What The FinTech #145 - 25 Jun 2023
🚀 Welcome to What The Fintech - your weekly dose of electrifying insights, game-changing breakthroughs, and dazzling trends from the pulse-pounding world of fintech across Hong Kong, Singapore, China, and Asia! As your go-to source for top headlines and industry insights, we're here to keep you updated on the latest innovations revolutionizing the way we think about finance and technology in this dynamic region.
Prepare to embark on a thrilling adventure through the digital landscape as we explore the ground-breaking developments, visionary startups, and trailblazing trends that are shaping the future of finance in Asia and beyond. So buckle up, grab your favorite beverage, and get ready to ignite your curiosity with the latest and greatest from the fintech universe! Let's dive in! 🌊💡💸
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What was the FinTech this week in: 📰
HONG KONG
Hong Kong’s Cyberport onboards over 150 Web3 firms in 12 months
Citic, JPMorgan replacing CICC in Cainiao’s Hong Kong IPO
93% of HK SMEs acknowledge the importance of digitalization but 57% see funding as a major challenge
AsiaPay &PayMe by HSBC to launch payments solutions for merchants in Hong Kong
Hong Kong’s Cyberport onboards over 150 Web3 firms in 12 months
Hong Kong is accelerating its drive to be Southeast Asia’s Web3 powerhouse after onboarding over 150 Web3 startups in one of its innovation and technology ecosystems. The startups are housed in Cyberport, Hong Kong’s flagship tech ecosystem designed to accelerate the growth of enterprises building with innovative technologies. Leading Web3 firms in Cyberport include digital currency exchange Hashkey Group, ConsenSys, and Web3 VC firm Animoca Brands. Given the emphasis on research and development, experts believe several Web3 service providers may set up operations in the ecosystem. Things are falling into place for Hong Kong’s quest to be the leading Web3 hub in the region, underscored by a recent move approving retail investors to dabble in digital currencies on approved exchanges. The move follows assurances by the Hong Kong Monetary Authority (HKMA) that interested firms will receive the full cooperation of the banking industry to ensure seamless onboarding in the industry. Chinese banks have also indicated a desire to offer banking services to incoming Web3 firms in Hong Kong despite the pervading digital currency ban in mainland China.
Citic, JPMorgan replacing CICC in Cainiao’s Hong Kong IPO
Cainiao Network Technology Co, the logistics arm of Alibaba Group Holding Ltd, has seen a reshuffle in the banks that are preparing for its Hong Kong initial public offering (IPO). China International Capital Corp (CICC) has to drop out to avoid conflicts of interest as the investment bank is a joint sponsor of J&T Global Express Ltd, one of Cainiao’s rivals in China, the people said. Banks including Citic Securities Co, and JPMorgan Chase & Co have instead joined Citigroup Inc in arranging Cainiao’s IPO. Deliberations are ongoing and the bank lineup could still change.
93% of HK SMEs acknowledge the importance of digitalization but 57% see funding as a major challenge
Payments company BVNK has ramped up its Asia-Pacific (APAC) expansion strategy by designating a new general manager for its regional operations. 93% of the community believes digitalization is important to business growth; however, 57% of those surveyed see funding as their biggest challenge when trying to digitalize their businesses. Amongst all respondents of the survey, while funding emerges as the top challenge in digitalization (57%), limited resources (46%) and relevant technical expertise / skillset (43%) are also identified as the primary reasons contributing to the digital gap. To step forward in their digitalization journey, 65% of the SME community responded that they are planning to increase their investments in digitalization by more than 25% this year compared to 2022.With digitalization and innovation continuing to re-define how people live and businesses are done, the respondents identified digital marketing (46%), establishing online presence / e-Commerce / mobile applications (41%) and developing data analysis and management (37%) as their top business priorities in the next five years.
AsiaPay &PayMe by HSBC to launch payments solutions for merchants in Hong Kong
AsiaPay, provider of digital payment solutions in APAC, announced a partnership with PayMe by HSBC in Hong Kong to help local merchants provide more flexible payment options in a single device. The partnership will enable merchants to offer PayMe to their customers when they check out online and offline. It also allows merchants to connect with more PayMe users through AsiaPay‘s payment gateway—PayDollar and leverage flexible features to fit the needs of their business. Besides consumers can now pay with minimal effort on their mobile devices, making transactions quicker and more expedient.
