Future of Fintech in Bangladesh

Financial Technology, more commonly known as ‘fintech’, describes a business that aims at providing financial services by making use of software and modern technology. As of today, fintech companies are directly competing with banks in most areas of the financial sector to sell financial services and solutions to customers. Mostly due to regulatory reasons and their organizational structures, banks still struggle to keep up with fintech startups in terms of innovation. Fintechs have realised early that financial services of all kinds – including money transfer, lending, investing, payments etc; need to integrate in the lives of the tech-savvy and knowledgeable customers of today to stay relevant in a world where business and private life are becoming increasingly digitalised.

Where Are Fintech Firms Headed?Fintech startups are looking to serve as substitutes for the old order of financial services firms, and, indeed, in many areas they are complementing the products and services that are already on offer. They are also leveraging regulatory norms, although navigating the web of disparate regulatory frameworks is not always easy. That said, globally, regulators have been paving the way for easy access to enable disruption in the financial services sector and to encourage competition.

Fintech in Southeast Asia Is on the Move

Fintech investment in Asia Pacific was modest in 2019 after experiencing a record-shattering level of investment in 2018. Both venture capital investment and M&A activity in Asia Pacific came down significantly during the first half of the year. A lack of megadeals in China accounted for most of the decline — with investors holding back given both the US-China trade tensions and the increasing regulatory focus being given to fintech and fintech companies.

2018 was a record year for deals and funding in Southeast Asia—an increase of 143 percent YOY. The number of funding deals in the region increased from 19 in 2014 to 68 in 2018. In general, Southeast Asian fintech startups are attracting higher funding and foreign investors, according to a recent CB Insights report. The largest recipient in 2018 was Vietnam-based fintech major Momo, which secured $100 million in Series C funding from Warburg Pincus. China’s Ant Financial (an affiliate of the Alibaba Group) is seeking to aggressively expand its reach in Southeast Asia. Ant provides a suite of financial services spanning payments, insurance, credit, wealth management and others through various subsidiaries. Ant Financial alone made investments worth $14 billion which is approximately 35 percent of total investment in 2018.

Asia on Track to Claim Fintech Reign from the U.S.

Global venture capital-backed fintech investment reached an all-time high in 2018. Fintech companies backed by venture capital secured $39.57 billion in 2018 across 1,707 deals globally. While the number of deals increased by 15 percent year over year, deal value surged 120 percent, according to a recent CB Insights report.The number of unique fintech startups that secured funding touched an annual high of 1,463 companies, while the number of total unique investors was 2,745, supported by a rush of corporate investors.

The U.S. retained its position as the top fintech market with 659 investments worth $11.89 billion in 2018, but Asia is catching up. Asia registered a surge in early-stage and mega-round investments and witnessed the biggest boost in deals—growing 38 percent YOY. Fintech companies in Asia were also recipients of record levels in funding, securing a massive $22.65 billion spanning 516 deals. In fact, Asia is likely to surpass the U.S. as a center for fintech investment soon. (Source: CB insights report)

Fintech in Bangladesh

Bangladesh’s undeveloped financial system, huge unbanked population, and increasing smartphone penetration rate, have fueled the development of innovative digital finance solutions. Bangladesh’s startup sector is at an emerging stage but evolving rapidly with several accelerators, incubators, startup events and some state sponsored programmes being introduced in recent years. Increasing mobile phone penetration has played a key role in stirring the startup scene where mobile phone has emerged as a strong medium to do many other business activities besides interaction and communication.

Non-banking Fintech company like bKash is the market leader in mobile money services in Bangladesh since last few years followed by iPay, another online payment platform where payment can be made from mobile phone or computer.Some banks are offering similar services (Rocket, mCash, Ucash) but their market share is very low. Apart from mobile money services, other banking services like account opening, loans, insurance and internet banking services have not been automated in most of the conventional banks and financial institutions.

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