Will the idea of Super apps take off?
The impact of the virus on the airline industry has been debilitating, particularly in the fast growing region of Southeast Asia. Major airline carriers have been forced to explore alternative means of revenue generation. In September, Singapore Airlines launched a program, offering diners an in-flight lunch experience starting from S$50 for the standard meal to S$500 for the ultra first class suites. Such deviations from traditional business models will be required if airlines are to remain afloat until air travel picks up and reaches pre-Covid levels. Another example of a Southeast Asian airline diversifying its activities is Malaysia based LCC Air Asia. The carrier has redefined its identity as an Asean super app, which promises to be a lifestyle platform, offering services related to travel, e-commerce and fintech. The Airline follows in the footsteps of other platforms like Grab and Gojek which began as small delivery services but expanded into super apps, providing a range of services like food delivery, transport, hotel booking and insurance. The airline has a customer base of 75 million users and it hopes to capitalise on its customer data to ensure that its marketing strategy is data-driven, from segmentation to cross and upselling. The airline’s digital arm, Air Asia Digital also has 3 pillars, including Venture Builder, RedBeat Academy and Data Centre. It also partnered with Google to launch the RedBeat Academy. It was initially established to train its employees through a series of tech workshops in areas such as AI, machine learning, cybersecurity, big data and software engineering and has now opened its doors to the public.
Is a Tech wave coming?
The tech revolution in Asia is something that all entrepreneurs want to partake in. A host of tech start-ups, backed by local accelerators and incubators are inching towards unicorn status, each looking at solving real problems for consumers. The fintech industry is one that has particularly boomed in recent times with new players looking to enter the digital banking and remittance space. The EY Global FinTech Adoption Index 2019 shows an 87% adoption rate in China, followed by 67% in Hong Kong, Singapore and South Korea.
Singapore and Indonesia have the largest tech ecosystems in Southeast Asia, worth $35 billion and $60 billion respectively, each home to 6 unicorns each. The valuation of the tech ecosystem has grown more than 5 times from $21 B in 2016 to $108 B in 2020. The penetration of the internet, wider adoption of smartphones and an increasingly urban population across the region are all factors that have fuelled the demand for FinTech enabled services. In an effort to encourage a digital enabled economy, the Singapore Central Bank, on Dec 4 granted licenses for 4 digital banks. Grab-Singtel & Sea have been granted a Digital Fullbank (DFB) license and Ant Group and a consortium comprising Greenland Financial Holdings, Linklogis Hong Kong and Beijing Co-operative Equity Investment Fund Management have received Digital Wholesale Bank (DWB) licenses. The digital banks have been set up to serve underserved businesses, with the aim of accelerating financial innovation in the region.
Growing piggybanks for Fintechs?
Since 2015, the growth of FinTech has been tremendous in Singapore with funding having increased by 30 %. Singapore also boasts of 10000+ employees in this sector and >1000 FinTechs as of 2020.
Singapore has the most vibrant start-up culture in Singapore and this promises a positive growth trajectory of FinTech. Although currently foreign investors can only provide Series C funding for Southeast Asian FinTechs, 51% of FinTech investment in Singapore is Seed or Angel. This suggests that in Southeast Asia, most start-ups are early stage and there exists a lot of potential, especially in the FinTech sector.
The success and growth of the sector is a consequence of a supportive regulatory environment and financial grants given to FinTech start-ups. For instance, 2020 saw the launch of two initiatives that drive the digital transformation in Singapore - the framework for digital payments that regulates the use of cryptocurrencies on a case-by-case basis instead of restricting their use completely and an act enabling consultation of industry players on their views with regard to virtual asset service providers. These initiatives are a step towards a transformative journey being undertaken by the Lion City, in order to retain its position as Asia’s digital & innovation focused hub.