SINGAPORE
JPMorgan set to establish commercial bank in Singapore
Singapore’s MAS proposes standards for digital currency programmability
JPMorgan set to establish commercial bank in Singapore
JPMorgan Chase & Co will be establishing its commercial bank in Singapore as part of its global expansion plans. The bank which currently serves more than 650 clients across 26 countries. Through this global push, JPMorgan will have a presence in 28 countries by year end with the addition of an Israel office as well. In 2019, JPMorgan‘s commercial bank had begun expanding its presence in Asia and Europe, having onboarded 175 bankers with the numbers expected to grow by more than 200 by end of 2023.
Singapore’s MAS proposes standards for digital currency programmability
The Monetary Authority of Singapore (MAS) published a whitepaper proposing standards for digital money. The focus is on programmability whether the underlying digital money is a central bank digital currency (CBDC), a tokenized bank deposit or a stablecoin. MAS wrote the whitepaper in collaboration with the International Monetary Fund (IMF), Banca d ’Italia, Bank of Korea, banks such DBS and JP Morgan, and FinTech firms. It extends MAS‟s previous work on Purpose Bound Money (PBM), where the simplest analogy is a voucher. Since MAS floated the PBM idea, multiple central banks have insisted that their future retail CBDCs will not be “programmable”. The MAS whitepaper addresses this concern, comparing the above sort of programmability to programable money, which central banks prefer to avoid. Most central banks, including the ECB support private sector programmable payments, such as being able to specify a payment based on a condition. MAS agrees that programmability should not limit the distribution of money or lead to fragmentation of liquidity. Its suggestion of Purpose Bound Money (PBM) is a third path combining some features of programmable payments and programmable money. PBM functions like a wrapper. Sticking with the voucher analogy, a digital currency could be wrapped as collateral and have conditions attached. Once the retailer receives the PBM it is unwrapped and reverts to being digital currency usable for any purpose. For example, un upfront payment might be made for business services, but the corporation can only access the money when they fulfil the service delivery. The money is only released when a customer receives their delivery.
CHINA
Alipay and Mastercard offer cashless payments to international travelers to China
WeChat introduces 'Quiet Mode' to bring peace of mind to 27.8 million deaf users
China's non-cash payments log steady growth in Q1
Nike partners AntChain for blockchain traceability in China
Qingdao Metro launches China’s first offline CBDC transit ticketing pilot
Jack Ma-backed Ant developing large language model technology
Alipay and Mastercard offer cashless payments to international travelers to China
Alipay and Mastercard have teamed up to offer a new payment option for international visitors to China, allowing them to go cashless while traveling around China's mainland. This new service will not only enhance the experience for international travelers but also unlock more business opportunities for merchants on the Alipay open platform. The Alipay-Mastercard partnership allows overseas card transactions completed on the Alipay digital wallet to be processed through Mastercard's omnichannel payments platform. This means that small and medium-sized businesses can easily accept payments from anywhere in the world.
WeChat introduces 'Quiet Mode' to bring peace of mind to 27.8 million deaf users
WeChat is ubiquitous in China, used by over a billion people to chat with friends, check the news, watch videos, pay bills, share photos and shop. And much of that activity is accompanied by a whir of notification pings and other sounds. After conducting in[1]depth interviews with 100 deaf people, WeChat discovered that many were worried their phones were disturbing others by making too much noise. In response, the company has introduced 'Quiet Mode', which will turn off all sounds made by the app. WeChat introduced Quiet Mode on 19 June 2023. The new feature is part of a 'Caring Mode' suite of functions that also includes 'Listen to Text Message,' allowing people with low vision or low literacy to hear the content of a text message by clicking on it.
China's non-cash payments log steady growth in Q1
Non-cash payments handled by Chinese banks continued stable expansion in the first quarter of the year. Non-cash payments via bank cards, electronic payment vehicles, commercial papers, credit transfers and other settlements hit 1,277.53 trillion yuan ($178.44 trillion) during the period, up 11.1 percent year-on-year. Electronic payments took the lion's share of non-cash payments, with a total transaction value of 831.82 trillion yuan. Among the electronic payment vehicles, mobile payments climbed 9.9 percent from the same period last year to 144.6 trillion yuan. In the first quarter, bank card transactions also went up 10.57 percent year-on-year to 292.9 trillion yuan.
Nike partners AntChain for blockchain traceability in China
Nike partnered with AntChain for product traceability using its blockchain combined with dynamic encrypted NFC chips embedded in the shoes. So far more than 130,000 pairs of shoes have used the technology. AntChain is a sister company of Alipay, China’s largest payments app. For now, much of Nike’s blockchain interest is around web3, non-fungible tokens and the metaverse. It launched its .Swoosh web3 platform last year and just announced a collaboration with EASports to include virtual shoes and apparel in its games. It recently ran a teaser on Twitter that today is the start of a Sneaker hunt on Fortnite. The company has been working on confidential computing and multiparty computation that enables organizations to share data for calculations, without disclosing the data itself.
