Posts

Thailand’s startup media outlet Techsauce published two detailed reports this month; Investor Guide Q1 2017: Thailand Tech Startup Report and its annual Southeast Asia’s Top 75 Fintech Startups Report. What were the key takeaways to know about Thailand’s startup ecosystem and Southeast Asia’s tech investment landscape? We take a look at both reports:

How did Thailand startups do in terms of funding?

An introduction to Thailand

Total funding figure in Thailand is getting bigger – no less than $85.2 million as seen in the chart below. The exact number can’t be pinpointed as there were several undisclosed Series B investments.

Notable funding mentions: 

  • E-book platform Ookbee raised $19 million from Chinese giant Tencent to create a digital content ecosystem in Thailand
  • Fintech startup Omise raised $17.5 million led by Japanese firm SBI Investment
  • Ecommerce marketplace Orami (now Moxy) raised $15 million from Facebook’s Eduardo Saverin B Capital
  • 3 food tech deals were made in 2016. At the beginning of 2017, B2B food supplier platform Freshket has raised an undisclosed six digit funding round
  • Corporate Venture Capital was a trend in 2016 that saw numerous corporations shift focus to technology and innovation as both direct investors and limited partners. This trend is expected to continue well into 2017 with the emergence of property tech in Thailand, pioneered by real estate giant Sansiri

In the graph below, you can see that the number of funded startups has shot from 3 to 75 in only four years. The number of active angel investors and the number of VCs have also grown in tandem.

Data from the report also shows that ecommerce still remains the top category for investors and increased steadily on a year-to-year basis. The second category is logistics with funding raised by aCommerce, Giztix and more.

 

Only two months into 2017, and already eight startups have already raised funding this year.

The diversity of Thai startups attracting investors show that there is more room for verticals such as education tech (edtech) and travel tech.

The report also predicts that by Q2 2017, there should be more funding given to a variety of startups in different sectors and investment opportunities in Thailand’s ecommerce landscape.

Southeast Asia’s top fintech trends

  • While core technologies such as blockchain and AI have gotten a lot of publicity, startups that can realistically develop it or utilize it are still limited but extremely attractive to investors
  • Each country in this report is making moves to launch regulatory fintech sandboxes to test out financial technology framework – Indonesia, Malaysia, Myanmar, the Philippines, Thailand, Singapore and Vietnam.
  • Many fintech firms in the region have mandates to work with banks and regulators, which means expanding beyond their domestic market may be a challenge
  • The entry of Alibaba’s financial arm, Ant Financial, into the region has caused startups that offer similar services to quickly adapt or risk getting squeezed out

Fintech players by country

The image above shows that Singapore is well ahead of other countries in terms of number of fintech companies with 31 players, followed by Thailand with 14 players. More doesn’t necessarily mean better, it will be time until one emerges.

With each country taking initiative to become less cash dependent, for example, Thailand government’s PromptPay initiative, this will be a continued trend into Q2 of 2017.

Insurance technology is still a minority but with Thailand’s Asia Insurance introducing online insurance packages and companies such as AXA and FWD offering online insurance in Singapore, the space is growing.

Financial technology in Southeast Asia is still growing and must in a region where only 27% of the population has a bank account. That leaves around 438 million people unbanked and endless opportunities for fintech firms to bridge the gap that traditional financial institutions are struggling to fill.

2017 is already shaping up to be another year of startup growth in Thailand but investors will be more strategic with their money. As fintech matures, it can only nurture the growth of online transactions.

The original reports from Techsauce can be found here and here.

Here’s what you need to know.

1. PromptPay is becoming more popular in Thailand

Transactions via PromptPay stood at around 15,000 a day on average last week, Bank of Thailand governor Veerathai Santiprabhob said at yesterday’s Post Today forum. “From what we have monitored, the PromptPay problems were caused by human error, not the system.”

“Even though the volume transactions keeps increasing, it only accounts for a very small portion of traffic the system can handle,” he said. Given that PromptPay’s backdoor system is scalable, the system can be upgraded to cope with a higher number of transactions in the future.”

Read the rest of the story here.

 

2. Gartner: Don’t expect uplift in delivery drones for years

The firm is expecting delivery drones to make up less than one per cent of the commercial drone market by 2020, asserting that it does not expect them to be “a major factor for several years”.

The firm expects that delivery drones will begin finding a niche in business to business applications first, particularly for internal services within one company where logistics will not be such a big factor.

Read the rest of the story here.

