, showing how seriously the city-state is taking this revolution.

When examining various industries, it is evident that the manufacturing and retail are the two sectors who are expecting their large investment in fintech to result in the achievement of greater speed and efficiency.

The manufacturing sector, committing 10.3 percent of their budget to fintech, are directly affected by innovation and the development of new technology through Internet of Things (IoT) where more and more household items have Wi-Fi capabilities and sensors. Meanwhile, the retail industry is more dependent on fintech advancements into contactless, mobile and biometric payment mechanisms and platforms which is the reason investment into fintech constitutes 9.8 percent of their budget.

Importantly for the sector and its investors, the glaring finding has been that there is no intention for any of the corporate treasurers to decrease their spending on fintech over the coming year, illustrating that the digital journey will continue for businesses across the industries.

Regulation and Security

An area where fintech spend will be concentrated on would be to stay abreast of the rising volume of regulation and compliance.

Finding ways to stifle money laundering, terrorist activity financing and over tight regulations such as ‘know your customer’ (KYC) requires an injection of funds into fintech.

Next generation systems are needed by financial institutions to satisfy regulators and resources will be directed to improving regulatory technology (RegTech). As the instances of hacking – both on the corporate and consumer sides – increases, businesses will be burdened with additional regulatory requirements to curb and limit those inherent risks.
  Equity Investment

The investment opportunities in fintech are evident as almost one fifth of corporate have already in invested in these technologies.

There is a sizeable portion of corporate who state they are in the exploration stages of investing in newer solutions through fintech investments. China is the most fertile region where fintech investment plays a prominent role as 30.8 percent of its corporates have already invested in fintech, with 43 percent of corporate treasurers intending to explore opportunities in the future.

What sets China apart from their global competitors is that the Chinese consumer, who has rapidly moved to the middle class due to the country’s economic prosperity, is more inclined to place their trust in new technologies.

The mindset of most Western consumers focuses on safety and expertise and they believe that this can be achieved by archaic financial services i.e. brick and mortar services. Due to the large population in China, the need was to reach mass market and the best solution was to invest in technology that can be easily scaled, and able to reach the remote countryside of China.

Mobile adoption in China is staggering with 1.3 billion registered users. Technologists have built financial solutions on top of the high number of platforms that exist in China, which facilitates proximity payments made by the user. China has enabled high activity with tech startups, due to the country’s limited regulatory restrictions, resulting in the drive in fintech innovation in the region.

A close competitor to China in the fintech race is Singapore. Long considered the region’s “hub”, it is home to approximately 55,000 startups, Singapore is making strides to ensure that they are geared for fintech growth, by lowering the compliance barriers for fintech startups and creating new relationships with other countries to facilitate trade in new technologies.

Last year, there were several high profile fintech startup investments within the region, with Quoine and Tagit among the largest, receiving US$20 million and US$9 million in funding respectively.

Outcome of fintech investment

Investment in fintech has to translate into returns for treasurers.

Almost 33 percent of businesses, regardless of industry, feel that the largest impact of their investments will be lowering market engagement barriers, allowing them to widely reach their customers and gain a better understanding of their customers need.

Differentiating the customer proposition and reducing costs while improving inefficiencies made up the top three of fintech’s impact on the business.

Overall, sentiment in the market is that fintech investments are bringing a positive impact on business activities, especially in the UK and Singapore.

However, those continuing to fund the sector will need to see past the razzle dazzle, focus on the market gap and ensure there are problems being solved and needs being met.
Change In Fintech Spend - By Country
% of Total

Source: East & Partners Treasury Fintech Index
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