Request For Startups — Part 1: Consumer Fintech
As we continue to meet inspiring founders, we at Lightspeed Southeast Asia often find ourselves discussing potential ideas that would be game-changers for the region.
This is Part 1 of a longer series and we’ve chosen Consumer Fintech to kick things off and are outlining exciting sub themes below.
Theme: Blockchain enabling cross-border payments
Why this is interesting: The existing SWIFT network isn’t very swift — it takes ~3 days for a remittance to go from the origin bank → intermediary bank → receiving bank PLUS there are all these middlemen fees along the way. In contrast, a USDC wallet-to-wallet transaction on a Layer 2 or high-throughput Layer 1 blockchain takes mere seconds and transaction fees are near-zero (ranging from $0.01 to $0.80). We’ve now hit a point where there’s enough regulatory clarity too — and as such we’re beginning to see institutional adoption of solutions that are far superior to the incumbent approach.
Potential ideas: The space WILL get competitive (e.g., see Stripe’s recent announcement with stablecoins). However, while ‘vanilla’ processing may eventually be commoditized, there is still value in products that build on top of these processing capabilities.
Theme: Transitioning from cash
Why this is interesting: In 2010, cash usage as a percentage of POS payment value in Indonesia was 95%. Today, that figure has fallen to 45% — still higher than the global average of 16%, but nonetheless a radical change. This is not just an Indonesian phenomenon — it’s happening all throughout the region with the rapid adoption of cards, e-wallets and standardized QR rails.
Potential ideas: There are multiple plays on this theme, but the one that we like most is credit-based. We’ve seen time and again that credit adoption naturally follows payment form factors (e.g., India with UPI, China with QR). Coupled with traditionally low rates of credit card adoption, we have a once-in-a-lifetime opportunity with to ride on the wave of digital credit on new payment forms.
Theme: Second generation wealth
Why this is interesting: Over the last generation, SEA has gotten richer. Societal issues of inequality aside, what this means is that (a) more families now have significant wealth and (b) this wealth has to be handed over in the coming years. However, wealth management practices haven’t kept pace, with obscene fees embedded in everything (up to 4% sales fees for mutual funds in Malaysia and Indonesia!).
Potential ideas: New ways to invest, insure and protect. One common issue is that wealth today is different from wealth yesterday — it’s now increasingly multi-asset, multi-country and multi-stakeholder. Therefore, solutions that could be interesting are those that DON’T try to aggregate all of their client’s wealth under their umbrella, but instead facilitate/manage different providers and disintermediate the private banking industry OR target HENRYs (High Earners Not Rich Yet) which have traditionally been underserved.
If you are building in any of these areas, get in touch with us at sea@lsip.com and follow us, for Part 2 of this series!
Signing off — Pachara Pinn Lawjindakul, Kevin Aluwi and Dat Han
