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Asian fintech enters accelerated innovation phase

Smart approach to the pandemic has brought the future forward



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Tilman Ehrbeck is managing partner at Flourish, a global venture investment company. He is based in Washington, D.C.

When COVID-19 first struck a year ago, startup entrepreneurs and early-stage investors paused briefly to assess what the pandemic might mean for the burgeoning theme of fintech innovation. Rather than threatening new financial business models, though, the pandemic has brought the future forward, dramatically accelerating changes to customer behaviors and industry structure in Asia and beyond.

What had previously been expected to play out over years has been accomplished in months. And with new data showing that financing volumes for fintech companies reached record highs in the first quarter of 2021, I believe we are entering an accelerated phase for innovation in finance.


This has the potential to deliver better outcomes for consumers and small businesses around the world — and I expect it to be shaped by three related themes that have demonstrated their importance over the past year: platforms, plug-ins and plumbing.

These themes should be front and center in an increasingly robust financing environment for fintech. Investment in the sector slowed during the initial uncertainty around the pandemic but picked up toward the end of last year and roared back in the first three months of 2021. According to CB Insights, fintech companies globally raised nearly $23 billion of financing in the first quarter of 2021 — more than half the total funding they attracted in 2020. Asian fintechs attracted $3.7 billion in the first quarter, up from $1.9 billion in the last three months of 2020.

Embedded finance, or the integration of traditional retail financial services into platforms that millions use on a daily basis, has gathered momentum during the pandemic. Startup entrepreneurs and early-stage investors have redoubled their efforts in this area and — judging by the slew of recent news — later-stage investors and public stock markets have taken notice.

There are three key components to embedded finance. The first involves platforms that are relevant and helpful to people’s daily lives during the pandemic: the gig worker platform that creates earnings opportunities, the e-commerce platform that delivers goods to neighborhood stores, the agri supply chain networks that link farm gate to food plate and the social media platforms that help people stay connected.

Platforms like these naturally integrate digital payments. They have rapidly growing user numbers, often commanding strong trust and engagement. Importantly, they also generate proprietary data and insights into user needs and behaviors, allowing them to expand into financial services other than payments.

When Grab announced its plans to go public via a merger with Altimeter Growth, a Nasdaq-listed special purpose acquisition company, it highlighted its embedded finance plans as one of three priorities and upside opportunities. The proposed merger, worth close to $40 billion, is the largest SPAC deal so far and would be the largest ever equity offering by a Southeast Asian company.


Grab’s apps on a mobile phone screen: Grab highlighted its embedded finance plans as one of three priorities and upside opportunities.   © Sipa/AP

The deal has attracted more than $4 billion of parallel new funding from marquee investors such as BlackRock and T. Rowe Price as well as sovereign investors like Singapore’s Temasek, Mubadala from the United Arab Emirates and Permodalan Nasional Berhad of Malaysia.

The second component of embedded finance is the plug-in products that leverage these popular platforms’ high engagement, payment transaction data and other customer insights. With these plug-ins, platforms can deliver a broader, more tailored and often cheaper set of financial services than were previously feasible for, or available from, traditional providers — especially new forms of credit or insurance.

The most visible example at present is buy-now-pay-later credit in e-commerce, which is often subsidized by online merchants who want to stimulate consumer demand. On the back of strong volume growth in the past 12 months, the CEO of Australia’s AfterPay has publicly contemplated a U.S. stock market listing following a similar move by U.S. competitor Affirm in January. While it has been less prominent so far, strong momentum is also building behind embedded working capital credit for rapidly digitizing small businesses and corner stores via supply and distribution logistics platforms.

The third component of embedded finance is the new breed of application programming interface based infrastructure. This plumbing is required to connect the new generation of customer interfaces and product providers with the regulated balance sheets or capital markets that finance, aggregate and manage risks at the back end. Across emerging markets, startups such as Brick in Indonesia or M2P Solutions in India are rushing to provide the type of connectivity that Plaid has created for financial data exchange in the U.S. — while Plaid itself raised $425 million of funding at a $13.4 billion valuation earlier in April.

Supercharged by the pandemic and lockdowns, embedded finance is changing the structure of traditional retail finance. Because of their large user bases, strong customer engagement and new data sources, platforms, product plug-ins and new plumbing together have the potential to bring financial services to far more customers, offering better services at lower costs than the traditional bricks-and-mortar banking system.