Qingdao Metro launches China’s first offline CBDC transit ticketing pilot
Passengers using Qingdao Metro‘s line 4 can now use their NFC mobile phone to pay directly for their fares with China‘s digital yuan central bank digital currency (CBDC), even if their mobile phone has no signal or has run out of battery. To use the service, ―users add China Unicom or China Telecom SIM card digital RMB hard wallet to the Digital RMB App and associate the hard wallet with the Bank of China personal digital RMB soft wallet. The offline CBDC payments application has been developed ―under the guidance of the Digital Currency Research Institute of the People‘s Bank of China, the Qingdao Central Branch of the People‘s Bank of China and the Qingdao Municipal Transportation Bureau, and with the strong support of Qingdao Metro Group.
Jack Ma-backed Ant developing large language model technology
JACK Ma-backed Ant Group is developing large-language model technology that will power ChatGPT-style services, joining a list of Chinese companies seeking to win an edge in next-generation artificial intelligence (AI). The project known as “Zhen Yi” is being created by a dedicated unit and will deploy in-house research. An Ant spokesperson confirmed the news which was first reported by Chinastarmarket.cn. Ant is racing against companies including its affiliate Alibaba Group Holding, Baidu and SenseTime Group. Their efforts mirror developments in US where Alphabet’s Google and Microsoft are exploring generative AI, which can create original content from poetry to art just with simple user prompts.
ASIA
SVB customers in Asia still stuck with outstanding loans
KakaoBank partners with SCBX for virtual banking license
Southeast Asia-focused Go-Ventures closes $240M second fund, rebrands as Argor Capital
Mizuho trials Fujitsu generative AI tech
Top South Korean banks gear up for a $27B security token market
Cambodia to promote cross-border digital payment with Việt Nam, Laos
IFC partners with Philippine Central Bank
GHL offers Alipay+ to thousands of merchants in Thailand
SVB customers in Asia still stuck with outstanding loans
Silicon Valley Bank customers in Asia are reportedly facing dual headaches following the lender’s collapse. These customers had their deposits seized by the Federal Deposit Insurance Corp. (FDIC) and still have outstanding loans with First Citizens Bank. Silicon Valley Bank (SVB) failed in March and was taken over by the FDIC, which later auctioned off its U.S. customer accounts, branches and loans to First Citizens. But that deal didn't include SVB’s Cayman Islands branch, which had deposits from the bank’s clients throughout Asia, including venture capital and private equity firms, whose deposits weren’t protected, and were drained by the FDIC. And some of those firms had drawn on credit lines tied to their SVB accounts, with those loans among the assets sold to First Citizens. The funds are now under pressure to repay those short-term loans, but the money that they had earmarked to repay the debt was in the Cayman bank accounts. The credit lines, which were known as capital-call credit facilities, were originally provided by SVB to many ventures’ capital and private equity funds when their deposit accounts were set up.
KakaoBank partners with SCBX for virtual banking license
South Korean-based internet-only bank KakaoBank has signed a memorandum of understanding with SCBX to obtain a virtual banking license from Thailand’s central bank. KakaoBank aims to obtain its banking license in order to run a digital banking platform from the central bank of Thailand. By partnering with the SCBX financial group, KakaoBank focuses on its overall plan for business expansion into the Southeast Asian economies and industries. Thai customers will be given the possibility to conveniently access a wide range of financial services and products, with improved accessibility through technology. The financial holdings company SCBX comprises multiple firms, such as the Siam Commercial Bank (a commercial bank based in Thailand), InnovestX Securities (a financial and investment solutions company), Card X (a credit card services enterprise), as well as others in order to provide its users and customers with efficient and secure financial solutions.
Southeast Asia-focused Go-Ventures closes $240M second fund, rebrands as Argor Capital
Go-Ventures, backed by Indonesia’s GoTo has raised the second fund at $240 million and rebranded as Argor Capital ―to reinforce the investment firm’s independence and expanded capabilities to drive growth‖ for its portfolios. Though GoTo will remain one of the investors in Argor’s latest fund, Argor’s investment decisions will continue to be independent of GoTo and other limited partners, according to the VC firm. The limited partners for Argo’s second fund include sovereign wealth funds, institutional investors, corporations, and family offices across the globe, from Asia, the Middle East, Australia, and Europe to the U.S. The VC will continue to invest in early and mid-stage companies. So far, Argor has invested from the second fund in sectors such as B2B marketplaces, consumer, environmental tech, fintech and digital transformation platforms for SMEs.
