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2 7 TH F E B 2 0 2 0

ASIA
FINTECH
REPORT
WHAT EUROPE CAN LEARN
FROM ASIA’S SUPER APPS

C O N T E N T:
I N T R O D U C T I O N : T H E R I S E O F T H E S U P E R A P P. . . . . . . . . . . . . . . . . . . . . . . . . . . . . P 1
S U P E R A P P S — E C O S Y S T E M S & G AT E WAY S . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . P 2
WHY LOCAL COMPANIES WIN.................................................P3
SUPER APP TRADE-OFFS......................................................P5
KEY LEARNINGS FROM ASIA..................................................P6
1

INTRO – THE RISE OF THE SUPER APP

In the 1990’s, Alibaba connected westerners with a comprehensive

DUCTION
manufacturer database and went on to create the biggest FinTech in
the world: Ant Financial aka Alipay, which boasts 1.2. billion users and
a $150 billion valuation1. Since Alibaba’s rise, the Asia Pacific FinTech
scene has exploded, catapulting low tech societies into a digitally in-
tegrated future. The region includes roughly 4.3. billion people2, 34 Top
100 FinTechs3, and 29 FinTech unicorns4.

According to the World Economic Forum, in 2020, Asia’s GDP will over-
take the rest of the world’s combined and the region’s middle class will
account for 90% of the projected 2.4 billion new entrants to the class
bracket5. This growing population, endowed with more disposable in-
come, requires a new type of financial product, one that FinTech can
deliver. Often cheaper, more scalable, and more robust, financial tech-
nologies like Super Apps are flooding the continent, boosted by the
high mobile penetration (set to hit 62% by 2025) and the willingness to
try FinTech (e.g. 69 % adults in China)6. As a result, Asia has leapfrogged
traditional financial products.

Asia’s Super Apps (several apps bundled into one umbrella app) fall
into two categories - ecosystems and gateways, and follow one killer
strategy: hyperlocalized service bundles that cater to users’ daily needs.

1
Roberts, Daniel. “Alibaba Spinoff Alipay Surged Past
1 Billion Users in 2019.” Finance.Yahoo.Com, 20 Dec.
2019, f inance.yahoo.com/news/alibaba-spinoff-ali-
pay-surged-past-1-billion-accounts-in-2019-150728030.
html. Accessed 26 Feb. 2020.

2
“Population Trends.” UNFPA Asiapacific, 2 Dec. 2014,
asiapacific.unfpa.org/en/node/15207.

3
KPMG. “2019 FINTECH 100 Leading Global Fintech Inno-
vators.” 2019.

4
Bloomberg News. “Why Asia Is Leading the Fintech Rev-
olution.” Bloomberg, 27 Jan. 2019, www.bloomberg.com/
professional/blog/asia-leading-fintech-revolution/.

5
Yendamuri, Praneeth, and Zara Ingilizian. “In 2020 Asia
Will Have the World’s Largest GDP. Here’s What That
Means.” World Economic Forum, 20 Dec. 2019, www.we-
forum.org/agenda/2019/12/asia-economic-growth/.

6
Yendamuri, Praneeth, and Zara Ingilizian. “In 2020 Asia
Will Have the World’s Largest GDP. Here’s What That
Means.” World Economic Forum, 20 Dec. 2019, www.we-
forum.org/agenda/2019/12/asia-economic-growth/.
2

SUPER ECOSYSTEMS & GATEWAYS

APPS —
Super Apps aggregate several services into one app so that the user
can conduct all of their daily business through the app’s interface.

These companies focus on user needs ranging from social connec-

tion and expression to transportation and logistics. As a result, the
apps serve millions of daily active users. The unifying feature across
the apps is the convenience focus. According to Nikkei Asian Re-
view, there are currently 11 Super Apps7, which can be divided into
two categories — Ecosystems & Gateways.

Apps Ecosystems:
Mostly self-contained communities facilitated by a payment system
WeChat i.e fintech as a means to an end. WeChat, for example, allows users to
Go-Jek
Line
message friends, pay bills, and order taxis seamlessly in-app.
Kakao Talk
Grab
Zalo

Apps Gateways:
A payment gateway stringing together many distinct services i.e.
OlaMoney
Paytm fintech as the end. Paytm, for example, allows you to top-up mobile
Alipay phones, buy plane tickets, and book hotels using a mobile wallet
PiPay
integrating across different partner sites.
Masii- Early Stage Venture
MoMo- Rising Star

Benefits:

To Users:
■ Convenience
■ Affordable services
■ Easy to use / learn interfaces
■ Single location for multiple services

To Businesses:
■ Diverse revenue streams
■ Cross-selling opportunities
■ Recurring revenue from platform dependence
■ More nuanced data picture of individual users

7
Liu, Coco. “Super Apps: WeChat, Go-Jek and Rivals Battle to Do It All in
Asia.” Nikkei Asian Review, Nikkei Asian Review, 2 Sept. 2019, asia.nikkei.
com/Business/Industry-in-focus/Super-apps-WeChat-Go-Jek-and-ri-
vals-battle-to-do-it-all-in-Asia.
 3

WHY LOCAL
Super Apps are the go-to-apps for millions.

