- Led Wayline
Emerging Tech Trends in Southeast Asia for 2022
Updated: Nov 1, 2022
Southeast Asia (SEA) is living up to expectations as a regional tech hotbed. From explosive e-commerce growths that achieved record-breaking gross merchandise value (GMV) rates – US$74 billion in 2020 that almost doubled to US$120 billion last year – to accelerated progress of digital finances, it’s clear that this region is the innovation hub for the world.
While various digitalisation efforts have taken place across the world, what the SEA region experienced over the last two years of massive disruption is remarkable as it saw the emergence of over 20 unicorns. In 2014, only three could lay claim to being a billion-dollar business and, fast forward to almost a decade later, that count-by-the-handful increased by almost seven-fold.
For most technology sector pundits, more unicorns are expected to appear in the coming months. These upstarts could be the next potential acquisition for the SEA tech giants or they could turn out to be the next industry disruptor.
Whatever the trend, one thing is certain – they will be using current or potentially new digital innovations and next-gen technologies to make their mark.
For Singapore’s Economic Development Board (EDB), there is a list of tech focuses to consider. From that, the critical ones include:
Climate-tech – all about managing climate change with digital solutions
Edutech – an economic sector that transformed overnight with next-gen technologies
Fintech – current trend that impacted banks and the financial sector on all levels
Entertainment – videogames/eSports and user-generated content are now global economy focuses
Cybersecurity – as the digital economy enables bad actors, it reinforces the need for data protection
Oddly, the list didn’t specifically include green-tech or sustainable production of food and resource acquisition – both major themes for the 17 United Nations Sustainable Development Goals (UN SDG).
From the listed five critical points, only fintech is the true disruptive trend as it is now the driving force for the global economy. To be more specific, it has impacted the way financial institutions must now operate in the era of digital disruption. It came a long way from starting out as mobile payments and digital wallets just over a decade ago, as this long-lasting trend had already forced changes to take place at all levels within banks and stock exchanges. It even influenced policy making at the global level.
Fintech – A Digital-First Innovation
How did fintech become a mainstay enabler?
Besides explosive consumer demand and governments gaining clearer understanding on how they can take their digital inclusion agenda forward, there are two factors that push the fast adoption of fintech.
First, the proliferation of smart devices and high-speed mobile internet connectivity in APAC is insanely staggering – a PWC study quoted the ‘We Are Social’ Global Digital Report 2018 on how the average mobile connectivity in SEA was 141% as of January 2018. This data-set, even if dated, is directly comparable to the GSM Association Mobile Economy Asia Pacific 2020 Report that shared how APAC’s overall connections penetration is expected to grow from 103% to 109% in 2019 to 2025. Similarly, smart device ownership will increase from 67% to 84% in that same period.
The mobile Internet and high-speed broadband usage trend is truly a beast of its own and, as per the infographics below, gives a taste of the limitless potential it has to offer.
Second, the booming e-commerce space ensures fintech will get as much room as it needs to accelerate its growth. Last year’s GMV records for SEA is both mind-boggling and alarming as it shows just how far fintech innovation can really go as more mobile wallet players and digital banks start showing up and, possibly, wrestle some control from traditional banks.
Malaysia’s The Edge Markets reported the following on July 2021: “In just over five years, China’s digital banks now have roughly a 5% share of the country’s RMB5 trillion (RM3.21 trillion) unsecured consumer loan market and more than 7% of online SME loans. South Korea’s KakaoBank, launched in 2017, attracted more than 10 million customers in its first year and now has a roughly 5% share of the country’s unsecured consumer loan market.”
Due to these massive growth expectations, fintech will experience similar gains as well. With the workforce shifting to work from home and daily activities now gone digital, everything engages digital transactions – be it food delivery or payments for e-commerce purchases and on-demand services.
Next-Gen Digital Disruptors
While fintech continues to forcefully change how businesses and banks operate, policymakers and those in governance for banks and financial institutions have re-looked at how they can quickly integrate.
This is applicable across various business verticals as large multinationals seek out what keeps startups perpetually thriving. Right now, the latest trend among startups is finding new ways to disrupt customer loyalty offerings and develop new user-generated content sharing platforms. After all, early trendsetters in the SEA region, like Shopback, caused a big shake-up for cashback programmes and forced entrenched players to step away.
One recent unicorn – Carsome – paved the way for car resellers who are looking to innovate as they move onto the digital platform and improve their capabilities. As is, more interest parties and investments are being poured into this space with other players like Singapore-based Carro and Indonesia’s Carmudi looking to secure new rounds of funding as well.
If something traditional like buying and re-selling used cars can rack up millions of dollars in investments, there is no doubt that any digital innovation from SEA and the wider APAC regions will have the latent potential to be disruptive.
While the SEA e-Conomy 2021 Report from Google, Bain and Temasek reinforced how e-commerce will likely power the digital economy for the SEA region, would going green or being focused on digital inclusion and sustainable innovations be the next big thing as well?
What’s Next for 2022?
The Asian Development Bank shared this point in its report: “Digital financial inclusion involves the deployment of the cost-saving digital means to reach currently financially excluded and underserved populations with a range of formal financial services suited to their needs that are responsibly delivered at a cost affordable to customers and sustainable for providers. (As is), the models of digital financial inclusion emerging in countries around the world introduce new market participants and allocate roles and risks (both new and well-known) differently from the traditional approaches to retail financial service delivery. Some risks are common to most or all approaches to digital financial inclusion.”
In short, cybersecurity and digital/tech innovations that focus on economic sustainability will have a critical role to play in this digital decade. That, of course, leads to the notion that the data economy is just as enticing and viable for innovation. From data scientists and engineers, to better user privacy management and improved best practices for on-premise and off-site digital warehousing, all these will be major considerations for businesses and the government.
This is one of the big focal points that is included in the KPMG Top 10 Tech Trends for 2022 report. Also included on that list are how artificial intelligence and quantum computing will be big hitters as well. There is some mention of the metaverse but, like the rest of the world, the concept is still purely speculative at worst and, at best, only properly defined as per how Facebook described it.
More insights on this virtual experience and how blockchain technologies would expand and sustain themselves will be going through various discourses in the coming months of 2022 as current trends, like the Gig Economy and Sharing Economy, make way for new disruptive forces, such as digital financing and customer engagement. This is what Google noted about the latter in its report: “Brands that want to thrive in this digital decade must meet the rising expectations of digital consumers to retain customers and grow brand loyalty.”
Emerging tech trends for 2022 – like fintech and sustainable innovations – will drive the global economy
Southeast Asia – now the breeding ground for tech unicorns – can be considered as a major global hub for next-gen emerging tech
From fintech and e-commerce to e-sports and even talent development – Southeast Asia, alongside the East Asian giants, will be powering the global economic ambitions of the Asia Pacific