This is particularly true for Southeast Asia, which has higher per capita income and mobile internet penetration than other emerging markets, but where traditional banking penetration is still around 50%. By leveraging these three elements of embedded finance, entrepreneurs, investors, incumbent banking partners and regulators in Asia have the opportunity to create a fairer and more inclusive financial system as the region begins to recover from the pandemic.

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The race for artificial intelligence – Can Europe compete? | DW Documentary



Artificial intelligence (AI) is transforming industries and society – and a global race has taken off for who will create the most cutting-edge technology. The outcome could reshape the global balance of powers. At the moment, the United States and China stand as the leading contenders. Europe, meanwhile, finds itself lagging behind. But the continent is eager to catch up, and it has a plan: Officials hope that a strong emphasis on transparency and fairness in AI development will set European AI apart and provide an edge in the years to come. However, the question remains: Can these European initiatives compete with the vast resources that Big Tech companies pour into AI research? And will the EU’s ethics-first approach to AI become a competitive advantage in the global race for AI – or will it set Europe even further behind?

0:00 The race for AI supremacy

0:51 Using AI to make cities more liveable

4:19 Can AI help cure cancer?

7:49 How the EU plans to govern AI

9:10 Transforming societies with big data

11:02 Will strict AI rules set Europe back?

15:11 Fighting cyber attacks and brain drain with AI

19:46 Europe: Winner or loser in the race for AI?

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Mergers and Acquisitions in African Fintech



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May 4, 2021

On 1st of April, as I was publishing my Uniconization of African Fintech piece, Mastercard was busy announcing their $100 million investment into Airtel Money (Airtel Africa’s mobile money subsidiary) to acquire a minority position – half what TPG Capital did. Even though I had gotten wind of the transaction knowing that Mastercard was already in bed with Airtel Money – some part of me thought of it as an April fools joke….

On the 12th of April 2021, Mobile Telecom Network (MTN) announced the valuation of their mobile money business at $5 billion making it the 7th African fintech unicorn with plans to bring in minority shareholders before going public. Given that Visa is already in bed with MPESA (Vodacom and Safaricom’s mobile money business), it is a matter of time before Visa also invests.

The unicornization of African fintech is the first trend but the second, topic of today, are the mergers and acquisitions in the sector. Mergers and acquisitions are slowly taking shape in the African fintech sector but, unlike the uniconization, they are manifesting on two interrelated tracks that may or may not eventually converge. The first track is maturing fintechs are acquiring smaller and earlier stage ones to grow their market share and establish territorial presence as Andrew Takyi-Appiah, CEO of Zeepay, told me. On the 28th of April 2021, two headlines made the news; AZA bought Exchange4Free whiles Ajua acquired Wayawaya. Zeepay had earlier acquired Zambia’s Mangwee Mobile Money and MSF Africa had acquired Beyonic last year. In 2018, Emergent Technology acquired Interpay Africa in Ghana and back in 2016, Interswitch acquired Vanso – the infographic below gives you more details. The second interrelated and accelerating track that has the African banks at the center of it. Some of the big banks in Africa have realized that if they are not careful, African fintechs would take over what used to be the domain of banking.

This has led some of them to establish ways to gain visibility into the market so that they can make snap acquisitions and strategic investments to protect their interests. The first evidence of that came through on the 24th of March 2021 when First National Bank (FNB), South Africa’s most innovative bank acquired 100% of local fintech firm Selpal to gain access to their community and township based “mom and pop” businesses.

With FNB leading the charge other South African banks are following whiles the phenomenon is slowly crawling up to Eastern and West African banks. Standard Bank setup a corporate venturing arm and also backed Founders Factory to cultivate ventures for them to invest in. Nedbank has a VC team that has made eight investments so far. Amalgamated Banks of South Africa (ABSA) made their first investment in 2019 followed by the second one in 2020. Rand Merchant Bank (RMB) has their own accelerator, Alphacode that is incubating startups. Ecobank Group has their fintech challenge which annually selects startups that have strategic fit for integration. Equity Group which owns Equity Bank has also launched the Equity Investment Bank (EIB) to back early-stage funds that would back startups. A totally different approach but with the same ramifications.