COMPANIES
Go-Jek, for example, had over 100 million monthly trans-
actions in 2019, while Grab conducted 6 million rides daily
during that same period (top apps in Europe are usually
measured in 100s of thousands). There are two factors that

WIN
contribute to Super App success:

1. Ease of entry facilitated by:

a. Hyperlocal Tactics
b. Government Priority

2. Legacy Partnerships

1. EASE OF ENTRY
HYPERLOCAL SOLUTIONS

Hyperlocal is more than just reading market research reports on the country and executing a strategy. Hy-
perlocal strategies come from observing community behavior, feeling pain points, and crafting an approach
that speaks to the local community.

GRAB WECHAT GOJEK PAYTM

COUNTRY SINGAPORE CHINA INDONESIA INDIA

FOUNDED 2012 2011 2010 2010

DESCRIPTION Mobility company Social media company Mobility company Payments company

HYPERLOCAL TACTIC DURIAN DAY RED PACKETS OJEK MOBILE RECHARGE

DESCRIPTION Malaysians love Durian, Red Packets are typ- An ojek is a motorcycle Many Indians used
a large stinky fruit na- ically red envelopes taxi service in Indonesia, prepaid mobile phones
tive to the region. filled with money given where any motorbike which required people
Playing on Uber’s Ice during Lunar New Year. owner could charge for to go to a physical loca-
Cream On-Demand WeChat made it possi- rides to circumnavigate tion to recharge phone
Entry strategy, Grab of- ble to send red packets traffic. GoJek created plans. Paytm made it
fered Durian, designing via its platform.9 a call center and then possible to top up de-
packaging to contain digitized this service, vices electronically.11
the stench.8 co opting the familiar
name.10

PAYMENT SYSTEM GRAB PAY (2017) WECHAT PAY (2014) GO PAY (2016) PAYTM (2010)

QUICK STATS ■ (2019) 122 million ■ (2019) 1 billion ■ (2019) 36.3 million ■ (2019) 450 million
(Registered Users) users active users users users
■ 3-year CAGR ■ 3-year CAGR 7% ■ 3-year CAGR ■ 3-year CAGR
50.21% 55.25% 25.07%
 4
GOVERNMENT / INSTITUTIONAL SUPPORT
Both East and Southeast Asian countries have
a hunger that comes from being underdogs. In
2006, China released their 15 year plan12 which
focused on building homegrown innovation to
compete globally. This focus meant that new tech
could flourish and, though this is a simplification,
the policy represented a mindset shift that galva-
nized startup culture including FinTech innova-
tion. The country doubled down on these priorities
in 2015’s Made In China 202513.
Additionally, in ASEAN, new banking policy has
been created. In 2019, both Singapore and Malaysia
(home to Grab and Singtel) created digital banking
regulations for challenger banks and other players
looking to legitimize their financial services. The
Singapore digital banking license, for example,
emphasizes profitability, asking companies to
prove their business models instead of prioritizing
growth and scale. These policies will have a direct
impact on the future of ASEAN FinTech.
8
9
10
11
12
13
14
2. LEGACY PARTNERSHIPS
As Super Apps develop their financial products,
they also partner with legacy banks and other
organizations to share their technological gains
e.g. the Thai bank, Kasikornbank, partnered with
Grab to develop a mobile wallet called GrabPay
by KBank14. This kind of partnership helps expand
the financial offering’s reach and add addition-
al revenue streams for both partners - FinTech,
and legacy.
Asia FinTech is not all disruption. Instead, as the
FinTech tide washes over the continent, it lifts all
boats including those of the existing players.
Chandler, Clay. “Grab vs. Go-Jek: Inside Asia’s Battle
of the ‘Super Apps.’” Fortune, 20 Mar. 2019, fortune.
com/longform/grab-gojek-super-apps/. Accessed
26 Feb. 2020.
Hsiao, Samuel. “In Just 4 Years, WeChat Has
Changed the Way People Give out Red Pack-
ets.” The Low Down - Momentum Works, 28 Feb.
2018, thelowdown.momentum.asia/just-4-years-
wechat-changed-way-people-give-red-packets/.
Lewandoska, Fabiola. “Interview.” Feb. 2020.
Jammanahalli Mahesh, Sharan. Paytm Use Inter-
view. Feb. 2020.
Cao, Cong, et al. “China’s 15-Year. Science and Tech-
nology Plan.” Dec. 2006.
Wübbeke, Jost, et al. No 2 | The Making of a High-
Tech Superpower and Consequences for Industrial
Countries. 2016.
Dahl, Jacob, et al. “How the Asian Banking Industry
Is Reinventing Itself for the Digital Age | McKinsey.”
Www.Mckinsey.Com, Feb. 2020, www.mckinsey.
com/featured-insights/asia-pacific/how-asia-is-re-
inventing-banking-for-the-digital-age. Accessed
26 Feb. 2020.
 5

SUPER
Despite the pros of bundling several services,
there are some trade-offs.

