The BaaS / Open Banking Opportunity in SE Asia


  • Better banking is a NEED not a WANT

    • Credit card penetration incredibly low

  • Data is KING - Race to market with # of integrations to get more data

    • A lot of reverse engineering - perhaps inefficient

    • Data is usually at the individual / retail

    • Better tech partners = payment gateways

      • Bigger tech forward ones already exist like Xendit

      • Telco data actually can be quite valuable in understanding who is paying utility bills

        • This data is used for underwriting

  • Banks are API / data providers AND clients

    • Most banks have some sort of API but they are supply pretty bad data

    • Tier 2 banks are more willing to innovate

    • Top banks are family-run --> messy and difficult

  • Top down regulations

    • Necessity to work with regulators

  • Best markets

    • Indonesia, Philippines, Thailand/Vietnam, then Malaysia and the rest. in that order.

    • Singapore doesn't count

  • Underwriting still rather underbaked

    • Opportunity in lending and credit scoring although space is very hard to break into bc lending firms like to own the underwriting

      • Perhaps low margins on data

  • Business model

    • Most have a goal of becoming a Truelayer / Tink / Plaid and have similar business models - charging API calls with maybe upfront fees

    • Being closer to infra usually means better unit pricing but also more upfront and maintenance work

      • Is the effort worthwhile for them? Need to decide based on their market

  • OPPORTUNITY in COMPANIES connecting corporate accounts to do the same

    • Strategy of most is to let end users connect retail / individual bank accounts to do operations such as balance inquiries

    • Nothing here yet. Maybe data isn't ready yet.

Key Differentiators / What to look out for

  • Integrations / partnerships - # and variety

  • Relationships with regulators and key large FI players

  • Overall speed to market / team's ability to execute

  • Ability to dominate Indonesia / Philippines / Vietnam

  • Innovation beyond just reverse engineering

  • Ability in understanding and managing fraud / KYC / compliance