Financial Technology: North and East Asia

Introduction

FinTech is increasingly a global phenomenon. Over 64% of consumers globally have used a FinTech product (Lazarow, A. 2020). FinTech refers to the term financial technology and is characterized by providing solutions to customers, innovation, technological alternatives, and financial and economic development. In North and East Asia, countries like China, Japan, Taiwan, and South Korea are leading the way to FinTech growth while Mongolia is still behind. FinTech advancement in these countries is due to the consumers' tendency to switch and search for digital alternatives.

As stated in the article written by M. Joshi, President of Infosys, “Asian countries, especially China – home to 4 of the biggest FintTech Unicorns: Ant Financial, Lufax, JD Finance and Qufenqi – along with Japan and Korea are leading the world in FinTech innovation” (Joshi, 2023). North and East Asia has four of the strongest companies in FinTech currently, just behind the U.S. which is the first in the world of financial technology development (Joshi, 2023).

Financial technology or “FinTech” has been defined in various ways. Bettinger defined the concept in 1972, as “…an acronym which stands for financial technology, combining bank expertise with modern management science techniques and the computer” (p. 2). Nearly five decades later, the definition has relevance and importance. The widespread adoption of technology such as mobile connectivity and the internet, has paved the way for FinTech to transform the provision of financial services. Through the application of information technology (IT), the financial landscape has thrived in new business models, products, applications, and processes (Feyen et al., 2023).

The correlation between technology and finance has in fact been intertwined since the 19th century. The first wave of FinTech was prompted in 1866 by the first transatlantic telegraph cable where “finance gradually shifted from analogue to digital” (Hernàndez, 2019, p.2). This was followed by a second wave in the 1950s and 1960s with the introduction of the automated teller machine (ATM). Now, we are experiencing a third wave with the emergence of new players and financial channels such as mobile money accounts and electronic transactions (Hernàndez, 2019).

Since banking engages with high-value activities there has always been an enticement to use the latest technology. The constant innovation has promoted transparency, high speed, interconnectivity, security, and most importantly, the availability of more tailored financial services (Feyen, et al., 2023). As technologically fierce competition tackles the industry, data analytics, network externalities, and interwoven activities in the East-Asia region made them stand out.

According to United Nations Escap (2018) the FinTech investments in the Asia-Pacific region have exceeded North America for the first time at $11.2 billion in 2017 -more than doubled from 2016. These sources of FinTech come primarily from North-East Asia with fast-growing young markets such as China and mature economies like Japan, dominating the global market. By shedding light on the journey of FinTech adoption across the region, this research seeks to provide a comprehensive understanding of China, Japan, Taiwan, South Korea and Mongolia`s evolving financial landscape in the FinTech setting.