The global pandemic and the subsequent restrictions of 2020 have created a lasting impact on global trade and the way business is conducted around the world. Combined with the recent scarcity of financing solutions in general, and even trade finance specifically, serious damage has been done to economies. In the post-pandemic world, new technologies and a more holistic approach to trade financing are expected to rectify these issues and become the most popular options. As a result, new trends in trade and trade finance are beginning to appear.

Digital transformation in the supply chain

The need for digital transformation in the trade finance sector has been rising for quite some time now, but its importance has only been highlighted during the COVID-19 pandemic. Digital solutions have now become a true necessity, instead of only being a convenient benefit. The overall impact of the pandemic and the subsequent changes in compliance measures were the main drivers of digital transformation, but there is increasing interest from the user end as well.

Corporations are fed up with traditional operations, and as many of their employees and partners are in different time zones and countries, digitization is even more important. In turn, financial institutions are attempting to keep up. Rather than presenting it as a unique selling point, technology is slowly becoming the standard, allowing collaboration and the overall customer experience to differentiate trade finance providers.

Collaboration and standardization in FinTech

There is also increasing demand for FinTechs working in the trade finance sector to begin collaborating and attempt to standardize their practices to make the user experience more seamless for suppliers, buyers, and funders. The advantages for end-users are quite evident, but system implementation might be a long process as contracts are drafted between multiple parties to ensure streamlined systems and operations.

Certain FinTechs are currently in preliminary talks about how to implement these solutions, even though most companies still have issues with shifting from a competitive to a collaborative mindset. It could be possible with the help of application programming interfaces and integrations, but not many FinTechs are confident in the safety of sharing processes when integrating with other companies. This makes them hesitant to make the necessary steps toward making partnerships.

Established trade finance providers are thriving

When it comes to selecting lenders and providers, it seems like companies are still making a safe choice. Deciding to find the right trade finance solution with an established provider remains the most popular choice, likely due to the increased safety and wider product range that these financial institutions provide. It’s not just about covering unpaid invoices and enabling seamless trade anymore.

Businesses dealing in importing and exporting now want higher freedom and more choice in terms of trade finance solutions. They want to be able to set their own trading terms, partner with the right international and local business partners alike, diversify their financing solutions, close their working capital gap, and gain the power to go global. Trusted and respected trade finance providers allow them to do just that, which might explain their continuous popularity among organizations.

Banks are still dominating the service segment

When it comes to the service provider segment, corporate banks are still dominating the market. Although the favorable environment has been attracting an increasing number of capital market investors and technology-led platforms in recent years, the market is still controlled by the world’s largest banks. Every trade transaction seems to be actively intermediated by these powerful global corporations. However, that’s not to say that nothing is changing in this space.

Due to the increasing pressure from clients, banks were forced to offer more favorable services and become more efficient altogether. As a result, the number of invoices and programs that are financed through trade finance has significantly increased since the pandemic. Existing solutions were also expanded to cover more suppliers. While the restrictions and lockdowns of 2020 might have affected global trade in quite unprecedented ways, innovative products, better operating models, and digitalization efforts are now enabling the trade finance sector to grow once again.

The US controls the North American region

Sophisticated, state-of-the-art technology is playing quite a significant role in trade finance at the moment, but nowhere quite like in the United States. Here, blockchain technology will likely be implemented in trade finance in the near future, which is expected to create new and attractive market opportunities.

The increased need for security and safety when trading, the rise in trade financing adoption, tougher competition, and updated trade agreements are all causing the growth of the US trade finance sector. International companies in the United States have already started employing new technologies that promise to increase the transparency and efficiency of the supply chain, and are creating novel digital networks to support trade and finance. The country’s rising total value of global trade imports and exports is propelling the market.

As the world evolves and recovers from coronavirus, global trade continues in a similar manner. However, the pandemic has created the need for new solutions, and the recent trade finance trends are reflecting these novel demands as well.

