BNPL turmoil in Australia: a cautionary tale or a one-off?

Read from your browser

The Top Up 💵

Welcome to The Top Up! Delivered every Wednesday via email and through the Tech in Asia website, this free newsletter breaks down the biggest stories and trends in fintech. If you’re not a subscriber, get access by registering here

Hello there

Hope you’re doing well as another wave of Covid-19 spreads across the world.

While I was doing some research on the buy now, pay later segment in India late last year, I found that people here were even ordering food online and buying market shares using BNPL products.

The data was astonishing: In the next four years, BNPL is expected to be a US$50 billion market in India compared to only US$3.5 billion now.

That’s why our fintech Big Story this week caught my attention. My colleague Melissa talks about how the impossible-to-ignore BNPL trend, which hit a record high in Australia in early 2021, is now seeing signs of waning in the country. The Land Down Under is one of the most mature BNPL markets in the world, with several listed players such as Afterpay, Zip, Splitit, Openpay, and Fatfish Group.

So is this the end of pure BNPL? Much like in India, BNPL is in its infancy stage in Southeast Asia, and it may go the way of Australia. But can BNPL players in the region avoid this downward trend? To find answers to these questions and more, read on.

-- Samreen

THE BIG STORY


BNPL sours in Australia, but will SEA players buck the trend?

Image credit: Timmy Loen

Australian BNPL stocks have gone into a tailspin since February 2021 as the model’s defensibility, rising competition, and regulatory risks are called into question.

THE HOT TAKE

Singapore fintech firm iFast finally buys a bank


Here’s what happened:

  • The Singapore Exchange-listed fintech firm intends to acquire 85% of BFC Bank, a full licensed UK bank.
  • The acquisition is driven by a belief that banks operate at the “foundation layer” of the financial industry, and having direct access to this will allow iFast to innovate at a faster pace.
  • The S$73 million deal values loss-making BFC at an above-average multiple.

Here’s what it means:

The planned acquisition of an 85% stake in BFC may have come a little late for Christmas, but is certainly a present that iFast has long coveted.

Having applied for - and failing to receive - a digital banking license in Hong Kong and Singapore, iFast’s prospects in Malaysia are uncertain. The company is one of at least 29 applicants chasing five licenses there.

Why is iFast so keen on having a digital bank?

The company, which started life as an online distributor of unit trusts, now owns businesses spanning the B2B, B2C, and B2B2C segments in financial services.



Lim Chung Chun, iFast’s founder and CEO, thinks that the fintech sector will become more globalized over time. As such, a digital bank would improve the company’s ability to build a cross-border wealth management business.

With the acquisition of BFC, Lim is putting his money where his mouth is.

However, the deal values BFC at a price to-book multiple of 1.6x. This is higher than the average for UK banks, which is around 0.7x. Moreover, BFC is not profitable - it lost S$4 million in the first nine months of 2021.

The market’s initial response was skeptical, with iFast’s shares falling by 4% after the deal was announced and the trading halt was lifted on January 7.

Perhaps investors were unsure of how a UK-licensed bank fits with iFast’s current business, which is solely Asia-focused. Unlike other sectors, banking remains a country-specific industry, with regulators jealously protecting their turf. For example, while BFC is licensed by the UK authorities, the bank cannot simply offer its services to customers in Malaysia.

IFast may be hoping that this acquisition will give it experience owning and operating a bank, which will boost the company’s credibility with regulators in other markets it hopes to enter.

Still, one wonders why it didn’t follow other regional tech players with digital bank aspirations like Sea Group and Grab, which both have acquired a bank in Indonesia instead. IFast may be more comfortable operating a bank in a developed market like the UK, despite its geographic distance from Singapore.

While many are excited by the rise of decentralized finance (DeFi), the scramble to build digital banking businesses shows that tech players still believe in the potential of regulated banks, which act as a trusted centralized provider of financial services.

– Simon

NEWS YOU SHOULD KNOW

Also check out Tech in Asia’s coverage of the fintech scene here.

1️⃣ Tiger Global co-leads $25m round of 🇮🇳 B2B fintech startup

Rupifi saw a 50% month-on-month growth in disbursals in the last 12 months while covering more than 50,000 SMEs.

2️⃣ BharatPe co-founder in legal tangle after alleged 'abusive call'

Ashneer Grover allegedly verbally abused a Kotak bank employee over the phone for failing to deliver Nykaa shares to him and his wife during the company's IPO.

3️⃣ Microsoft CEO joins Groww as investor and advisor

The fintech unicorn raised US$251 million at a US$3 billion valuation in October.

