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High-growth fintechs look to Asia for expansion

Out-Law News | 05 Dec 2018 | 9:36 am | 1 min. read

High growth companies which focus on innovative financial technology (fintech) are increasingly likely to look towards Asia for expansion opportunities, according to Pinsent Masons, the law firm behind Out-Law.com.

Asian markets offer particular opportunities for future revenue growth due to increasing personal wealth, as well as the rapid development in the digitisation of financial services products, according to financial services expert Alexis Roberts of Pinsent Masons.

"You only have to look at the incredible penetration of platforms like WeChat to see the extent to which people have bought into these developments," Roberts said.

"Coupled with this, personal wealth is increasing in Asian markets, and so the opportunity for digital platforms in wealth management is growing significantly. Also, rightly or wrongly, Asian markets are sometimes seen as less challenging from a regulatory perspective than some European countries, and that could create an appetite for investing there. High growth companies which focus on fintech are very likely to look to Asian markets for growth as a result," he said.

Europe's fastest growing companies see Asia as the most attractive destination for future revenue growth, according to recent research conducted for Pinsent Masons by MergerMarket. Among 400 high-growth businesses surveyed for the report 'Pacesetters: How Europe's fastest-growing companies stay ahead of the pack', 57% said that they expected the Asian market for their products or services to increase greatly in the next 12 months.

Last week, London-based digital banking and currency service Revolut announced that it had been granted licences by the Monetary Authority of Singapore (MAS) and Japan's Financial Services Agency. Revolut, which began recruiting staff for a planned Singapore headquarters in April, intends to begin offering services in the Asia-Pacific region in the first quarter of 2019, according to the announcement.

A number of innovative European banking, payments and wealth management businesses have made similar expansion announcements in recent months, according to the Financial Times. Martin Stead, chief executive of investment management platform Nutmeg, told the paper that Nutmeg is planning to launch in Hong Kong next year, while app-based bank Tandem is also planning a Hong Kong launch after selling a £15 million stake in the business to Hong Kong's Convoy Global Holdings.

MAS is currently consulting on the creation of a new 'express' regulatory sandbox, designed to enable fintech companies to bring fintech services with low or well-understood risks to the market much faster. Financial regulators have begun offering regulatory sandbox initiatives to allow companies to try out certain activities that they otherwise would not allow, as long as they are overseen by the regulator and comply with certain rules.

In recent months, MAS has signed fintech cooperation and collaboration agreements with the Chinese central bank, the People's Bank of China (PCB); and the Dubai Financial Services Authority (DFSA), financial and ancillary services regulator for the Dubai International Financial Centre.