Related

Source: Vietnam Insider

Vietnam is one of the leaders among ASEAN countries in the volume of financing for FinTech, second only to Singapore. 93% of all venture investments in the country is directed at the E-Wallets & E-Money segment.

The data shows, since 2016, the total number of FinTech companies has grown to 97, making an 84.5% increase. However, the number of newly launched start-ups per each year decreased from 11 to 2. The market features a high competitiveness and a high entry bar.

Transaction volume demonstrated a 152.8% growth since 2016, with 29.5 million of new FinTech users. As a result, every second Vietnamese uses at least one FinTech service. The demand for digital services (transactions, payments and wallets) among the Vietnamese population is remarkable.

According to company analysts, Vietnam FinTech is young and promising. The market valuation has increased from 0.7 to 4.5 Bn USD since 2016. In the near future, the government is going to become more involved in FinTech, evidenced by the increasing number of favourable legislation for financial technologies.

The FinTech regulatory sandbox and the legal framework for digital assets and cryptocurrencies also assume further development of the industry.

By 2024, Vietnam FinTech market should reach 18 Bn USD if the trend remains the same.

Related

Source: Vietnam Insider

The survey conducted by Robocash Group revealed that key indicators, reflecting financial inclusion in Southeast Asia have increased by 1.4 times on average over a four-year period since 2017. Increased financial inclusion in the region suggests that the potential for credit services development in Southeast Asia remains untapped.

All countries recorded growth in the use of digital financial services, digital accounts and transactions. Myanmar is at the forefront of digital payments, savings and informal borrowing. However, borrowing from financial institutions fell twice as a result of COVID-19, adding to the influence of unauthorized lenders. Vietnam has become a leader in growing savings in financial institutions. Over the past four years, the country’s authorities have built a well-developed financial system that includes banks, P2P platforms and pawnshops, which contributed to the stable growth of financial inclusion in Vietnam.

Starting 2017 from a similar position to Vietnam, the Philippines has since shown a less intense rate. However, the country’s authorities have already taken strong measures to massively digitise finance among the population. In Laos, the decline in loans from friends and acquaintances may be related to the increase in credit offerings on the local market. The reason for the relatively low development in Indonesia is likely to be the higher starting point in 2017 compared to Vietnam and Myanmar. The country is qualified to become a fully-fledged macroregional fintech centre with a well-developed in-house fintech system.

“Most countries have sustained growth in borrowing, either informally or through financial institutions. Along with the growth of loans, the population of Southeast Asia shows an increase in savings.  This confirms an increase in consumption and justifies a broad outlook for expanding financial institutions in the region. The potential for development of credit services in Southeast Asia remains untapped. ”- comment Robocash group analysts.

A total of 688 Facebook and Instagram users from Myanmar, Vietnam, the Philippines, Indonesia and Laos were surveyed.

Related

Source: Vietnam Insider

Over 75 percent of Malaysian businesses have embraced at least one FinTech product or service over the past 12 months, according to findings from a new regional survey of business FinTech usage by global professional accounting organisation CPA Australia .

Mobile payments and digital wallets were the most widely adopted FinTech in Malaysia in the past 12 months, with 63 per cent of businesses surveyed indicating usage. This trend is likely to continue in the next 12 months.

The adoption in Malaysia was driven by the need to increase business efficiency, with more than 56.3 % identifying this as an important benefit in using FinTech. 40.4 % businesses adopted FinTech as a means to adapt to the challenges posed by the COVID-19 pandemic. Just over 34.4 % saw the use of FinTech as a way of reducing costs.

Advance allows company partners to leverage the salary access platform as a backup source of cash flow for employees, particularly during the COVID-19 pandemic.

Advance – the preferred partner of employers for financial services in the Philippines – has raised seed funding from four VCs led by US-based Next Billion Ventures. Wavemaker Partners and fintech-focused funds Dymon Asia Ventures and Accion Venture Lab, Accion’s seed-stage inclusive fintech investment initiative, also participated in the round.

Launched in 2019, the 24/7 salary-on-demand platform has been adopted by some of the biggest companies in the Philippines to provide their employees with early access to their wages to promote financial wellbeing within their organizations.

