On 15 October, Momentum Works hosted a briefing together with Cento Ventures on 2021 H1 Southeast Asia tech investment report. In addition to the 7 pathways to unicorn-hood, and the 4 key fintech trends in the region, we also discussed a range of relevant topics.

One thing we did not manage to cover in full, because of the time constraint, was the questions. We promised the 300+ friends in the audience that we would draft an article to address some of the key questions. You can also see our responses to Jakarta Post on unicorns in Indonesia here:

Q1: Why is the payment industry lagging while Financial service is growing that fast?

Dmitry:  Mostly a consequence of H1 cut off point; confirmed investment into the payments sector in Q3 is US$ 600M at least. 

So, not lagging, actually in the process of massive transformation driven by things we discussed: regulation +  local payment switches, collective mind of investors shifting from “wallets are the future” to parsing the “huh, why are Adyen / DLO / Fawry doing so well?” question.


Q2: Are personal finance management/ savings platforms (for example, Moneko or PlannerBee) registering on the regional radar?

Dmitry:  This depends on the definition of “registers”. While standalone personal finance management solutions – just like accounting systems for SME – have not been receiving much investment yet, when combined with / incorporated into wealth management (or, SME lending) models they do get a fair bit of attention (Stashaway, Pluang).

Mickey: My take keeping the context within personal finance: We see a lot of headwinds against pure-play personal finance companies.

  1. Although some are more ambitious and want to utilize the data for more advanced offerings, they still have to compete with a slew of 5-10 personal finance management “tools” in each country, while the user could conveniently download these tools from global players with well-developed apps.
  2. Personal accounting is a low-frequency use case; thus, stand-alone apps are being eroded by Investment, Earned-wage access, Bank’s app, and possibly larger BNPL who aim to be a “financial service super-app” that naturally adds basic personal accounting components to their product suite. (in short, not manage first > then pay or invest, but pay/invest first > then manage)

Jianggan: Any product that is against human nature will not go very far. Trading/betting is human nature, personal accounting is not unless: 1) the person is facing financial stress; 2) the person has some wealth that they worry about losing value or their peers earning much better return. In scenario 1 lending apps plus pen and paper are more useful; in the 2nd scenario the trading / wealth management tools already give you the accounting function, not to mention online/mobile banking where the top players are becoming pretty good. 


Q3: Where are some good reports/materials that investors can access to get a better appreciation of the Southeast Asian payments space?

Dmitry: Central banks’ websites are always full of exciting, up all night page turner material 🙂 (personal favorite is “Indonesia-Payment-Systems-Blueprint-2025” pdf). The Ken, a while back, has done an excellent series on UPI and its impact on the Indian ecosystem, very much predictive of where SEA is going – and the SEA team at The Ken is following up nicely.

Jianggan: We covered payment in our Blooming Ecommerce in Indonesia report – part 2. Stay tuned as we are making more systematic assessments on the payment sector – you can subscribe to the TheLowDown newsletter (on the right hand side of this article) for updates. 

But yes, I agree with Dmitry on Central Banks’ websites. In some cases you will need local language access to get more: for example, on Bank of Thailand’s website you get much more information and statistics about payment if you can read Thai. 


Q4: Any thoughts on how “BNPL” can be applicable to SME/MSME like what some fintech is offering to (cross-border) e-com sellers in CN

Jianggan: In general Chinese fintech investors/players do not believe in offering credit to SMEs because 1) it is much harder to build data models as data collection from SMEs is harder/takes more time; 2) SME lending is much more susceptible to economic downturns. 

Only platforms which control transactions of SMEs are in a good position to offer lending – such as Alibaba to Taobao/crossborder merchants and Meituan to F&B establishments taking delivery.  Their lending is often more aimed at increasing merchants’ sales/turnover (which benefit the platforms in general) rather than earning an interest income. Consumer lending for platforms is much more lucrative, if regulators permit. 

Credit terms, however, have existed for decades in offline B2B transactions, and many B2B online platform startups in Southeast Asia use that (i.e. offer better credit terms compared to offline alternatives) to grow volumes fast. This is risky. 

