Indonesia's Shariah fintech prospects and Apple's new savings account

In The Top Up this week, we look at Indonesia’s prospects in Shariah fintech and dive into Apple’s newest financial product - a savings account. [Read from your browser]( The Top Up 💵 Welcome to The Top Up! Delivered every fortnight 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](. IN FOCUS In today's newsletter, we look at: - [Indonesia’s ascent to the top of global Islamic fintech faces obstacles]( - Apple’s newly launched savings account for Apple Cash users in the US - Other newsy highlights such as KoinWorks shting down its student loan service --------------------------------------------------------------- Hello {NAME} Will Gen Zs change the world? Their tastes and preferences matter, evident from the way they are consuming content (a la TikTok) and how brands and companies are [responding](. It turns out that the Gen-Z population - in particular those below the age of 30 - will be a critical determinant of, wait for it ... Islamic fintech prospects. At 230 million, Indonesia has the largest Muslim population in the world. However, its market size for Shariah fintech transactions trails behind that of Saudi Arabia and Malaysia, my colleague Budi writes in this week’s Big Story. The low Shariah fintech penetration rate in Indonesia can be attributed to a number of factors such as limited financial literacy and education, low budget allocation toward the industry, and dependence on conventional VC firms for capital. But if the country’s Islamic fintech startups are able to tap the growing awareness of a halal lifestyle and highlight the ease of Shariah fintech solutions among the youth, they could very well move the needle. On the topic of youth - and perhaps beyond - users in the US would have cheered the launch of Apple’s highly anticipated savings account. With an attractive savings rate and slick dashboards, what’s not to like? I discuss this and more in this week’s Hot Take. -- Melissa  --------------------------------------------------------------- THE BIG STORY [Indonesia’s ascent to the top of global Islamic fintech faces obstacles]( The archipelago has more Shariah fintech players yet a smaller market size than Malaysia and Saudi Arabia.  --------------------------------------------------------------- THE HOT TAKE Would you use an Apple bank account? Here’s what happened: - This week, Apple [launched savings accounts]( tied to the Apple Card in the US. - The tech giant is offering a competitive annual percentage yield of 4.15%, though rates may change at any time. - Deposits in the savings account will be held by Goldman Sachs and [covered by the Federal Deposit Insurance Corporation](. Here’s our take: Apple’s long-awaited savings account has launched. If you have an existing Apple Card, use it religiously for your payments to earn [daily cashback]( and reside in the US, this one might just be for you. The new savings account closes the loop on payments for existing users of the Apple Card. Cashback earned on purchases at selected merchants made via the Apple Card - a feature called Daily Cash - can be automatically deposited into the savings account to earn interest. These funds can also be managed directly from the Wallet app. The new changes unfortunately do not apply to the large number of Apple users outside the US. The good news is that these new features touted by the Apple Card’s savings account aren’t completely foreign to us in Southeast Asia. In Singapore, existing services like ShopBack or Yuu already offer cashbacks on purchases from many household names, both online and offline, which can be used to offset future transactions. While ShopBack does not have a savings account tied to it, you could take your pick from numerous snazzy digital banking offerings available. There are those that credit interest into your savings account [daily]( and those offering [attractive discounts]( at partner retailers. Oh, and these days, they all come with slick dashboards that provide a snapshot of your account balances, transactions, and savings. See also: [Sizing up GXS and Trust, Singapore’s newly launched digital banks]( Relying on several service providers certainly isn’t as seamless as using just one. By combining digital payments, peer-to-peer transfers, and buy now, pay later (the latter two services available only in the US) into an ecosystem of financial services, Apple makes for a compelling proposition. Certainly, the firm’s latest savings feature makes sense for any already-entrenched iPhone or Apple Watch user, in the same way that a customer who frequents Grab might see value with opening a GXS Bank account to [better manage their finances](. Firms offering cashless payment services, BNPL, and digital banking stateside will experience the most “pain” in the near term as users make the switch to Apple, leading to reduced volumes. In the US, [approximately 51%]( of smartphone users in the US have iPhones. That number decreases as you head East. Case in point: In Indonesia, Southeast Asia’s largest economy, a majority of smartphone users have Android devices. The bigger question is: Will the savings account be enough for a long-time Android user to make the big switch over to the Apple realm? Will they withdraw lump sums of their savings from an existing bank account into the new account? In all likelihood, probably not. – Melissa  --------------------------------------------------------------- NEWS YOU SHOULD KNOW Also check out Tech in Asia’s coverage of the fintech scene [here](. 1️⃣ [Cards remain dominant payment method, but digital wallets projected to overtake in Singapore: FISÂ]( In online payments, e-wallets are expected to become more popular than credit cards, taking a 40% market share by 2026. 2️⃣ [KoinWorks shutters student loan service]( KoinPintar, the higher education loan service that the fintech firm had been operating since 2017, was discontinued at the end of 2022, with KoinWorks shifting its focus to other products. 3️⃣ [StanChart VC arm invests in SG wealthtech firm]( BetterTradeOff helps businesses to deploy financial planning solutions tailored to their clients. 4️⃣ [WhatsApp users in Brazil can now pay merchants through the app]( The move allows users to browse, purchase, and pay via the messaging app, whose shopping function had - until now - relied on third-party payment links in order to facilitate transactions. --------------------------------------------------------------- FYI  [Fintech funding dropped faster than any other sector in Q1. Are VCs falling out of love?]( Funding into European fintech firms fell 83% in Q1 2023 compared to the same time last year - with deeptech and climate tech startups raising more capital. --------------------------------------------------------------- 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 in a fortnight! 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 © 2023 Tech in Asia, All rights reserved. 63 Robinson Road, Singapore 068894