A customer makes a payment using a WeChat QR payment code via her smartphone, next to an Alipay QR code (left) at a vegetable market in Beijing on November 3, 2020. Photo: AFP / Greg Baker

Financial technology is a sector that’s growing rapidly across Asia, which is benefiting economies and societies in the region, but some clear – and resolvable – challenges remain.

While many of the biggest tech giants are currently based elsewhere, the consumer fintech boom has taken off in Asia like nowhere else.  

The existence of large unbanked and underbanked populations, which means that there is significant demand for fintech solutions that can help increase financial inclusion, is one of the major contributors. Fintech companies are able to leverage their tech propositions to offer products and services to these populations at a lower cost than traditional financial institutions.

Also, Asia’s middle class is rapidly growing, and with it, demand for financial services that cater to their desire for innovative products and services. In addition, many countries in Asia have “mobile-first” economies, meaning that a large portion of the population uses smartphones as their primary means of accessing the Internet, which can be utilized by firms to provide mobile-based, convenient and accessible solutions.

The growth of fintech has had real, ongoing and tangible benefits across the region, primarily because it boosts financial inclusion by offering affordable and accessible services to underserved populations. In turn, this has been shown to help to reduce poverty, promote economic growth, and improve social welfare, as well as helping to increase financial education and empower consumers to make informed financial decisions.

In addition to the many social plusses, fintech is a catalyst for economic growth. It’s proven to reduce monopolistic practices, lower costs for consumers and businesses, improve general commercial efficiency, create new markets and revenue streams and reduce systemic risks.

Yet despite all these significant advantages, the region has many barriers for fintech; among these are regulatory. 

Regulatory frameworks for financial technology vary across countries in Asia, making it difficult for fintech companies to operate and expand across borders. This lack of clarity and consistency is also making it challenging for investors to assess risks and potential returns.

What’s needed is an intragovernmental regulatory guide that can help ensure that regulations and standards are consistent across different jurisdictions, government agencies and departments. 

This could provide clarity for fintech companies wishing to invest, reduce compliance costs, and help protect consumers by preventing fraud, improving transparency, and ensuring that customer data is handled properly.

With fintech being inevitably the future of finance, should this happen, Asia’s global economic dominance would be fast-tracked.

Nigel Green is founder and CEO of deVere Group. Follow him on Twitter @nigeljgreen.