APP
The Super Apps’ scale creates a rich database, while the apps’ struc-
tures require technical sacrifices. Key trade-offs include data security,
data privacy, fraud protections, and modular speciality.

TRADE-
OFFS
1. Data Security
Having so much user data centralized and digitized in a non-bank
entity leaves data vulnerable to cyberattacks and leaks. In 2019,
WhatsApp, an end-to-end encrypted messging app now part of the
Facebook family, was hacked in India using an Israeli hacking tool15.
The Super Apps collect more information than WhatsApp and are
equally vulnerable.
15
Agarwal, Surabhi, and Megha Manda-
via. “WhatsApp Confirms Indian Jour-

2. Data Privacy
nalists and Activists Targeted in Hack.”
The Economic Times, 1 Nov. 2019, eco-
nomictimes.indiatimes.com/tech/in-
ternet/whatsapp-confirms-indian-jour-
nalists-and-activists-targeted-in-hack/ For apps like WeChat, data is tied between social media accounts,
articleshow/71833170.cms. Accessed 26 banking information, and even logistics data making it easy to paint
Feb. 2020.
a full user picture. WeChat, opting not to use end-to-end encryption,
16
hermesauto. “120 Gojek Drivers Suspend- instead encrypts between the sender and the WeChat servers and
ed for Using Modified App That Helps leaves users vulnerable to privacy violations.
Them Bypass Verification.” The Straits
Times, 29 Jan. 2020, www.straitstimes.

3. Fraud Protections
com/singapore/gojek-to-suspend-120-
drivers-for-fake-app-use. Accessed 26
Feb. 2020.

One key concern that legacy players have about implementing digital
solutions is conducting KYC (Know Your Customer) and AML protec-
tions (Anti-Money Laundering). In the legacy system, KYC and AML
protocols are established, while digital solutions are more suscepti-
ble. KYC and AML aside, Super Apps have other fraud vulnerabilities in
their core businesses. For example, Go-Jek had to suspend 120 drivers16
for using a fake app that helped them bypass verification systems.

4. Modular Specialists
Because these platforms are providing several services, it’s unlikely
that every service they offer will be of similar caliber. Modularity, on
the other hand, allows different teams to perfect the component
parts. For example, Grab started out as a mobility app with an easy
to use interface, however as they added more services the app shift-
ed priority, letting the mobility offering decay. This has led to driver
strikes and unwanted feature rollouts.
6

KEY
Asia is a FinTech powerhouse that both innovates, borrows from,
and uplifts the local financial system.

LEARN-
While China has been the focus for a decade, ASEAN is poised to re-
place China as the FinTech juggernaut. So, what can Asia teach us?

INGS 1. Trust People’s Tech Readiness

FROM
Users thirst for convenience and are willing to trust technology
with their data and money. So often innovation is killed because
creators are waiting for the population to be ready. Take Go-Jek:

ASIA
Ojek rides (motorcycle taxis) were already popular. Go-Jek just saw
the opportunity to streamline the process by creating a call cen-
ter and an Ojek fleet. People adopted it immediately. As phones
became more sophisticated and ubiquitous, the company iterated
transforming Indonesians’ daily lives.

2. Localize To Your Environment

There is no one size fits all solution. Uber used the same ice-cream
tactic in ASEAN that it did with US markets, but when Grab copied
Uber’s tactic and hyperlocalized it, they became the favorite forc-
ing Uber to sell their Asian business to Grab and leave the region.

3. Form Partnerships
Creating your own products takes time, money, and resources, all
of which delay go-to-market and limit user reach. Partnerships, es-
pecially those between young FinTechs and legacy players, allow
companies to share knowledge, talent, and networks. When Thai
bank, Kasikornbank, partnered with Grab to develop GrabPay by
KBank, Grab gained access to a new market and a new revenue
stream, namely repurposing existing technology.

Super Apps extend financial product reach.

In countries like China, Alipay and WeChat have created near cashless
societies where even the most rural user can participate. As mobile
internet penetration increases, FinTech’s reach will only grow. Asia is
not only building Super Apps, they are creating intuitive UI/UX experi-
ences that mesh with the users needs, wants, and habits.
7

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