 

3.  Recommended Reading: Hermès Sales Gain Adds Evidence of Luxury Recovery in China

Chinese shoppers are shopping again.

Hermes International SCA added to evidence of a luxury rebound as shoppers in Asia buy more silk scarves and Birkin handbags.

At Hermes, revenue growth in Asia-Pacific, excluding Japan, slowed to 4% from 14.2% the previous quarter. The slowdown is due to lower inventories in leather goods after the company ramped up output and sales with new production sites earlier last year.

Read the rest of the story here.

Before you get started on your Tuesday, here is what you need to know.

1. Grab is now hiring government insiders to grow its business

In a move that mirrors ex-Obama advisor David Plouffe’s position at Uber, Grab’s latest hire is Badrodin Haiti, the former chief of Indonesia’s national police. Haiti will be taking on the role of President Commissioner, managing corporate governance.

This is interesting because: The Indonesian government laid out regulations for ride-hailing services last year, which place restrictions on the types of cars in service and a ban on so-called independent drivers. Grab is currently looking to expand further into the country, and would most likely benefit with an insider on board.

Read the rest of the story here.

 

2. Recommended Reading: Online resale startups enter an international growth race

Although VCs and fashion startups tend not to see eye-to-eye, with fashion founders often having to defend their company against male investors who don’t shop online.

However, investors are seeing an opportunity in the online resale marketplace. According to data from fashion investment community FashInvest, investors funneled more than $175 million into the online reselling industry in 2016. The question of when the inevitable bubble will burst has been raised, but it hasn’t happened yet.

For investors, the marketplace makes sense: it’s steadily aligned consumer behavior, as shoppers aren’t going to simply stop buying Birkin bags or vintage Chanel.

Read the rest of the story here.

 

3. Thailand’s PromptPay launches C2C segment

The launch of C2C PromptPay service is expected to increase the traffic of electronic money transfers, especially through mobile banking channels.

The government has also set the date to roll out the business-to-business (B2B) stage on March 1. The pre-registration for corporate clients was launched at commercial banks last Friday.

There are 20 million accounts registered for PromptPay services, with commercial banks expected to see 30 million accounts registered, with the addition of B2B clients.

Read the rest of the story here.

Here’s your weekend round-up of newsworthy ecommerce headlines. Read on below.

1. Amazon is planning to open 100 pop-up stores in US shopping malls

The pop-up stores reflect the company’s growing drive to reach consumers directly through a variety of access points including retail storefronts. Read the rest of the story here.

 

2. Shop and Kaymu tying up with banks and post offices for online payments

Rocket Internet’s incubated online marketplaces shop.com.mm and kaymu.mm are in talks with banks to set up new payment systems as more users are signing up online. Read the rest of the story here

 

3. Southeast Asia’s shopping site iPrice has added a ‘price comparison’ function

The feature works in two ways. If you look at a product, iPrice will pull up a list of related variants to help you to easily find the exact one of your choice. Secondly, it pulls in additional information like delivery time, delivery cost and payment options into a single view. Read the rest of the story here.

 

4.  Alphabet teams up with Chitpole to deliver burritos in Virginia Tech

Google parent Alphabet Inc. plans this month to use drones to deliver burritos to a small number of staff and students at Virginia Tech, a limited test of the tech giant’s ambitious plans to quicken deliveries with unmanned aircraft. Read the rest of the story here.

 

5.  Thailand’s aim for a ‘cashless society’ hits a slowdown amidst concerns over security

Some people point out that cybercriminals are very sophisticated and they doubt that banks have enough resources to fully shield customers from these risks. Read the rest of the story here.

 

The case of a Kasikornbank customer who lost almost 1 million baht to cybercriminals and the hacking of Government Savings Bank (GSB) ATMs, have fueled fears over online banking for Thais, reports Bangkok Post.

According to surveys by the Bangkok Post, these security concerns are causing consumers to delay their signup for PromptPay.

Some people point out that cybercriminals are very sophisticated and they doubt that banks have enough resources to fully shield customers from these risks.

Even though PromptPay registration requires only an ID card and a phone number, consumers worry the data can be used to obtain confidential information if it falls in the wrong hands.

According to a Mr. Thanaprasert, one of the people who were interviewed, he is delaying the signup of PromptPay due to lack of sufficient information.

‘I’ve only heard of the benefits of the service but do not know anything about the security system prepared for it and how commercial banks or government will take responsibility if my money is stolen,’ he says.

There have been warnings circulated via LINE chats that cyber thieves can access bank account information by having only an ID card or mobile number linked to a bank account.

