Can Indian stock trading apps reignite user growth?

In The Top Up this week, we dive into the falling user numbers of India’s stock trading apps and Indonesia’s new guidelines on AI use in fintech. [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: - Indian stock trading companies face [stagnating user growth]( after a Covid-19 boom - Indonesia’s financial services authority’s new guidelines on the use of AI in fintech - A [new crop]( of players entering the digital banking sector in Southeast Asia --------------------------------------------------------------- Hello {NAME} Over the weekend, I binge-watched the show Dumb Money, which was inspired by the real-life GameStop short squeeze in early 2021. While the show reinforced the notion that stock trading carries significant risks, I also learned a valuable lesson: investments - like any commitment - demand time, patience, and persistence. The same seems to apply to running stock trading apps in India. Like Robinhood - a platform that rose in popularity propelled by GameStop - companies like Zerodha in India experienced a surge in trading activity during the pandemic. Zerodha’s growth, however, has plateaued since. Nithin Kamath, CEO and co-founder of Zerodha, even anticipates a 40% decline in his company’s revenue by 2024, as Prabhu Mallikarjunan writes in this week’s Big Story. Zerodha and another Indian stock trading app, Groww, collectively make up around 40% of the total active user base across India’s investment industry. Faced with stagnant growth in stock trading, Zerodha has recently begun diversifying into mutual funds. Meanwhile, in the Hot Take, I explore the new guidelines issued by Indonesia’s financial services authority on the use of AI in the country’s fintech industry. Regulating AI is certainly complex, but is regulation what’s needed right now? -- Budi --------------------------------------------------------------- THE BIG STORY [Is India’s online trading boom facing a reality check?]( Amid the new normal, Indian investment platforms are facing tighter competition, sluggish user growth, and volatile market conditions. --------------------------------------------------------------- THE HOT TAKE Navigating the complex landscape of regulating AI in fintech Here’s what happened: - During the Indonesia Fintech Summit and Expo last week, the country’s financial services authority (OJK) [released]( its AI ethical code guidelines for the fintech industry. - This was done in collaboration with the Indonesian Fintech Association, the Indonesian Sharia Fintech Association, the Indonesian Joint Funding Fintech Association, and the Indonesian Crowdfunding Services Association. - While not publicly available, the guidelines serve as a reference for each association to formulate their own code of conduct to optimize the use of AI in the fintech industry and mitigate potential risks. Here’s our take: Considering that several fintech players in Indonesia have implemented AI for some time now, talk of regulations around the use of the technology appears to have come a little late. The use of AI for risk engines and chatbot-based customer service is not a new development in the local tech industry, including in the fintech sector. Buy now, pay later platform Kredivo [introduced]( a credit scoring innovation based on AI in July. This allows it to assess the eligibility of prospective customers and their ability to repay, which could lower non-performing loan rates. E-wallet Dana also [adopted]( AI to automate its business processes a few years ago. In neighboring Singapore, the Monetary Authority of Singapore is working to encourage the responsible use of AI but has stopped short of [implementing AI regulations](. In June, Singapore [updated its toolkit]( for the responsible use of AI in the financial industry. The new version introduces assessment methods for ethics, accountability, and transparency, among other changes. Toolkits and guidelines like the one just introduced in Indonesia will need to address issues such as the [black-box problem]( where the lack of transparency in the inputs, mechanisms, and how decisions are made using AI models can lead to unpredictable and potentially harmful outcomes. Tech in Asia has reached out to OJK to inquire about the specifics of the new guidelines. See also: [Indonesia’s OJK launches more stringent regulations for online lenders]( But overly stringent rules could deter innovation. In Europe, [the introduction of the AI Act]]( by the European Union could see firms that flout the rules fined between 10 million euros (US$11 million) to 30 million euros (US$33 million) or 2% to 6% of their yearly turnover, whichever is higher. This could drive tech firms - particularly AI companies or AI adopters - out of the EU. Moving ahead with guidelines instead of full-on regulations could suggest that Indonesia has considered these elements. President Joko Widodo himself has been an [advocate]( of increased AI adoption. Case in point: Indonesia granted a [10-year golden visa]( the first of its kind, to OpenAI CEO Sam Altman in September. Involving various industry associations puts Indonesia on the right path—a direction also endorsed by Singaporean authorities who believe in learning from multiple industry stakeholders before establishing regulatory frameworks. Currency converted from euros to US dollar: US$1 = 0.91 euros. --------------------------------------------------------------- NEWS YOU SHOULD KNOW Also check out Tech in Asia’s coverage of the fintech scene [here](. 1️⃣ [Pathao founders’ new firm secures $3.8m round led by GFC, Spartan Group]( Wind, a blockchain-powered remittance firm based in Singapore, has reached nearly US$3 million in transaction value since its establishment in 2022. 2️⃣ [SG-based Lendela raises $5m to fuel expansion in Asia Pacific]( The lending platform doubled its revenue growth in the past year and achieved profitability in Singapore and Hong Kong. 3️⃣ [Ant, Grab, StraitsX to jointly explore use of purpose-bound money]( GrabPay merchants can now accept cross-border payments enabled by purpose-bound money using Ant Group’s Alipay+ solution. 4️⃣ [MAS launches digital money blueprint, plans to develop wholesale CBDC in 2024]( The blueprint outlines the necessary tech infrastructure for digital money transactions, including a settlement ledger to record transfers. 5️⃣ [Engineers leave Indonesian fintech unicorn Xendit]( At least 18 engineers, including senior employees and managers in Singapore and Indonesia, have left the company since September. --------------------------------------------------------------- FYI [SEA’s digital banking map unveils bright spot for investors]( Despite competition intensifying, incumbent players like Bank Jago and Bank Raya reported strong financial results this year. --------------------------------------------------------------- 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