Fintech firms in Southeast Asia are planning to expand their footprint beyond their current markets. What are their chances of succeeding?
As many as 87 percent of financial technology firms operating in Southeast Asia have aspirations to push into other regions, according to the Asean Fintech Census 2018 study by EY.
The survey found the preferred destinations for growth and expansion are the U.S., U.K. and China. The fintechs also see traditional financial services providers as their biggest competition – and not fintech peers.
Challenges Ahead
Rapidly expanding economies, young, urban and digitally savvy populations, and increasing mobile and internet penetration will fuel rapid growth by fintechs in the region, according to Liew Nam Soon, EY managing partner for Asean markets.
Pushing beyond their geographic comfort zones however will see the ambitious firms tangle with funding and talent acquisition.
Cash Worries
Funding remains an issue for the firms surveyed with most of them in the earlier stages of development, over two-thirds – 68 percent – of respondents have less than a year to plan and raise funds for growth.
EY's Liew believes fintechs should look to access the wider network of business opportunities and investors such as venture capitalists who can help them to scale internationally and also be a source of funding.
Lack of Skills
By far the biggest hurdle to international growth is the paucity of start-up or fintech talent in the markets they currently operate in, holding them back from further expansion. Over half (60 percent) of those surveyed said talent shortages were an acute issue.
The respondents also want to see more government action to enable the growth of the sector. Reforms to make hiring easier and tax incentives for angel investors were the two top issues cited.