Then we have those banks that seem to be late to the party or have still not come to terms with the changing landscape and continue to lobby regulators not to allow fintechs into their space. That came to a head on last month in Nigeria when the lenders kicked MTN Mobile Money (MoMo) off their shared platform because MTN MoMo halved it commission charged on the banking channels to 2.5%. The regulator had to intervene to restore MTN MoMo to the platform and reinstated the commission to 4.5% for the purchase of airtime via the banks. Whilst this may look trivial; it is really about the banks that are not on the fintech wagon realizing that fintechs are putting their business and margins at a significant risk. For example, in Ghana, MTN MoMo has about 15 million active accounts whilst all the 23 banks collectively have about 5 million bank accounts – that is a 3:1 ratio. In Nigeria, the Central Bank is yet to approve payment-service licenses to MTN Nigeria and Airtel Africa after two years of them putting in their application which would allow them to provide most banking functions except lending and taking foreign-currency deposits. Whiles that seems to be a showstopper, Nigeria’s recent open banking regulations have forced the banks to share their data with the fintechs. This levels the playing field to some degree but begs the question whether the banks would change their strategy and start looking to acquire the fintechs or whether the fintechs like Flutterwave, Interswitch, Fawry, Airtel Money, MTN MoMo or MPESA which are all worth more than a billion dollars might turn around and start acquiring the banks.  Whichever way it goes, M&A is going to characterize the African fintech space as the second major trend after unicornization for the foreseeable future.

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Vlog: Discovering the latest innovations at the World Intelligence Congress



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By Guo Meiping, Zeng Hongen

What are the latest innovations in the intelligent industry? How could they change our lives? Let’s find out the answers at the fifth World Intelligence Congress (WIC).

Held from May 20 to 23 in the northern city of Tianjin, the WIC consists of a series of conferences, exhibitions and competitions.

One of the highlights of WIC is the “Intelligent Technology Exhibition” in which over 200 enterprises, universities, and research institutes demonstrate their works of intelligent technology.

A special pavilion was set up at the exhibition, which demonstrates innovations from universities in Tianjin.

A neuro-controlled mechanical exoskeleton developed by the Tianjin University. /CGTN

Developed by the Tianjin University, an exoskeleton called “Shen Jia” attracted a crowd.

“This is a neuro-controlled mechanical exoskeleton,” Liu Yuan, a Tianjin University’s Neural Engineering Team member, told CGTN. “What distinguishes us from other exoskeleton systems is our electroencephalogram (EEG) cap.”

Captured by the EEG cap, patients’ willingness to walk drive the exoskeleton to move accordingly, Liu added.

The Integrated Procedures Trainer developed by the Civil Aviation University of China. /CGTN

At the exhibition, the audience can get the chance to be a “pilot” with a simulator developed by the Civil Aviation University of China.

The simulator, or an Integrated Procedures Trainer, is used for training in airplane maintenance and flight procedures, explained Zhang Wenlin, lecturer of Civil Aviation University of China. He added that the simulator has already been adopted by many airlines in China for relevant training.

Some of the demonstrations of intelligent technology at the WIC are closer to our lives.

Exercise equipment at the smart exercise yard can track users’ motion. /CGTN

A smart exercise yard was set up at the exhibition. Before exercise, users can scan a QR code at the entrance and filled in physical information such as height, weight, and medical history to register.

After the registration, users can scan their faces before using each exercise equipment, so the equipment can track their motion and show them information such as the number of their movements and how many calories they’ve burned.

A robotic barista demonstrated at the fifth World Intelligence Congress. /CGTN

If the audience needs a cup of coffee in the middle of their tour, a robotic barista was at their service. 

Click here to watch the re-broadcast of CGTN’s tour at the exhibition.

Tianjin is a city full of tech and science features.

The Tianjin port is an important shipping hub in north China. /CFP

The Tianjin port is an important shipping hub in north China and has continuously been a “smart port”. It has introduced a variety of technological innovations to bolster efficiency including the BeiDou Navigation Satellite System, self-driving electric vehicles and 5G.

Moreover, experts from research institutes and universities based in Tianjin have participated in the research and development, and manufacture of China’s Long March-5 rocket and the Chang’e-5 lunar probe.

(Cover image by Gao Hongmei)

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