In the past twelve months, the Manila-based fintech startup has provided close to $3 million to thousands of Filipinos across the country. Earlier last year, Advance was able to obtain institutional lending capital from the nation’s top tier banks, which shows trust in their credit process and service offering.

“Advance aims to simplify finance for millions of hardworking employees who see their paychecks as their biggest assets, and who should be able to derive financial dignity from their work,” said Jaime de los Angeles, co-founder and CEO of Advance.

“That’s why we created an on-demand credit platform where individuals would be able to access their salaries anytime and have the financial flexibility to no longer worry about waiting for payday.”

Advance services companies of any size without requiring them to change their existing processes and can also integrate with HRIS and payroll systems to make the experience even more seamless for their clients. Once the partnership is finalized, Advance is extended into the hands of employees immediately.

Bringing Financial Flexibility to the Workforce

Around 80% of Filipinos live paycheck to paycheck, while an estimated 36 million still borrow cash for their daily needs. Unable to rely on assistance from employers or banks, many opt to take out loans from fast-cash lenders – leaving them vulnerable to unreasonably high rates and predatory collection practices.

“We’ve heard so many horror stories of people with an urgent need for cash who resort to  payday lenders due to the lack of quality options. We knew that we could provide a much safer alternative to keep them from succumbing to these endless debt cycles,” said Addi Guevara, Advance’s co-founder and CFO.

Advance combines flexibility with controlled limits to promote responsible debt management. “Filipinos deserve to get access to the salary they’ve worked hard for whenever they need in order to regain a greater sense of control in their everyday lives. We are not a loan – our service acts as a financial bridge,” added de los Angeles.

“More than a stopgap measure, early access to salary allows employees to enjoy a broader range of opportunities, no longer held back by financial stress. We’re able to provide thousands of employees with convenience and peace of mind from day one.”

A Sustainable Tool for Agile Employers

Advance has also proven to be an indispensable tool for employers, especially during this period of economic instability.

Partner employers have been able to leverage the salary on-demand platform as a backup source of cash flow through this coronavirus crisis. Employers can now grant financial assistance to their employees without having to tap into company resources. Advance ensures that everyone’s best interests are met even in the event of major business disruptions.

“Because our service is purely digital, instant, and 24/7, we’re able to offer not only an essential credit solution, but a reliable one, which is ideal during these turbulent times. We’ve been able to see how Advance has taken some financial pressure off our partners and hope to offer the same positive experience to even more companies transitioning into the new age of HR,” said de los Angeles.

Advancing to New Heights

“Access to non-predatory consumer credit is a profound problem across emerging economies,” said Ken Toyoda of Next Billion Ventures. “We’re excited to support the Advance team in their mission to offer a tech-enabled, on-demand solution that we believe will positively impact millions of Filipinos.”

Salary-on-Demand platform for the Millennial workforce. Manila-based Advance wields digital technologies to dignify the age-old practice of salary advances. (L-R: Enzo Doromal, Addi Guevara, Jaime de los Angeles, Stef Lim)

According to de los Angeles, Advance’s seed funding will be used to improve further on technology, bolster operations, and expand business in terms of new products and markets. This would ultimately create greater opportunities for a broader base of underserved Filipinos.

“The funding is a big boost to Advance as it allows us to strengthen our team and accelerate our tech initiatives to not only provide better access to credit, but offer simplified financial services to millions of Filipinos,” said de los Angeles.

“Four independent VCs have placed their faith in our team, our mission, and business model. Beyond the funding, our new partners provide us with invaluable insights and an extended network, which is huge given their experience in fintech and scaling businesses. We’re thrilled to be working with them as we take Advance to another level,” said de los Angeles.

“We envision Advance servicing 1 million employees and 10,000 businesses in the next 5 years,” added Guevara. “We’re excited for the road ahead, and feel that we have the right pieces in place to take on this challenge.”

