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4 Trends That Will Shape Financial Services in a Post-COVID World

Date Posted: 28 July, 2022

The groundswell of digitalisation that forced whole industries and services online in 2020 during the early onset of the COVID-19 pandemic, only continued growing in 2021 despite the return to office-based work and vaccine rollouts across the globe.

Corporations, SMEs, and end users alike, having tasted the widespread benefits of e-commerce, digital payments, and other seismic changes, were simply not going back.

The migration of businesses online led to upstart fintechs mushrooming to deliver specific verticals that clients were demanding in the new normal, such as wealth management (robo-advisors), SME lending, and buy-now pay-later (BNPL) offerings.

Some legacy banks and financial institutions were quick to pivot, enabling Application Programming Interfaces (APIs) that connect their KYC and other key services with third-party apps and developers – building open banking ecosystems. According to a May 2022 report, Asia Pacific banks are set to hit as much as 18% of revenues through their BaaS partners.

As Asia Pacific fintechs and banking players alike enter the second half of 2022 and plan for 2023, here are four key trends that will shape a post-Covid finance world: BNPL, central bank digital currencies (CBDCs), environmental, social and governance (ESG) standards, and the rise of neobanks.

POS Financing and BNPL

Point of Sale (PoS) financing includes both BNPL and other financing options such as interest-bearing point of sale loans. In Finastra’s BaaS Outlook 2022 whitepaper, our survey of corporate and finance leaders led us to expect POS financing to accelerate by 104% by 2024.

According to the Q4 2021 BNPL Survey, the Asia Pacific BNPL payment industry is expected to grow 61.5% on an annual basis to reach US$133.7 billion in 2022. BNPL’s strong growth in the region has been largely supported by increased e-commerce penetration as well as the wider economic slowdown which makes POS financing a key value offering for online merchants.

The region is home to one of the world’s largest BNPL players in Australia’s Afterpay (acquired by Square for US$29 billion), as well as India’s Pine Labs (US$7 billion valuation), Japan’s Paidy (acquired by Paypal for US$2.7 billion), Singapore’s Atome (US$2 billion valuation), and Indonesia’s Akulaku (US$1 billion).

However, the luster has faded somewhat in recent years, as recent estimates expect BNPL to account for just 2% of e-commerce payments in Asia Pacific by 2025 (2021: 1%).

At the same time, BNPL firms are running on a loss, with Afterpay and Paidy averaging margins of -15% and smaller players suffering much more. An April 2022 report projects that the region’s BNPL players will face a combined loss of US$5.2 billion by 2025.

Central bank digital currencies (CBDCs)

With the accelerated digitalisation brought on by COVID-19 lockdowns, central banks in Asia Pacific have been exploring issuing digital tokens that are pegged to their own fiat money. These are called CBDCs, digital dollars that have the same value as cash or paper dollars.

There are two types of CBDCs: wholesale and retail. As defined by the Bank for International Settlements (BIS), wholesale CBDCs are intended for the settlement of interbank transfers and related wholesale transactions. They serve the same purpose as reserves held at the central bank but with additional functionality.

Meanwhile, retail CBDCs make central bank digital money available to the general public, just as cash is available to the general public as a direct claim on the central bank.

As of June 2022, 109 countries or currency unions have some form of CBDC initiative, according to the Atlantic Council Geoeconomics Center CBDC tracker. Emerging markets are leading the charge on CBDCs, looking to digital tokens to solve various local issues.

China became the world’s first major economy to pilot a digital currency (e-yuan or e-CNY) in the middle of the pandemic in April 2020, in a bid to push more Chinese to go cashless while building greater resilience in the local payments ecosystem currently dominated by tech giants-backed TenPay and AliPay.

Meanwhile, India plans to roll out its Digital Rupee gradually this year to support its massive import-export activities, as a way to streamline cross-border transactions by reducing costs and bypassing multiple layers of banks for international settlements.

Solving the complex cross-border payments ecosystem is a common issue for Asia Pacific nations exploring CBDCs. In March 2022, the BIS Innovation Hub together with the central banks of Australia, Malaysia, Singapore, and South Africa, developed an experimental multi-CBDC platform for international settlements.

The initiative, called Project Dunbar, resulted in two prototypes for a shared platform that could enable international settlements using digital currencies issued by multiple central banks.

ESG standards

Increased stakeholder pressure has led to an acceleration in corporate progress towards ESG-related goals. In October 2021, Bloomberg reported that Asia Pacific ESG-linked financing had reached US$229.2 billion in the year-to-date, more than a five-fold increase from its 2016 level.

ESG funding presents a huge opportunity for banks to respond with relevant financial instruments that can help fund ‘green’ and ‘social’ projects and promote improvements in a borrower’s ESG related parameters.

In 2017, China Development Bank (CDB) offered financing to the construction of Karot hydropower station in Pakistan, which is also the first large-scale hydropower project backed by the Belt and Road Initiative. In June 2022, the power plant began operating, generating 3.2 billion kWh of electricity and reducing 3.5 million tons of carbon emissions annually.

Banks can play a key role by setting up a panel of industry experts comprising ESG experts and auditors, who can guide borrowers to adopt the right KPIs and Sustainable Performance Targets (SPTs).

Building on this, banks can act as the custodians of data relating to green loans. This will promote greater trust through verified impactful green and ESG outcomes – especially with the recent onset of greenwashing concerns from Asia Pacific regulators.


A January 2022 report found that Asia Pacific was home to 68 neobanks – that number has definitely grown now. Between 2012 and 2021, the market has grown at a CAGR of 37%. India leads the region with 14 neobanks, with Hong Kong boasting 12. Conversely, China, which claims to have 220 million neobank customers, is only home to four neobanks.

Upstart fintechs are not upstarts anymore, as more Asia Pacific super apps are increasingly wading into the neobanking and digital banking space.


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