Mizuho trials Fujitsu generative AI tech
Japan’s Mizuho Financial Group has begun trialing generative AI technology from Fujitsu to streamline development and maintenance operations of its systems. The joint trials, which will go on for several months, will seek to verify the AI’s effectiveness in automatically detecting errors and omissions in system design plans and audit processes. To strengthen work process resilience, the partners plan to apply generative AI technologies to work processes and tasks including the generation of source code, system development, and maintenance.
Top South Korean banks gear up for a $27B security token market
NongHyup Bank announced Thursday that the nation’s top three banks -- Industrial Bank of Korea, Shinhan Bank and Woori Bank -- have joined its consortium for security token offerings formed in April. Aside from the lenders, other financial tech firms, including real estate fractional investment company Funble, fintech firm Aton’s subsidiary Trackchain and Artipio, a fractional art investment subsidiary of culture platform operator Yes24, also joined the consortium to increase the total participants to 18 firms. NongHyup Bank created the consortium in April together with two local banks -- Suhyup Bank and Jeonbuk Bank -- and six other fractional investment firms with the aim to build a security token ecosystem. The STO market is a nascent but lucrative market whose size is estimated to reach 34 trillion won ($26.6 billion) next year. Banking groups are increasingly jumping onto the bandwagon as the Financial Services Commission, the nation’s top financial regulator, announced a set of guidelines in February, hinting at easing regulations as early as later this year. NongHyup Bank said its consortium members will discuss ways for banks to enter the STO market in compliance with the regulatory guidelines and to set up platforms together to issue token securities. In the longer term, it aims to create an STO securities ecosystem, under which companies issue corporate bonds as security tokens and the tokens can be traded.
Cambodia to promote cross-border digital payment with Việt Nam, Laos
National Bank of Cambodia (NBC) is preparing to sign agreements with the State Bank of Vietnam and the Bank of the Lao People's Democratic Republic to promote the use Cambodia’s local currency, riel, in their economic activities. This initiative would allow consumers to utilize riel for purchasing products/services in other countries through QR codes linked to their domestic accounts. The promotion of cross-border payments using the riel is expected to enhance its circulation. In addition to facilitating cross-border transactions, the use of riel will be encouraged among tourists visiting Cambodia who wish to pay in their local currencies when engaging with Cambodian merchants. However, Cambodia’s top economist did not specify when new agreements will be reached.
IFC partners with Philippine Central Bank
The International Finance Corporation has announced its partnership with Bangko Sentral ng Pilipinas and World Bank to launch the Open Finance PH Pilot. Following this collaboration, the financial institutions will focus on developing the Open Finance ecosystem for Philippine-based companies and customers. The initiative aims to improve the way clients that lack documentation and the needed information for leveraging financial services build a financial profile, a credit history, and access loans and other products. The Open Finance PH Pilot was designed to voluntarily undertake financial institutions to codevelop an open and scalable ecosystem that offers customers the opportunity to take more control over their financial data. Furthermore, it also enables them to access a wide range of financial solutions from different providers.
GHL offers Alipay+ to thousands of merchants in Thailand
GHL Systems Berhad has expanded the integration of Alipay+ to over 2,600 local businesses in Thailand to support cross-border digital payments from Asian mobile wallets. These include AlipayHK (Hong Kong SAR), Kakao Pay (South Korea), Touch „n Go eWallet (Malaysia) and Alipay (Chinese mainland). In essence, this new integration will allow travellers visiting Thailand to pay with their home e-wallets at over 5,000 retail outlets powered by GHL. This achievement was made possible through a partnership with Alipay+, which is a suite of global cross-border digital payment and marketing solutions operated by the Ant Group. By expanding the integration of Alipay+, GHL wants to make sure that travellers will have no lack of retail and entertainment options in Thailand and will be able to utilise their own local mobile wallets at popular shopping destinations in Cha[1]am, Khao-Yai, Pattaya, Ayutthaya, Phuket and Krabi.
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And that's it for this week's What The Fintech 🎉 We hope you've found our selection of Asia's fintech trends, innovations, and insights both informative and valuable. Your feedback and suggestions are important to us, so please share your thoughts to help us curate content that matters most to you. 🌟
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Until next week, keep exploring the future of finance together! ✨
Your Fintech Navigator,
Medhy
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