Horizons newsletter – Week 39 // 2017
Horizons is a bi-monthly Dasym Research initiative to show you how the Dasym themes have been in the news. We publish the Horizons on our website and as an email newsletter. If you wish to receive the email, please contact Investor Relations.
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If you can’t beat them…
Up until 2008, technological innovation in the financial services industry mainly took place within financial institutions which used technology to provide financial products and services. The crisis ended this: stricter regulation, critical consumer perception and tough market conditions forced financial incumbents to deal with the issues at hand, creating an opportunity for new participants to enter the field. Known as Fintechs, these companies address all forms of technological innovation in the financial sector. They improve the efficiency of financial processes, but are also enabling new financial products and business models, such as branchless banks, peer-to-peer lending and blockchain. Now, almost ten years on, both financial incumbents and Fintechs are increasingly open to joining forces. In August for instance, JP Morgan and OnDeck Capital expanded their collaboration in online lending. By partnering, Fintechs gain access to the incumbent’s customer base, data and industry knowledge, while financial institutions can more rapidly deploy new offerings. This demonstrates how financial institutes bring technological innovation back into their businesses, testifying for the resilience of incumbents when they face disruption.
Connect the unconnected
Today almost 4 billion people are offline, living in ‘Internet deserts’ or being too poor to access the Internet. There is little hope to bridge this gap soon, given that replicable rural solutions will probably not be deployed at a large scale nor at low cost. In addition, with the coming Fourth Industrial Revolution – described as a range of new technologies fusing the physical and the digital – data and connectivity will be necessary to run basic services such as e-governance, e-health, and e-commerce. As a result, this next phase of digitalization could potentially increase the digital divide. At the same time, new technologies are increasingly offering a way out for the unconnected. More apps are now tailored for slow connections, limited data storage and smartphone-only Internet, replacing traditional services in an accessible way. The use of voice and images in technology interaction further lowers the threshold to access the internet. However, to truly close the gap, joint effort is needed to build internet infrastructure, but also to lower costs and teach people how to use it.
Passages through Southeast Asia
China’s influence in Southeast Asia is increasing. Recently, state-owned enterprises signed two contracts with Thailand for a high-speed rail project. The line will run through the country and connect it with Laos as part of China’s Belt and Road Initiative (“BRI”). Furthermore, Myanmar is also drifting closer to China since its repressive internal policy has caused a rift with western countries. For China, the region is central to becoming a global player. With Thailand China is planning a canal that will bypass the U.S.-controlled Strait of Malacca, resulting in infrastructure throughout Myanmar which will grant China access to the Indian Ocean.
However other great powers are moving in as well. This month, Malaysian Prime Minister Razak visited the White House where he signed several deals with the U.S. Next month, India and Japan will unveil more details covering the Asia-Africa Growth Corridor project, which will showcase their ambitions for the region. Because of its markets, resources and strategic location, Southeast Asia is increasingly becoming a magnet for outside powers. Countries that can attract investments from all sides will profit from this growing interest.