4️⃣ Pine Labs to raise US$500 million in US listing

The listing could give the Temasek-backed company a valuation of about US$5.5 billion to US$7 billion, according to a Bloomberg report.

That’s it for this edition - we hope you liked it! Do also check out previous issues of the newsletter here.

Not your cup of tea? You can unsubscribe from this newsletter by going to your “edit profile” page and choosing that option in our preference center.

In the meantime, if you have any feedback or ideas, feel free to get in touch with Terence, our editor-in-chief, at terence@techinasia.com.

See you next week!

P.S. Don't miss out on the biggest tech news and analysis. Add newsletter@techinasia.com to your address book, contacts, or safe sender list. Or simply move us into your inbox.

Too many emails?
Switch to a different frequency or get new content through our preference center, or unsubscribe.

You can also break our hearts and remove yourself from all Tech in Asia emails over here.

Copyright © 2022 Tech in Asia, All rights reserved.
63 Robinson Road, Singapore 068894

Older messages

Singapore’s 20 largest exits

Thursday, January 20, 2022

More: Apple offers support for alternative payments on the App Store in South Korea and Bukalapak gets into the grocery game Read from your browser Daily Newsletter Hello there Have you seen the film

Live commerce in India, and retail’s next frontier

Thursday, January 20, 2022

The Checkout is Tech in Asia's free newsletter that breaks down the biggest stories and trends in ecommerce. Read from your browser The Checkout 🛒 Welcome to The Checkout! Delivered every Thursday

C-suite shuffle on the cards at MDEC

Thursday, January 20, 2022

More: A Singapore wellness startup partners with Microsoft and several startups close lucrative funding rounds Read from your browser Daily Newsletter Hello there What would you think of someone

Who knew selling used cars could be so lucrative?

Thursday, January 20, 2022

Dunzo, Eigencom, Pentera, and more startups also raised funding this week. Read from your browser FOMO Saturday Hello there , Over the holidays, I watched the movie adaptation of Roald Dahl's

The crew calling all the shots at Sea

Thursday, January 20, 2022

Check out our top articles for the week Read from your browser Top Stories of The Week Hello there , Sea Group's story is about taking big chances. It began with three young people - Forrest Li,

You Might Also Like

From Request to Response: How APIs Work – Beginners Guide

Thursday, March 28, 2024

In the vast expanse of the digital ecosystem, APIs (Application Programming Interfaces) act as critical conduits, facilitating seamless conversations between different software platforms. From clicking

Elastic 8.13 is here: Amazon Bedrock in the AI Assistant for Observability

Thursday, March 28, 2024

Learn about Amazon Bedrock support within the Elastic AI Assistant for Observability ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ elastic | Search. Observe. Protect

A Creative Market Reset 🎨

Thursday, March 28, 2024

Adobe needed some real competition. Now it has some. Here's a version for your browser. Hunting for the end of the long tail • March 27, 2024 A Creative Market Reset Canva's purchase of

Fisker lost millions … then it got them back

Wednesday, March 27, 2024

More Fisker woes View this email online in your browser By Christine Hall Wednesday, March 27, 2024 Welcome back to TechCrunch PM! This afternoon, learn about some new Google features, a startup that

▶️ How to Get Better YouTube Video Recommendations — What to Know About Alexa Skills

Wednesday, March 27, 2024

Also: The Best Samsung Phones of 2024, and More! How-To Geek Logo March 27, 2024 📩 Get expert reviews, the hottest deals, how-to's, breaking news, and more delivered directly to your inbox by

JSK Daily for Mar 27, 2024

Wednesday, March 27, 2024

JSK Daily for Mar 27, 2024 View this email in your browser A community curated daily e-mail of JavaScript news Bad Abstractions Could Be Ruining Your Code The code is easy to read and it runs fine -

Ranked | The World's Biggest Oil Producers in 2023 🛢️

Wednesday, March 27, 2024

The word's three biggest oil producers accounted for 40% of production in 2023. View this graphic to learn more. View Online | Subscribe Presented by FEATURED STORY The World's Biggest Oil

Daily Coding Problem: Problem #1394 [Easy]

Wednesday, March 27, 2024

Daily Coding Problem Good morning! Here's your coding interview problem for today. This problem was asked by Google. Given the head of a singly linked list, reverse it in-place. Upgrade to premium

Free Event: Watch 10 entrepreneurs launch their AI ideas

Wednesday, March 27, 2024

They built this in 2 months 👀 ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌

Digging into Marissa Mayer’s newest app

Wednesday, March 27, 2024

Plus a snake robot on Saturn's moon View this email online in your browser By Alex Wilhelm Wednesday, March 27, 2024 Welcome to TechCrunch AM! Today we have notes on Marissa Mayer's new app,