Grab and go: Analyzing the dash for Home Credit’s SEA business

In The Top Up this week, we look at Grab’s potential acquisition of Home Credit’s Southeast Asia business, and illegal binary options in Indonesia. [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 Putra Muskita Journalist Hello {NAME} When I started out as a tech reporter a few years ago, the buzzword du jour was big data. For large tech companies, data is the one thing that could bring about major revenue, profits, and long-term sustainability. At the time, big data’s benefits were mostly talked about in abstract terms, but that has changed since then. In Southeast Asia, a region with low rates of institutional borrowing, big data has powered fintech lending, which appears to be the holy grail for many tech companies including Grab. In this week’s big story, my colleague Miguel looks at the super app’s potential acquisition of Home Credit’s Southeast Asian business. The Netherlands-based company targets borrowers in emerging markets with little to no credit history, helping them purchase durable goods like washing machines or television sets. It’s looking like a good fit. An acquisition would provide a boost to Grab’s financial services business, especially with Home Credit’s 24 million customers in the region. In turn, that user base can increase significantly, powered by Grab’s vast presence across Southeast Asia. But it’s far from being a done deal. A number of prominent Japanese banks are also interested, and financially, they can bring the fight to Grab. Meanwhile in Indonesia, a fintech-related scam has captured both media and public attention lately, and it’s not the only one. These fraudulent schemes highlight the growing need for tighter, preventive regulations and for better financial literacy among the general public. We go into more detail in this week’s Hot Take. -- Putra THE BIG STORY 1️⃣ [Will Grab’s bid for Home Credit bolster its fintech ambitions?]( Image credit: Timmy Loen Acquiring Home Credit’s SEA business will provide Grab access to 24 million customers in the region, but a trio of Japanese banks stand in the way. THE HOT TAKE Indonesia’s fintech Wild West Image credit: Timmy Loen Here’s what happened: - A [binary option]( platform called Binomo recently went viral in Indonesia - for the “right” reasons initially, and then quickly for all the wrong ones. - This is not the first fintech-related fraud in the country, and it’s not likely to be the last, given the low financial literacy among the public. - As of late March 2022, 40 people who had reported Binomo to the authorities collectively lost US$3 million. Here’s our take: A few months ago, a “trading” app called Binomo started going viral in Indonesia. Much of the publicity appeared to come from social media influencer Indra Kenz. Hired by the app to acquire new users, Kenz flaunted Tesla and other luxury cars as well as private jet rides on his social media accounts. To Kenz’ followers, the implication was clear: The source of his wealth was trading on Binomo (though he did run a few other businesses). Eager to earn extra cash, people started using the app. Here’s how it works: Users put down a deposit of at least US$10. After that, they can choose assets to trade and are shown the recent price movements. But instead of buying and selling stocks like in normal trading, users are asked to predict the stock price’s movement - whether they will go up and down - within a short time frame (as quick as 5 seconds). Guessing correctly would give them profits at 80% of their deposit amount. A wrong answer, however, would mean losing their entire investment. If you think that sounds fishy, then you’re not the only one with such suspicions. Binomo is an example of a binary option platform that is banned in many jurisdictions (Indonesia is following suit) as it is considered a form of gambling and susceptible to fraud. Indeed, while many like Kenz had made money off the platform, many more have lost large sums of money. By late March 2022, 40 people who had reported Binomo to the authorities collectively lost [US$3 million](. The Indonesian authorities have since blocked Binomo and [99 other similar platforms](. Kenz, meanwhile, is undergoing a [criminal investigation]( which has broadened to include members of his inner circle, including [his former fiancee and sister](. Unfortunately, Binomo is not the first fintech-related fraud case in Indonesia, and it likely won’t be the last. Last year, Tech in Asia published an [investigative piece]( about a group promoting a cloud-mining investment scheme linked to VidyCoin, a Singapore-based cryptocurrency. Photo credit: Vidy Like Binomo, VidyCoin Community Indonesia promises sky-high profits that seem too good to be true. It offers 3x returns in 14 months - higher than what some top venture capital firms earn. There are also scant details of how cloud mining itself works, while the community operates like a multilevel marketing business. For what it’s worth, though, the company behind VidyCoin distanced itself from this group. All of this boils down to the age-old tension between fintech regulators and entrepreneurs launching new innovations. How can regulators effectively police the space when startups are moving at a much faster pace? And how can regulators do so without inhibiting innovation? Indonesia’s peer-to-peer lending sector is perhaps a good gauge, as it is more mature than cryptocurrency or even binary option apps - in the country, at least. While there were legitimate, venture-backed P2P lenders in the beginning, there were also many bad players that terrorized borrowers whose payments were tardy. Otoritas Jasa Keuangan (OJK), the financial services authority of Indonesia, has since implemented regulations - including a lengthy licensing process - and cracked down on those operating illegally. Despite these measures, completely preventing these illegal apps from sprouting appears difficult. Even now, I still get occasional text messages offering instant cash loans by downloading an Android Package Kit (APK), bypassing the Google Play store. The more mature verticals aside, Indonesia’s fintech sector can feel a bit like the Wild West, especially since financial literacy remains low among the public. But perhaps user education is the only answer, as hard as the lessons may be. -- Putra  NEWS YOU SHOULD KNOW Check out Tech in Asia’s coverage of the fintech scene [here](. Photo credit: Ajaib 1️⃣ [Indonesian investment unicorn bumps up stake in local bank to 40%]( Ajaib has increased its ownership in publicly listed Bank Bumi Arta from 24% to 40%. The investment app is now the single largest shareholder of the bank. 2️⃣ [Tencent-backed Voyager goes unicorn with $210m raise]( This brings Voyager’s valuation to almost US$1.4 billion. Based in the Philippines, the company runs local e-wallet PayMaya and also counts SIG Venture Capital and International Finance Corporation as investors. 3️⃣ [Malaysian fintech app nets $15.5m in series A money]( Gotrade allows users on its commission-free platform to invest as little as US$1 in the likes of Tesla, Apple, and Netflix. 4️⃣ [SG fintech firm banks $2.2m in pre-seed money]( Founded in October 2020, Aquariux provides solutions around trading, payments, and remittances of traditional and digital assets. 5️⃣ [HK fintech firm WeLab names new group advisor]( Bruno Lee, a former Manulife executive with 30 years of industry experience, will work on WeLab Bank’s upcoming wealth management business. FYI [Meta plans ‘Zuck bucks’ virtual coins for Facebook and Instagram users]( Mark Zuckerberg hopes payment tokens will reduce his platforms’ reliance on ads as their popularity wanes. Potential products include “social tokens” or “reputation tokens,” which could become user rewards. 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 preferences 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