Tech-talk: Banking on new-economy firms to win in ASEAN
The end of quantitative easing (QE) in major global economies has put an end to cheap money, impacting firms of all stripes – including, for the purposes of this article, tech firms looking to grow in ASEAN.
While the economic potential of the 10-nation bloc constitutes a bright spot in an otherwise tricky global landscape, it requires proactivity to benefit from the emerging opportunities. After all, the further evolution of the new-economy sector, made up of businesses on the cutting edge of technology and research, needs more than new ideas. It demands in-depth insights into how emerging ASEAN opportunities can be leveraged and expanded.
And that is why we believe tech firms will boost their chances of winning in ASEAN by partnering with banks that have deep market knowledge and an extensive local business network and can provide customised innovative solutions.
A diverse marketplace of around 664m people1, ASEAN offers bright opportunities for the tech firms that effectively respond to its array of customers and their needs. And the ability to cater to these changing demands and habits of the relatively young, emerging-affluent and tech-savvy consumers lies in the use of data analytics that generate timely insights on user needs, preferences and behaviour.
In addition, firms that understand local nuances, cultures and challenges – the need to translate offerings into local languages, or how logistics and distribution vary by urbanisation rates, from 100 per cent in Singapore to less than 40 per cent in Cambodia, Vietnam, Laos and Myanmar2 – will do particularly well.
Mind the challenges… but opportunities abound
A dynamic economic engine, ASEAN’s cumulative GDP is projected to reach USD5.2trn in 2027 from USD3.1trn in 2020.3
In addition, technology has enabled new retail categories like e-sports and mobile e-commerce, and – with the rise of platforms – the ability to sell easily across borders, a particular boon to small businesses.
However, banking penetration remains low: In the six largest ASEAN economies4 it is just 50 per cent, with a further 18 per cent of people unbanked.5 This makes the provision of e-wallets essential for tech firms looking to sell their services.
Another challenge is the limited talent pool. According to an industry survey, nine in 10 companies in ASEAN experience challenges in recruiting, nurturing and retaining tech talent.6
Differing regulatory regimes among ASEAN countries pose another obstacle, as does the increasing need to contend with net-zero.
Innovative solutions for across ASEAN
At the heart of tackling these big issues and expanding successfully in ASEAN is finding the right financial partner – one that offers more than just financial solutions, but also shares tech firms’ innovative spirit.
Many of these tech firms’ financing issues are new and require customised banking solutions that fit their operating model. Our API solutions have enabled tech clients such as e-payments companies across the region to launch new services.7 To keep ourselves ahead of change and transformation, we are investing heavily in innovation, co-creating with our clients, as well as building ventures that explore new business models via SC Ventures.
Another advantage is our extensive banking network across the region, offering tech firms crucial cross-border reach and seamless transaction-processing capabilities.
Our strong presence in ASEAN markets and beyond enables our clients to benefit from regional cash, FX and working capital solutions that incorporate local nuances and requirements, as well as treasury practices that we have implemented for multinational corporations. Such expertise can in turn help tech firms to shortcut the learning process.
Lastly, as environmental, social and governance (ESG) issues come to the fore, we are also taking a stand and setting long-term ambitions to unlock and direct capital for sustainable development where it is needed most.
In their pursuit of sustainability goals, tech firms should assess how their prospective partners can help them fund their transition to net-zero. After all, tech firms with their large ecosystem can play a key role in boosting sustainability. This includes sourcing renewable energy and improving energy efficiency (via green buildings and clean transportation), as well as adopting a circular-economy approach and using green financial solutions.
And our unique offerings include a single, Singapore-based touchpoint that coordinates for the region, providing access to our network of clients, partners, investors and government agencies across ASEAN and beyond.
For example, we will be bringing our clients to Vietnam and connecting them with key local partners and government agencies to help them kickstart their setting up of data centres there. In addition to our in-depth understanding of the data centre’s business model and a wide network within the local industry, our sustainable finance solutions can readily support these ventures to align with the increasing focus on the sector’s green transition.
Banking on firms with high growth potential
Any relationship, though, is a two-way street. When seeking that perfect banking partner, tech firms should also know what banks value in potential clients.
At Standard Chartered, we focus on five core areas: a viable business model with a strong pathway to profitability, the quality and track record of the management team, financial health (including the cash-burn rate and the quality of investors), social media traction, and the health of the industry in which the tech firm operates. These, we believe, will underpin a long-lasting relationship.
In summary, the end of cheap money requires that tech firms looking to grow in ASEAN re-evaluate their financing needs. Banking with the right partner can help such firms capture the opportunities – in ASEAN and beyond. And there’s no better time than now for tech firms focused on ASEAN to embark on the right partnership for exponential growth.
The writer is Head, Client Coverage, Singapore, Corporate, Commercial & Institutional Banking, Standard Chartered.
Source: The Business Times © Singapore Press Holdings Limited. Permission required for reproduction.
1 https://www.aseanstats.org/publication/asean-statistical-highlights-2022/
2 https://www.aseanstats.org/publication/asean-statistical-highlights-2022/
3 https://www.imf.org/en/Publications/WEO/weo-database/2022/October/weo-report
7 Standard Chartered and Allinpay enable real-time cross-border payments via QR code https://av.sc.com/sg/content/docs/sg-sc-and-allinpay-enable-real-time-cross-border-payments-via-qr-code.pdf