Mueller Jackson
Jackson Mueller
Associate Director, Center for Financial Markets
Jackson Mueller is an associate director at the Milken Institute's Center for Financial Markets. He focuses on fintech, capital formation policy and financial markets education initiatives. Prior to joining the Institute, Mueller was an assistant vice president at the Securities Industry and Financial Markets Association (SIFMA), where he focused on...
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FinTech in Asia: The State of Play

By: Jackson Mueller
June 12, 2015

Over the past year, we have observed how financial technology (FinTech) continues to affect the financial services industry and how the changes have rubbed up against — and in some cases uprooted — traditional financing. And we have seen how innovation has challenged archaic regulatory frameworks that failed to anticipate a world where speed, efficiency and automation are the new norm.

Recently, we have paid particular attention to developments in the UK, where the government has taken proactive steps to create a suitable regulatory and legal environment for FinTech companies. With a first-mover advantage, London is quickly turning into--in Mayor Boris Johnson’s assessment--the FinTech capital of the world.

But for how long, assuming you agree with Johnson? The competition to attract FinTech companies and investment has stretched beyond Silicon Valley, Silicon Alley and London to Asia. Given Asia’s economic importance, its large population and the prowess of its financial-services sector, it is no surprise that governments have become much more responsive to FinTech.

The more serious question is, which country will become Asia’s FinTech capital? Below, we review activities in several nations that are laying the groundwork for FinTech development and investment. Some of these countries are well on their way while others are just starting. As such, we take a look at just a few notable efforts made by policymakers and regulators over the past year.


The Australian government has been one of the more proactive in the Asia-Pacific region. In November 2014, Australia’s Financial System Inquiry released its final report, recommending steps policymakers and regulators can take to adapt the financial system to the digital era. Among other things, the report addresses debt and equity crowdfunding, retail payments, payments infrastructure, digital identity, data access and enhanced credit reporting. It also urges the government to establish a public-private sector “Innovation Collaboration” committee to discuss how Australia’s financial system infrastructure can continue to stay abreast of innovations.

The Australian Securities and Investments Commission (ASIC) has championed FinTech. In March, Commission Chairman Greg Medcraft announced plans for an innovation hub to streamline the licensing and regulation of FinTech companies. ASIC commissioner Greg Tanzer said in early May that ASIC would work with Stone and Chalk and other FinTech accelerators in the region. ASIC also will offer a one-stop source of information on the Web for startups.  Medcraft also announced plans for the Digital Finance Advisory Committee, whose members are from a cross-section of the FinTech industry.

The Senate has been active in examining the potential for digital currency, assigning its Economics References Committee to study digital currency, and create a suitable definition for use in local tax laws. The committee’s report is expected in August. Both ASIC and the Australia Tax Office (ATO) have submitted comments to the committee. ASIC expressed the view that digital currencies “do not fit within the current definitions of a ‘financial product’” under Australian law. ASIC noted, however, that the law “could be changed to accommodate digital currencies within existing regulatory regimes.” Meanwhile the ATO described bitcoin as “a form of intangible property” subject to capital gains taxation. With the uproar over the tax treatment of bitcoin, it will be interesting to see whether the Senate report will provide any additional clarity on this issue.

Hong Kong

Back in February, Financial Secretary John Tsang called for the establishment of a steering group to make Hong Kong a FinTech hub. The  call was answered a month later when the government announced the creation of the Steering Group on Financial Technologies. A report with recommendations is expected by the end of this year.

Officials have also been active outside the office. Just last month, a seminar was held where government officials including, Andrew Wong Ho-yuen, permanent secretary for the financial services and the treasury, and Legislative Councillor Charles Mok, heard from industry stakeholders involved in crowdfunding, online lending and digital currencies, on the opportunities and regulatory challenges for FinTech startups. And both Gregory So, secretary for commerce and economic development, and Professor K C Chan, secretary for financial services and the treasury, promoted the FinTech sector with speeches at two events held by the Hong Kong Venture Capital and Private Equity Association.

