Since the pandemic, Asia was the only continent to experience a fall in fintech funding in the second quarter. Despite this, U.S.-listed OneConnect Financial Technology, a SaaS (software as service) fintech firm controlled by Ping An Insurance Group, is set to experience “accelerated growth” in Southeast Asia as a shift to digital banking intensifies.
OneConnect was set up in 2015 as the financial technology arm of Ping An Group. The fintech focuses on offering technology solutions that help increase revenue and manage risks for firms and financial watchdogs. It cuts costs and boosts efficiencies for enterprise clients through the creation of cloud-computing services with a range of software and other digital tools as an on-demand service.
Last week, the New York-listed, China-based company was able to raise $356.4 million from a follow-on sale of 20.7 million shares. Following this raise, OneConnect’s current revenue multiple is now at its highest historical level as the effects of COVID-19 became a catalyst for demand for digital banking services among regulators and institutions. Shares surged 115%, closing at $21.57 on Friday. The success of this sale was preceded by the company being selected for the 2020 CB Insights China Fintech 50 list, which recognizes the best fintech enterprises in China on June 29.
According to a company statement, OneConnect will use its new capital to improve platform and technology capabilities, international expansion, and strategic investments. Shanghai-based angel investor of tech businesses, Yin Ran, emphasized the necessity for OneConnect to prioritize overseas expansion. “Expanding abroad is also a good choice for OneConnect because overall, China is a front runner in digitalizing banking services and has abundant know-how and experience.”
Despite Ran’s suggestion, Michael Fei, board secretary of OneConnect, continues to think within the region sharing that “our new expansion pace in the region would be faster.” He shared that prior to the pandemic, OneConnect secured nearly 50 clients in 10 Southeast Asian nations within a year, with the confidence to follow on this trajectory. “We have quite a few orders from the clients there in the pipeline.” Fei further highlighted his point with the example of Indonesia’s potential, as the number of smartphone users increase by around 10 million a year.
OneConnect’s confidence towards expansion in the Asian market is further substantiated by its 29.6% revenue increase year-on-year, with third-party customer revenue increasing by 50.4% year-on-year according to a company report. This comes despite the economic downturn in the first quarter due to COVID-19. The Company’s five smart solutions - Smart Office Solutions, Intelligent Deposit Solutions, Intelligent Operation Solutions, Artificial Intelligence (AI), and Sales and Risk Management Solutions - were attributed for driving the growth.
Southeast Asia, Hong Kong, and Japan are currently the three major overseas markets targeted by OneConnect, Fei said.
