3 fintech unicorns on geopolitics, the COVID curve and growth prospects

Some of the biggest names in global business, economics, politics and other spheres were assembled for the Credit Suisse Asian Investment Conference 2022. These include the likes of Dr Condoleezza Rice, former US Secretary of State; Mo Gawdat, a former senior executive at Google; and John B. Taylor, a Stanford economics professor.

For more than 15 years, the event has gathered an eclectic mix of thought leaders. And in a sign of the times, the conference again adopted a virtual format, as the pandemic continues to disrupt all aspects of our lives. Topics stemming from the global effects of COVID on supply chains and technology adoption underpinned many of the conversations, as did the war in Ukraine.

The rise of “cashless” transactions and online retail has accelerated rapidly over the last two years. A key aspect of this, payments platforms, was the topic of one session at the conference, which assembled founders of three of Asia’s “unicorns” in the space:

• Richard Koh, Founder and CEO, M-DAQ
• Moses Lo, Co-Founder and CEO, Xendit
• Prajit Nanu, Founder and CEO, Nium

In a session moderated by Credit Suisse’s vice chairman of Asia Pacific technology, Neel Laungani, they discussed consumer trends, their business models, and the nature of competition among tech firms in APAC.

All three emphasised that collaboration rather than hard-fought competition characterise the interaction between tech firms in the region. 

Moses, whose Jakarta-based firm Xendit creates digital payment infrastructure, regards the company as a helper of existing banks rather than a disrupter. “Fintech, I think, is about competing in some places and working together in others,” he said.

Nanu, whose company Nium enables banks, payment providers and businesses to collect and disburse funds and issue payment cards, explained its start in Southeast Asia and expansion into Latin America and beyond.

He emphasised the vast scale of the addressable market for such firms, with no one player able to own the entire payments space.

“When you look across the globe, some are strong in the US, or Europe, or Asia – there’s really no global platform because payments are fragmented,” Nanu said.

“Until such a time as you have built a trillion-dollar business and there’s enough without fighting each other for market share,” he believes the spirit of collaboration will persist.

And Richard Koh, who heads up Singaporean foreign-exchange platform M-DAQ, explained the structure of its recent acquisition of another player in the space, Wallex. This should see the combined business process around US$15 billion of transactions in 2022.

What are the tailwinds for payments?

The pandemic’s role in accelerating demand for digital payments and online transactions was cited by all three.

“That’s something we’re all benefiting from and even after this episode is over, the world will have become much more digital-ready across all age groups and all sizes of businesses,” Koh said.

What are the biggest challenges?

The fight for talent is a global headwind for the technology industry, and one which is magnified further in the Asian region, where finding senior executive talent is particularly difficult. Especially for startups and early-stage technology firms, they find large firms that extend into the region scoop up much of the best local talent.

“The bench in southeast Asia just isn’t that deep. But that will change over the next 10 years,” Moses said.

Regulations were previously a key challenge in the space, but things are becoming easier on this front, said Nanu, noting that greater emphasis on “e-KYC” (electronic know-your-customer) was making things easier, accelerated by the pandemic.

Is the curve flattening?

The acceleration of e-commerce during the pandemic has been widely acknowledged. Investors and business owners alike have anticipated a potential slow-down once “normality” (whatever that is) returns to the world and borders and physical storefronts reopen.

But Moses doesn’t see the “curve” flattening.

“I think the tailwinds we’ve mentioned are driving a new batch of startups and companies that are becoming big very quickly, which has been driving growth,” he said.
“And among the growth acceleration we saw mid-COVID, there are some underlying systemic trends that will continue.”

These include the uptake of cryptocurrency, changes in wealth management businesses, new aspects of the fintech sector. “We see sustainable growth over a long period of time, and I see that continuing even as we get more physical,” Moses said.

War, terrorism and "Black Swan" events

And on the question of geopolitics – something that has been front-and-centre since Russia invaded Ukraine last month, Credit Suisse’s Laungani asked how they’re equipped for the accompanying financial risks.

“Every dealing room is looking for some type of crystal ball in trying to figure out what the price of a currency will be one second, one minute, one hour or one day from now and to figure out how to price it now,” said Koh.

But he says such concerns are really only relevant to the more speculative parts of the market. Instead, M-DAQ focuses on the demand side of the transactions.

“In the last six-and-a-half years we’ve built a better model focusing on the demand side, which we have found to be more consistent despite volatility – whether there’s central bank intervention or other black swan events such as war, terrorist attack, or other things that might cause movements of between 2-3% in currencies,” Koh said.

“If you focus on the demand side, the volume of products purchased in each country across different platforms tends to stay quite consistent.”

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