Crypto wave takes Vietnam by storm, and UOB’s big ASEAN bet

The Top Up is Tech in Asia’s free newsletter that breaks down the biggest stories and trends in fintech. [Read from your browser]( The Top Up 💵 Welcome to The Top Up! Delivered every Wednesday via email and through the Tech in Asia website, this free newsletter breaks down the biggest stories and trends in fintech. If you’re not a subscriber, get access by [registering here](. Written by Melissa Goh Fintech Journalist Hello {NAME} , About five years ago, a friend told me he had gotten into Ethereum. Over a coffee, he geeked out about the cryptocurrency’s potential to power “smart contracts” - in certificates of education, for example. That was 2017 - the “early” days of cryptomania, the year CryptoKitties was launched, a few months before the crypto winter of 2018, and when Dogecoin was still a joke. (Depending on which way you lean, it might still be.) One wishes they got into Ethereum in 2017. (This is not investment advice.) / Photo credit: Coinbase Five years on, the metaverse, NFTs, decentralization, and Web3 have become familiar to every man on the street, regardless of whether most people truly understand what these terms mean or believe in their potential. Or should I say, every boy on the street - since crypto investors are, in fact, getting younger. Gen Z, which is made up of school children and teenagers, is getting onboard the crypto train. Perhaps they’re driven by Covid-induced boredom (à la Gamestop), access to play-to-earn games, the desperation to make a quick buck, or their general openness to new tech and risk taking. Not being old enough to invest themselves, some Gen Zs in Vietnam are borrowing money from their parents to put into cryptocurrency. In fact, the country has more people who own digital coins than those with retail stock brokerage accounts. Nearly 6 million people - or about 6% of Vietnam’s population - own cryptocurrencies, placing the country among the top five in the world for crypto adoption. What’s behind Vietnam’s crypto rush, and could rapid adoption propel the country's transformation into the next global blockchain hub? My colleague, Huong, has the answers in this week’s Big Story. Also, we analyze what United Overseas Bank's (UOB) US$3.6 billion acquisition of Citigroup’s consumer banking business in four ASEAN markets means for the Singapore-based lender’s digital banking endeavor and regional ambitions. Read on to find out. And what about my friend, you ask? I hope he’s still holding on to that Ethereum. -- Melissa THE BIG STORY [Explaining Vietnam’s crypto boom]( Image credit: Timmy Loen While the country’s young investors are loving the short-term profits from cryptocurrencies, startups hope the trend will power the rise of Web3. THE HOT TAKE  Supercharging UOB’s ambitions in SEA The UOB team at the launch of TMRW / Source: UOB Here’s what happened: - Last Friday, Singapore’s UOB said it would be acquiring Citigroup’s consumer banking businesses in Indonesia, Malaysia, Thailand, and Vietnam. - Citigroup’s consumer business consists of its unsecured and secured lending portfolios as well as its retail deposit and wealth management units. - Citigroup will retain control of its institutional banking businesses in these markets. The deal is expected to be completed between mid-2022 and early 2024.  Here’s our take: The stakes are high in the race to become one of Southeast Asia’s leading digital banks - and even higher in places like Indonesia and Vietnam, which have large unbanked and underbanked populations. Analysts across the board have given the sale [a thumbs up](. Besides having a positive impact on UOB's return on equity, earnings per share, and other performance metrics, the deal is widely seen to be strengthening UOB’s presence in the four regional markets. It will also fast-track the bank’s regional digital banking ambitions. Since 2019, the bank has plowed [US$148 million]( into developing TMRW (pronounced ‘tomorrow’), its mobile-only digital bank in Indonesia and Thailand. Then last September, UOB threw another S$500 million (US$371 million) into the effort. Part of that investment was used to combine its TMRW app, available in Indonesia and Thailand, with its Singapore mobile app in a bid to forge a new and improved version called UOB TMRW. Its latest mobile interface is intuitive, to say the least, and offers investment products as well as insights into spending habits - almost a norm these days. The bank has said that it plans to introduce more digital-only wealth products, the use of chatbots, and to leverage data to inform customers of the types of financial solutions available to them . If anything, it sends a message that UOB means business. Despite launching