Apart from fears over cyberattacks, the lack of awareness about PromptPay has also limited the number of those signing up for the service. Mr. Suchit Somprasert, a taxi driver said he has never received any welfare nor subsidies from the government, but he will sign up for the service if he is entitled to such assistance.

Other people have said their lack of awareness about the concept has scared them from signing up.

Predee Daochai, chairman of the Thai Bankers’ Association (TBA), said the association plans to launch soon a public relation campaign to educate and inform the public about PromptPay.

A version of this appeared in the Bangkok Post on September 12. Read the full version here

The formation of  The Fintech Association of Thailand was announced today at the ‘Positioning Thailand’s Fintech Ecosystem’ conference held at C-asean. The association will see government figures, banks, regulation officers and the private sector join forces to drive Thailand’s fintech industry to its full potential.

The event was a roundtable discussion with key figures in the financial, media and regulatory sector, where a number of  important issues and topics regarding the country’s Fintech landscape were discussed.

C-asean launched the event in collaboration with the esteemed panel of speakers:

  • Wisudhi Srisuphan, Thailand’s Deputy Minister of Finance
  • Dr. Veerathai Santiprabhob, Governor of Bank of Thailand
  • Korn Chatikavanij, Thailand’s Former Minister of Finance
  • Tipsuda Thavaramara of the SEC Thailand Deputy Secretary-General
  • Teeranun Srihong Senior Executive Vice President of Kasikorn Bank

Thailand’s weak fintech infrastructure

According to Korn Chatikavanij, Thailand has a good market size with innovative ideas to drive the fintech industry forward. However, what the country currently lacks is the integration of sectors, from private to public, and also between regulators. Talks regarding the government’s e-payment initiative, PromptPay, has brought into light the country’s readiness for a cashless society and trust issues.

Thailand lacks one crucial component; the ability to address and identify problems with infrastructure.

However, it is time to acknowledge that industries need to be disrupted, and traditional banking services must adapt with changing trends.

ecommerceIQ Thailand FinTech Ecosystem

Source: C-asean Facebook Page

One of these trends is the request for traditional banks to close down rather than expand as amount of online services grow. Although most of these changes are happening in Bangkok, the government’s PromptPay rollout strives to shift the whole country to digitized payments.

Ideas such as blockchains and ‘smart contracts’ that have been adapted in other countries are thrown around simply as buzzwords in Thailand instead of viable solutions.

In Singapore, the government and private sector support the fintech initiative by allocating funds to all startups and sectors that develop fintech, from hardware development to programming. This is how successful fintech companies accelerate quickly. These kinds of development need to happen in Thailand.

The main consensus from panelists,

Fintech cannot be treated as a buzzword, companies must be accountable for their mistakes and prioritize the customers.

In order to pave way for financial innovation, there must be competition in the marketplace, according to Tipsuda Thavaramara from the SEC, and this means properly defining regulations that control traditional systems.

ecommerceIQ Thailand FinTech Ecosystem

Global players pose as the real threat to digital development

Thailand should not be concerned about competing with other finance players in the country, such as banks or firms, nor should it be concerned about competing with other ASEAN countries’ fintech development. It is big players such as Alibaba that we should be concerned about, says Korn. Global companies have the bandwidth to disrupt domestic development.

Without strong domestic development, the country could potentially lose out to popular payments in China and the West such as Alipay and PayPal.

“Cannibalization of the industry is ok as long as we participate in the cannibalization” – Teeranun Srihong, Senior Executive VP of Kasikorn Bank.

How to regulate fintech

Members of the panel proposed to set up a ‘sandbox’ as a space to outline regulations and facilitate fintech startups to grow. The sandbox is to be treated as a lab space.

Regulators in Thailand are traditionally conservative and hardly deviate from the fine print. However, the Bank of Thailand is working wth the government to relax certain financial regulations.

Regulation should be principle based, rather than rule based. A good regulator must also be an innovation facilitator. Rules cannot be rigid when it comes to technology.

Aside from reviewing regulations, the government is also working to push out e-KYC (electronic-know your customer), which is supposed to validate and store user data. This will be very useful following the launch of PromptPay. In Q4 of this year, The Bank of Thailand will also be pushing for the launch of QR codes to support the e-payment system.

The formation of the Fintech Association will be beneficial in driving progress and conversation forward as it will provide a viable link between different sectors needed to push the country’s fintech advancement forwards. However, a lot of work is left to be done until Thailand can claim to be a fully functional digital society.

Written By: Anutra Chatikavanij