Fintech has dramatically altered our landscape – the way we live as a society and conduct business. In the first part of a special series on technology, Leo Long explores how Indian and other Asian businesses are capitalizing on this emerging development, with an eye on implications for the legal profession
The concept of fintech may be strange to many in the Asia-Pacific region, despite the fact that it has already transformed the economic landscapes of Asia-Pacific countries and the life of their people.
For example, more than 800 million Chinese have entered into a cashless life by using the online payment channels offered by internet giants such as Tencent and Alibaba. Alibaba’s e-commerce site, Taobao, is reported to support 10 million jobs and has lifted millions of Chinese out of poverty. In India, payment company Paytm has attracted hundreds of millions of users. And more Asian companies are progressively using fintech as the concept gathers momentum.
Li Yikun, the Beijing-based vice president and general counsel of Fox Financial Technology (Hong Kong) Group (Huli.com), has first-hand experience of the growth of fintech in Asia, especially in China. Li says China’s fintech has developed from basic adoption of information technology in financial services to more advanced and sophisticated areas such as blockchain, cloud computing, financial big data and robo-adviser.
In 2016, fintech financing in the Asia-Pacific region surpassed North America for the first time, and global investment in fintech ventures increased by 10% to US$23.2 billion, mainly thanks to some blockbuster deals in mainland China and Hong Kong, according to a report by consultancy Accenture.
In contrast, political uncertainty, particularly in the UK and US, is leaving space for Asian countries with rapidly rising profiles to become fintech hubs. It has even been suggested that the Asia-Pacific region has surpassed the US and Europe to become the main hub of innovation for fintech.
As a result of this, it is clear that rapid fintech growth will be seen in some Asian countries. In 2015, Malaysia became the first ASEAN country to enact equity crowdfunding regulations. In 2016, Singapore revealed Asia’s first regulatory “sandbox” – a safe area where fintech services and products can be tested without immediately incurring regulatory consequences – after the UK launched the world’s first regulatory sandbox in 2015. More jurisdictions are also adopting similar sandbox strategies.
Evolution of fintech in India
As a long-term rival to China, India is expected to be the next battlefield with its huge population who have access to the internet. Indian government campaigns such as Digital India and the Smart Cities Mission will augment the country’s digital infrastructure, while the Aadhaar scheme aims to assign a unique identification number to every Indian resident, based on biometric data, for the purposes of banking, subsidies and other financial services.