In Asia-Pacific (APAC), super-apps are not only redefining consumers expectations in banking; these platforms are straight out leading the digital banking race, according to a new report by Swiss digital banking tech provider Banking, Payments: Context (BPC) and Dutch fintech consultancy firm Fincog.
The report, titled Digital Banking in Asia Pacific, looks at the state of digital banking in APAC, provides an overview of the sector, and takes a deep dive into APAC’s super-apps, highlighting how some of them have turned into the region’s most successful digital banks.
Super-apps are a new breed of tech giants originating from APAC. Over the past years, these platforms have grown exponentially and have emerged as the gateways to consumers, providing anything from ride-hailing, logistics and food delivery, to digital payments and loans to meet the daily needs of consumers and encourage them to interact regularly with the platform throughout the day.
In China, the super-app model has been particularly popular and has helped turn a number of players into tech giants and fintech leaders.
Tencent-backed WeChat is one of the leading and most sophisticated super-apps in the region, bundling together online messaging, social media, marketplaces, and services. Through its integrated digital bank WeBank, the group now serves over 200 million banking customers, making it the biggest digital bank in APAC, according to the report.
In India, digital payments specialist Paytm provides over a thousand services ranging encompassing payments, commerce and cloud, as well as financial services. Since Paytm Payments Bank received its licensed in 2015, the digital bank has amassed a massive customer base of 333 million consumers and over 21 million merchants. These numbers make Paytm Payments Bank the second largest neobank in APAC by number of customers.
In South Korea, Kakao started off as a messaging app, before adding an e-wallet to the platform, and finally providing a full-fledged digital bank. Leveraging network effects and Kakao Talk’s massive customer base of 46 million monthly active users, KakaoBank was able to reach profitability after less than two years in operation. KakaoBank started trading in August, becoming the first online-only bank in Asia to go public. With 34 million customers, KakaoBank is the fourth largest neobank in APAC, according to the report.
APAC’s neobanks
APAC is home to 68 neobanks. These neobanks either have their own banking license (e.g. KakaoBank), are an affiliate of a traditional bank (e.g. TMRW), or are partnered with other industry participants to offer financial services (e.g. Crypto.com).
Growth of digital banks in APAC 2012-2021, Source: Digital Banking in Asia-Pacific, Fincog, BPC
India is currently the biggest neobanking market in APAC, recording 14 neobanks. After India, Australia is the second largest digital banking market with 13 neobanks, followed by Hong Kong (12) and Singapore (eight).
APAC’s neobanks serve a total of 437.2 million customers with China alone making up for half of that number (220 million).
Total customer acquisition of neobanks in APAC 2016-2021, Source: Digital Banking in Asia-Pacific, Fincog, BPC
Compared to markets including Europe and the US, APAC’s digital banking sector remains relatively small but new regulation is expected to accelerate the growth of the sector.
In the Philippines, the Bangko Sentral ng Pilipinas started granting its first digital banking licenses this year. Voyager Innovations’ fintech arm PayMaya Philippines said earlier this week that it had received the green light to set up a digital bank, making Maya Bank the sixth out of seven digital banks to be licensed by the central bank.
In Malaysia, the central bank is set to issue up to five digital banking licenses in Q1 2022. Indonesia released last month new regulations for digital-only banks.
APAC’s fast-evolving neobanking landscape has led many incumbent banks to respond by establishing their own digital bank subsidiaries.
An analysis by fintech research firm WhiteSight identifies at least 15 digital banks in APAC that are owned by incumbents, among which popular ones like TMRW by United Overseas Bank (Thailand and Indonesia), Mox Bank powered by Standard Chartered (Hong Kong), and Cake powered by VPBank (Vietnam).
Digital banks of incumbent banks, Source: WhiteSight, Sept 2021
Featured image credit: Background photo created by rawpixel.com – www.freepik.com
PlatoAi. Web3 Reimagined. Data Intelligence Amplified.
Click here to access.