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6 thoughts on integrated finance in Southeast Asia by Nagesh Devata, vice president of Payoneer APAC

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Integrated finance refers to non-financial companies providing clients with access to financial services through a technology platform. For example, if you’ve ever shopped on a website or through an app and paid electronically, this was made possible by a built-in finance provider.

The sector has exploded in 2021 and its global global revenue is expected to reach $ 230 billion by 2025, up 922% from the $ 22.5 billion in 2021, according to The data US-based private equity firm Lightyear Capital. This massive growth is achieved through payments, insurance, loans and a host of other financial services that integrate with other business channels.

In Asia-Pacific, 18 of the region’s 46 largest banks have launched their own venture capital funds to invest in early-stage fintech startups. Most of these funds started investing in 2016, by to research by S&P Global. This reflects broader developments around the world. Since September 2021, investors have channeled $ 4.25 billion in integrated finance startups around the world, an increase of nearly 300% from 2020, according to data provided to Reuters by PitchBook.

Payoneer, a company headquartered in New York City, obtained a ticker symbol on the Nasdaq on June 28, 2021 after merging with FTAC Olympus Acquisition Corp, a specialist acquisition company. “Businesses and consumers demand a level of innovation. They’re looking at how they can grow their business more efficiently and globally, and how players in integrated finance are going to create those connections so that companies can connect and access different markets, ”said Nagesh Devata, vice-president. Chairman of Payoneer in the APAC region. KrASIA.

Despite its popularity, integrated finance is under regulatory review. The Central Bank of Malaysia (BNM) is expected to enact the Consumer Credit Law in 2022 to strengthen regulatory requirements for all consumer credit activities, including popular offers such as’ buy now, pay later “(BNPL). And, the Monetary Authority of Singapore is review the regulatory approach at BNPL amid concerns over rising consumer debt.

“These programs are increasing, not only in Malaysia, but also in other countries. There are legitimate fears that such offers will encourage consumers to spend beyond their means, with costly debts that they may not be able to repay. Most BNPL programs in Malaysia are offered by non-banks, ”BNM Governor Datuk Nor Shamsiah Mohd Yunus said at a press conference on November 12.

As the integrated finance industry continues to evolve, KrASIA spoke to Devata, who presented his outlook for the integrated finance industry in Southeast Asia.

This interview has been edited and consolidated for clarity and brevity.

KrASIA (Kr): To what extent is integrated finance developed in South East Asia?

Nagesh Devata (ND): We are witnessing a significant integration of financial services into non-financial platforms. The idea of ​​integrated finance reconnects with the global boom in e-commerce, in which not just traditional payment providers – financial institutions – offer services. Consumers expect a seamless payment experience when shopping online, while businesses see the demand for an integrated payment experience.

Southeast Asia’s integrated financial industry is clearly on a huge growth curve. For example, in Singapore, there has been a huge push to advance fintech and drive adoption. While the region’s legacy infrastructure is not as mature as in countries like Japan and Korea, it provides space for creativity and innovation, allowing companies to build new models.

Kr: What are the main use cases in the region?

ND: “Buy now, pay later” is a very popular theme. Electronic wallets are exceptionally popular in the region.

Kr: What is the important strategy for companies offering integrated financing solutions?

ND: Take a step back and look at the needs of businesses and consumers. For example, if you were a Vietnamese business that wanted to sell products across borders, you would need working capital, as well as the ability to move money between point A and point B. This requires a range of services, including payment acceptance solutions. , cards and other financial products.

It’s really about bringing all of these offerings together, so consumers and businesses don’t have to go to separate providers for different services.

Kr: Does the financial and technological culture of consumers remain in step with the development of integrated finance?

ND: We found a large level of financial literacy skills. Many new internet users are scrambling to find out where to find information, as fintech players across the region grapple with the challenge of low financial literacy.

Kr: What challenges will hinder the growth of the integrated finance industry?

ND: It is a challenge to know who the customers are, and being able to do so differentiates one service from others. Industry players will need to figure out how to serve a diverse group of customers.

Another challenge is creating the right customer experience. We can think about UI design: How can service providers present this in a way that makes sense to a consumer or a seller?

We also need to think about the problems we are trying to solve. Are we trying to fix something that’s only happening in Southeast Asia, Asia Pacific, or the world? It is important to be aware of these nuances.

Kr: What can we expect from Payoneer in the next two or three years?

ND: Payoneer will continue to expand our reach. Cross-border trade continues to accelerate. We have already established strategic partnerships with some e-wallets in the region and in other parts of the world.


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