On the other hand, allowing SMEs to accept BNPL for their retail sales/services is an attractive proposition. Ant does that quite well – in Southeast Asia we see Grab and Sea both pushing hard in this area. 


Q5: Do you think the next unicorn from Indonesia will come from these SMEs enabler start-ups?

Dmitry: One or two of 1B+ companies will surely come from MSME enabler / supply space; investment theme has reached escape velocity (i.e. most growth investors seem to feel they need a stake in one or more of those)

Jianggan: As explained, SME enabler startups sit on an interesting intersection of financial services, retail and business automation. Many have been able to grow user numbers and top line volume quickly in the early and early growth stage – which will allow investors to give unicorn valuation soon. The question for these startups is how they can translate this growth into something sustainable and eventually profitable – many will fail in this process, some will make it. We do not know which ones yet. 


Q6: How long will it take for all the warungs to be replaced by modern retail? (Or, for a significant percentage to be replaced)

Dmitry: Deep question that requires more research – at a gut feel level, as far as non-metros are concerned, probably not within 5-6 years. In parts of Indonesia, the Philippines, Vietnam, rural MY and TH – possibly never.

Mickey: Have not come across a report that dares make such a prediction yet, as the premise of “modern trade will fully replace all general trade” is a monomer (I had the same question originally).

What we could say is that each retail format has its role to play.

In SE Asia: Modern trade players are focusing their expansion through smaller formats (convenient stores and mini grocery stores) as most Hypermarkets and larger formats have already expanded to where population density allows. This is certainly displacing the convenient store format in the highly populated area.

However, the various general trade stores (privately owned toko, warungs, sari)  still have their raison d’etre.

Modern trade could not justify the logistic structure and the sparse population in the more rural area. And most importantly, they could not play with the pricing variability to compensate for those 2 issues. (A general trade store and agents can sell any retail price that suits the far away Northern Sulawesi region as long as it covers their cost and people are willing to pay, but Alfamart can’t).

And yes, the better digitised and more business savvy new generation of general trade operators will displace the old ones.

In short: Modern retail will likely displace the general trade in the highly populated areas, but the general trade will continue to exist to serve the market where modern trade could not comply with the logistic, demand, and pricing structure. Meanwhile, the general trade is also digitising itself as the younger generation of operators are taking charge.

Jianggan: In China, where ecommerce and social commerce are highly developed, FMCG-focused mom and pop shops have been resilient. While a few research put the total number of such retail points to be about 6 million, many believe if you factor in the rural retail shops, the number can go up to 20 million. 

They are much more resilient compared to supermarkets/chains because the owners absorb many costs (including labor, rent inventory etc.) and risks. It has been difficult for large ecommerce platforms including Alibaba and JD to supplant them, or take control over them (most of such initiatives by big platforms did not succeed). Even in densely populated urban areas, mom and pop stores persist, offering convenience to the neighborhood. 

I think they will only be replaced when owners (maybe younger generations) all have better, more viable alternatives to make a living – that is a far away prospect. 

Thanks for reading The Low Down (TLD), the blog by the team at Momentum Works. Got a different perspective or have a burning opinion to share? Let us know at [email protected].


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Jianggan Li is the Founder & CEO of Momentum Works. Prior to founding Momentum Works, he co-founded Easy Taxi in Asia, and served as Managing Director of Foodpanda. The two years running Rocket Internet companies has given him a lifetime experience on supersonic implementation, and good camaraderie with entrepreneurs across the developing world. He holds a MBA from INSEAD (GMAT 770) and a degree in Computer Engineering from Nanyang Technological University. Unfortunately he never wrote a single line of code professionally - but in his first job he was in media, travelling extensively across Asia & Europe, speaking with Ministers & (occasionally) Prime Ministers. Apart from English and his native Mandarin, he is also fluent in French and conversational in Cantonese & Spanish. He tried to learn Latin (for three years) and Sanskrit (for six months) as well. In his (scarce) free time, he reads, travels, hikes and dives. Pyongyang, Tehran & Chisinau are among the interesting cities he has been to.