South Korea

Shin Je-yoon, chairman of the Financial Services Commission (FSC), has made a name for himself in South Korea as a vocal supporter of the country’s FinTech sector. Back in November, the FSC established a consultation body filled with industry leaders and government officials to prepare recommendations for reforming the country’s beleaguered financial services industry. The reforms will upend South Korea’s conservative regulatory approach, which has constrained FinTech development. In preparation for a “global innovation war,” the FSC has sought to foster greater convergence between the IT and financial services communities through deregulation measures. These include changes that will ease e-commerce and e-banking rules, allow non-banking institutions to run Internet-only banks, allow multiple payment technologies, increase corporate investment in FinTech startups, and ease regulations for cross-border transactions. The commission has remained adamant that security continue to be strengthened as systems become more integrated and as FinTech companies proliferate.


The government’s sovereign wealth fund, GIC Private Limited (GIC), has made significant investments in the FinTech space recently. GIC was the lead investor in Square’s $150 million raise in October, valuing the company at $6 billion. Another sovereign wealth fund, Temasek Holdings, backed Funding Circle’s recent $150 million raise in late April, pushing Funding Circle’s valuation to roughly $1 billion. In addition, Infocomm Investments, part of the Infocomm Development Authority of Singapore (IDA), which is responsible for the development and growth of the sector, partnered with Europe-based Startupbootcamp FinTech to launch an accelerator in Singapore. Steven Tong, formerly with Infocomm Investments, was named the accelerator’s managing director. In early March, Infocomm was in talks to invest upwards of $200 million in Israeli technology startups to build up Singapore’s FinTech sector.

Apart from the government’s investments in FinTech, the Monetary Authority of Singapore (MAS) has taken an accommodative approach to digital currencies, with Ravi Menon, managing director of Singapore’s Central Bank stating that they “have a role to play.” While MAS has indicated that it plans to regulate virtual currency intermediaries for money laundering and terrorist financing risks, the central bank stated that additional regulation would follow only “if necessary.” Separate from MAS, the Inland Revenue Authority of Singapore (IRAS) has issued tax guidance covering businesses using digital currencies, with one significant benefit: businesses that hold cryptocurrency investment for the long-term will not be subject to capital gains tax on any profits made from selling the currency. Given the favorable tax and regulatory treatment of digital currencies, it is of no surprise that three bitcoin startups joined seven other finalists at the new Startupbootcamp FinTech accelerator in Singapore.

Mainland China

Rapid growth in China’s peer-to-peer lending industry has overshadowed the U.S. and UK markets. In a market still dominated by retail investors, the Chinese sector grew 270 percent in 2014 with the number of platforms doubling to 1,700 within the last two years. Phenomenal growth also brings increased challenges and scrutiny. A number of these platforms have collapsed and regulatory officials have voiced concerns about the sector. According to one report, of the nearly 1,600 operations evaluated by an independent Chinese ratings agency, nearly 400 were blacklisted and a further 700 were considered risky. Another report said nearly 300 platforms were shut down in 2014, with nearly 50 percent of the closures attributed to fraud. China’s Banking Regulatory Commission is expected to release draft rules this year to govern the sector.

At the same time, the government is fostering technological innovation. A policy paper published in March urges leaders to create a flexible legal and regulatory environment by 2020 to accommodate the innovative changes underway. The document also recommends that China break down monopolies to create a level playing field and give entrepreneurs a voice in policy. Another encouraging sign is the recent news that the State Council has publicly backed crowdfunding and alternative methods of finance — a boon to the roughly 140 crowdfunding platforms operating across the country.


India is among several countries that, with the World Bank Group, have committed themselves to achieving universal financial access for adults by 2020. The goal, while noble, will be difficult to achieve given that the World Bank estimates that 2 billion people worldwide have no access to a bank account or various transaction services. Still, Prime Minister Narendra Modi has asked the Reserve Bank of India, the nation’s central bank, to map out a 20-year plan to promote financial inclusion. The State Bank of India, a government-owned corporation, is actively encouraging adults to participate in the financial system. One program launched last August called People Money Scheme, has led to the creation of 135 million new bank accounts, according to the government providing identity and enhanced financial security to the unbanked masses. Both Onno Ruhl, the World Bank’s country director for India, and Gloria Grandolini, the World Bank’s senior director for finance and markets global practice, pointed out the potential if the government were to also promote mobile financial services as a means of inclusion. India has roughly 870 million active mobile subscribers.

While it is still too early to tell what place will become the FinTech capital of Asia, or whether there will ever be a true champion, governments in the region are, each in their own way, laying the groundwork for FinTech growth. And while the different strategies (and speeds) may unnerve some, the opportunities are tremendous for countries that can find the right approach.



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