B2B Payments

ASEAN’s FinTech Reputation Rubs Off On SMBs

Southeast Asia is now front and center on the world’s FinTech stage, and it’s no accident. Regulatory efforts to promote FinTech innovation, a bustling climate for blockchain and interest from other markets eyeing the region for expansion have all led to Southeast Asia’s impressive standing in this space.

The Wall Street Journal recently reported, for example, that China’s technology industry is looking closely at Southeast Asia, which is now the world’s third-largest region for technology M&A activity by Chinese companies.

On the consumer side, forecasts for 257 million-plus smartphone users in the region by 2020, according to eMarketer research, mean broad potential for mobile transactions, faster payments and beyond. On the corporate side, initiatives from countries like Singapore are targeting areas like trade finance and cross-border B2B transactions.

In the midst of this innovation is a massive pool of small- and medium-sized businesses (SMBs) ready and willing to adopt the new products of FinTech innovation.

Analysis from the US-ASEAN Business Alliance for Competitive Small and Medium-Sized Enterprises (SMEs) found 96 percent of companies across the ASEAN market are SMBs. In a blog post by SAP, analysts noted that SMBs in the area have historically struggled to access and adopt technology of greater sophistication. SAP cited research in the 2014 ASEAN SME Policy Index, which highlighted this challenge, pointing to regulatory policy as lacking in its ability to promote technology adoption by small firms.

Four years later, however, the newest research suggests the region’s environment for FinTech innovation is quickly rubbing off on its small business community.

According to United Overseas Bank, EY and Dun & Bradstreet, small- and medium-sized businesses are showing less reluctance to adopt cutting-edge tools, including artificial intelligence (AI) and robotics. Their ASEAN SME Transformation Study shed light on the economic growth of the market, with half of small businesses surveyed expecting revenue growth for the 2018 fiscal year.

More than a third of small firms already have a presence across borders, and less than half are satisfied with their main financial service provider, meaning there is significant opportunity for alternative FinTechs to step in. More than a third (37 percent) told researchers they are on the hunt for more holistic advisory services from their providers, while more than two-thirds noted foreign exchange (FX) volatility is a top operational concern.

At present, the report found, it takes an average of 15 days for a small business in the region to be approved for a loan. More than half (58 percent) said they would be willing to use an alternative lender, especially as 68 percent said they are concerned about the cost of funding, and more than 65 percent said they are concerned about how difficult it is to access financing.

Not only are SMBs across the Asia-Pacific market facing key challenges that can be filled by FinTech innovation, but these companies are also eager to spend money for new tools. Sixty percent told researchers they are most interested in investing in new technologies for the fiscal year — more than any other category, including equipment or assets like inventories.

“SMEs are most likely to focus their future technology investment in software and services,” the report said, “followed by the underpinning hardware and infrastructure.”

That means eCommerce and customer relationship management tools, customer relationship management (CRM) solutions, data analytics and business intelligence, accounting and billing, enterprise resource planning (ERP) and supply chain management.

“There is significant opportunity for SMEs in the region to improve their digital agility,” said EY Managing Partner of ASEAN Markets Liew Nam Soon in a statement, according to finews.asia reports. “In time, we expect that SMEs will increasingly subscribe to web-hosted applications to free themselves from managing IT functions internally.”

While cutting-edge solutions like blockchain may be making their way into the ASEAN market, SMBs there will first have to take a step with Software-as-a-Service, especially considering resource constraints.

“As small businesses explore technology solutions to enhance business operations, it is important for them to understand the various options available so as to use their limited resources effectively,” said UOB Head of Group Business Banking Lawrence Loh in another statement.



Banks, corporates and even regulators now recognize the imperative to modernize — not just digitize —the infrastructures and workflows that move money and data between businesses domestically and cross-border.

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