By Joanna R. Viegan

Singapore-based fintech startup GoBear has raised $17 million from returning investors Walvis Participaties, a Dutch venture capital firm, and Aegon N.V., a life insurance and asset management provider.

The funding brings GoBear’s total funding so far to $97 million, and will be used to expand its consumer financial services platform, which is available in seven Asian markets: Hong Kong, Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam.

Founder and CEO Adrian Chng told TechCrunch that GoBear will focus on what it calls its “three growth pillars”: an online financial supermarket that evolved from the company’s financial products aggregator/comparison service; an online insurance brokerage; and its digital lending business, which it recently expanded by acquiring consumer lending platform AsiaKredit.

The company has also added three new executives over the past few months: chief information technology officer Valeriy Gasratov; chief strategy officer Jinnee Lim as Chief Strategy Officer; and Mike Singh from AsiaKredit as its new chief lending officer.

GoBear originally launched in 2015 as a metasearch engine, before transitioning into financial services. The company now works with over 100 financial partners, including banks and insurance providers, and says its platform has been used by over 55 million people to search for more than 2,000 personal financial products.

The startup serves consumers who don’t have credit cards or other access to traditional credit building tools. Similar to other fintech companies that focus on underbanked populations, GoBear aggregates and analyzes alternative sources of data to judge lending risk, including patterns in consumer behavior. For example, Chng said if a loan application is filled out in less than a minute, it is more likely to be fraudulent, and applications made between 8:30PM and midnight are less risky than ones made between 2AM to 5AM.

Data points from smartphones is also used to assess creditworthiness in markets like the Philippines, where the credit card penetration rate is less than 10%, but more than 40% of the population uses a smartphone.

Despite the COVID-19 pandemic, Chng said GoBear has been gross margin positive since the end of 2019. Interest in travel insurance has declined, but the company has continued to see demand for other insurance products and lending. Its online insurance brokerage has grown its average order by 52% over the last three months, and the company has seen 50% year-over-year growth from its loan products.

There are other fintech companies in Asia that overlap with some of the services that GoBear offers, like comparison platform MoneySmart, CompareAsiaGroup and Grab Financial Group. In terms of competition, Chng told TechCrunch that not only is the market opportunity in Asia huge (he said there are 300 million underbanked people across GoBear’s seven markets), but the company also differentiates with its three core services, which are all interconnected and draw on the same data sources to score credit.

Chng anticipates that the pandemic will spur more financial institutions to begin digitizing their products and looking for partners like GoBear to help them manage risk. In turn, that will make more financial institutions open to using non-traditional data to score credit, enabling underbanked markets to have increased access to financial products.

“The momentum is here. I think now is the time for tech and data to transform financial services,” he said. “As a platform, we are really looking for partners to come with us for the next phase of growth and investment. I feel positive even with COVID-19, because I think that we will have more acceleration, and the opportunity to change people’s lives and benefit them and investors by solving tough problems will only increase.”

By Catherine Shu @ Techcrunch

In South and Southeast Asia, the share of customers who obtained repeated advances on online platforms in 2019 amounted to 44%. The analysis of data of 1.2 million clients of Robocash Group in the region reveals that fintech loans have become widespread as they help people cover gaps in a budget.

Remarkably, in 2019, the Philippines had the highest part of repetitive customers – 51%. The lowest share was in Vietnam – 31%.

The growing number of applications across the markets proves the surging interest in fintech loans among the population. In total, 46% of customers of Robocash Group in Europe and Asia obtained online credit only once in 2019.

The figures within the Asian region are comparable. Thus, 51% of clients in India, 49% in the Philippines, and 54% in Indonesia had only one active loan in 2019. Vietnam stood out with a share of 69%.

The data confirms the urgency of most applications. In this sense, digital loans are increasing their meaning as a convenient tool to solve financial issues. The highest input to the popularity of alternative lending comes from digital technologies.

According to the annual review by We Are Social, Internet penetration in Southeast Asia amounted to 66% in January 2020. With widespread unofficial employment and missing credit history among the local population, insufficient banking inclusion leaves an immense field for alternative financial solutions