By all accounts, fintech had a great year in 2015 when it ultimately became a global brand and movement mobilising one of the world’s most staid industries to subscribe to a bold vision of the future.
Come 2016, much of that vision is turning into reality. In Southeast Asia, fintech benefits from pioneering progress in Europe and the US – as was the case with e-commerce and adtech. This, coupled with lightning fast growth in Internet penetration, is giving emerging fintech players in this part of the world a great foundation to grow.
Whether or not you believe that global markets are cooling, or that such a thing as a fintech bubble exists, the net outlook is relatively positive – especially in the region’s thriving emerging markets (and we hope it stays that way).
If we look closely at this region’s fintech companies, we notice the focus on platforms. Perhaps platforms are easiest to do, have good proof of concept, and seem to make sense for customers.
I think all of us have at one point benefitted from comparing products online, and developing user-friendly and useful ways to do it is essential in empowering the end customers of financial services. Nonetheless I fail to understand why many of the more exciting or daring business designs in fintech struggle to make it to Asia.
In this region, we still have countries with an around 80 per cent unbanked (and, as some say, 90 per cent uninsured or underinsured) population. Also, Southeast Asia stands out with its steep Internet adoption and social media growth and usage patterns, especially on mobile. Why are we not seizing that opportunity in bolder ways?
The apparent avoidance of innovating the core of financial services is more noticeable in insurtech, where so far we are still waiting for product innovations to flood the markets. While comparison sites for insurance are sprouting up everywhere, we find surprisingly little digital e-commerce in the industry.
In life insurance especially, there is still little innovation on the distribution side. Sure, you have some microinsurance players offering basic insurance that can be purchased e.g. via phone credits. Beyond the microinsurers, however, we really have a long way to go.
At the same time, insurers around the world are actively looking to reinvent their business – and many of them are starting to become aware that the needed change is anything but discretionary. In the past decades, it was still possible to sell insurance in its traditional form – rigid terms and long contracts with complex features have pretty much time been the status quo in insurance.
The paradigm finally seems to be shifting a little, as insurers are realising that the majority of millennials may not put up with the somewhat stuffy value proposition of insurance. Filling out pages of forms is something our generation is very reluctant do to, because it just seems so unnatural given the possibilities technology presents today regardless of where you operate.
There are many ways to look at the resultant situation – one, that we will not make much progress in insurtech until more startups in the space start reinventing the product side of insurance. Whether this will happen anytime soon remains to be seen.
My view is that insurance companies have a very useful unfair advantage when it comes to the product side of things – the legal and financial framework for developing insurance products is definitely a massive barrier to entry, and so far very an effective one.
I am sure a few audacious startups will sooner or later venture into the product transformation side of insurance. But until that happens in this region, we have an amazing opportunity to be the first to get this right. The opportunities are almost endless, and so many insurance propositions that should already exist simply have not been realised.
Once insurance companies see beyond incremental product improvements or new feature launches, promising new territory is to be discovered.
The views expressed here are of the author’s, and e27 may not necessarily subscribe to them. e27 invites members from Asia’s tech industry and startup community to share their honest opinions and expert knowledge with our readers. If you are interested in sharing your point of view, submit your article here.