in 2019, TMRW is far from a household name in both Indonesia and Thailand. As of September last year, it had just over 350,000 registered users, most of whom were from Indonesia, as we [previously reported](. That's why UOB's acquisition of Citigroup’s assets is highly strategic: The move could supercharge UOB’s customer base in the four markets, almost instantly expanding its user base to 5.3 million from 2.9 million. Its Thailand business would see the biggest boost, growing to 2.4 million customers - an addition of 1.1 million users. While Citi’s retail customers don't automatically become users of UOB’s digital app, it's certainly possible to convert them through cross-selling. That said, UOB is not the only bank swooping in on the blue-ocean market. In Indonesia, the digital banking scene [is heating up]( with more tech firms and incumbent banks backing small lenders. The likes of [WeLab]( and a joint [Sea Group-BNI]( effort have joined the space in just the past month alone. Gojek’s Bank Jago and Akulaku-backed Neo have exceeded TMRW in terms of active users and cumulative downloads, according to estimates, even though both were launched more recently. In 2020, Indonesia’s Jenius brought on 1.4 million new customers, taking its total user count to over 3 million, according to consultancy firm Momentum Works. DBS’ Digibank, meanwhile, added 200,000 new users in the same period to reach about 800,000 customers. Granted, UOB is chasing high-quality customers - also known as the “emerging affluent,” who deposit relatively large sums of money - as opposed to onboarding a large customer base through discounts. This might explain its smaller customer base and slower pace of growth. The Citigroup deal directly plays to its strategy. The move potentially increases UOB's mass affluent customers by 81% and emerging affluent customers by 1.7x, as per one analyst’s [estimates](. This would give UOB a “critical advantage” against its competitors. – Melissa NEWS YOU SHOULD KNOW Also check out Tech in Asia’s coverage of the fintech scene [here](.  1️⃣ [MAS stops crypto platforms from advertising in public]( Under the guidelines effective immediately, crypto service providers, banks, and financial institutions should not market or advertise such services in public areas in Singapore, or through third parties like social media influencers.  2️⃣ [Validus forms JV in Vietnam for new fund]( The joint venture was formed by Validus Vietnam, multinational conglomerate TTC Group, and early-stage VC firm Do Ventures. It will give SMEs access to TTC Group’s ecosystem of companies in Vietnam and Do Ventures’ fintech expertise.  3️⃣ [Airwallex launches in Singapore]( The Hong Kong-based fintech firm’s enterprise services include global account issuance, domestic and cross-border money transfers, multicurrency wallets, and online payments acceptance.  4️⃣ [Crypto platform offers up to 90% interest on Axie tokens]( Finblox, a digital asset investment platform, will generate this yield in several ways, including lending out the assets to financial institutions or trusted decentralized finance protocols.  5️⃣ [Earned wage access startup gets $5.3m seed funding]( Paywatch, which is based in Malaysia and South Korea, will use the new funds to expand into Southeast Asian markets like Indonesia and the Philippines.  6️⃣ [Akulaku eyes US listing via merger with Patrick Grove’s SPAC]( The Indonesia-headquartered fintech firm aims to raise US$200 million to US$300 million in a listing that give it a valuation of US$2 billion, according to a source. FYI 1️⃣ [Malaysia’s central bank studies need for a digital currency]( While a decision has not been made to issue central bank digital currency (CBDC), Bank Negara Malaysia said it was working on enhancing its technical and policy capabilities, should the need to issue CBDCs arise. That’s it for this edition - we hope you liked it! Do also check out previous issues of the newsletter [here](. Not your cup of tea? You can unsubscribe from this newsletter by going to your “edit profile” page and choosing that option in our preference center. In the meantime, if you have any feedback or ideas, feel free to get in touch with Terence, our editor-in-chief, at terence@techinasia.com. See you next week! P.S. Don't miss out on the biggest tech news and analysis. Add newsletter@techinasia.com to your address book, contacts, or safe sender list. Or simply move us into your inbox. Too many emails? Switch to a different frequency or get new content through our [preference center]( or [unsubscribe](. You can also break our hearts and remove yourself from all Tech in Asia emails over [here](  Copyright © 2022 Tech in Asia, All rights reserved. 63 Robinson Road, Singapore 068894