FinTech market in Asia-Pacific to hit $72bn by 2020, new data suggests

BY Fraser Tennant

The FinTech market in the Asia-Pacific region is growing significantly and set to reach a value of $72bn by 2020, suggests new data from Frost & Sullivan.

According to the firm, the positive outlook for the FinTech industry in the region is being fuelled by a growth in digital payments, such as increasing adoption of cashless payments by small and medium sized enterprises (SMEs). Also, there is more widespread awareness of the viability of using P2P financing as well as new methods of crowdfunding using Blockchain, which Frost & Sullivan believes will lead to growth in the personal and business financing segment.

Furthermore, new innovations are expected to radically transform the way consumers shop, pay, perform banking transactions and purchase insurance. The wave of new FinTech technologies is also changing customer behaviour and interactions today.

Speaking at Frost & Sullivan’s annual review and outlook for the FinTech industry in Asia-Pacific, Spike Choo, consulting director in the firm's ICT Asia-Pacific practice, outlined the emerging trends in FinTech for 2018, making special mention of his expectation that more innovative FinTech services will be launched in the areas of financial investments and advisory services, as well as insurance due to advances in Big Data analytics, artificial intelligence (AI) and blockchain.

Much of the growth being seen in the region’s FinTech ecosystem is a result of the active support and initiatives provided by financial regulators such as the Monetary Authority of Singapore (MAS), Bank Negara Malaysia (BNM) and Bank Indonesia (BI), noted Mr Choo.

A major feature of Frost & Sullivan’s review and outlook was the future of cashless payments in Singapore. According to Quah Mei Lee, industry principal, ICT, Asia-Pacific, the mobile payments market in Singapore was estimated to be worth $1.4bn in 2017. Although the market is still small, Ms Mei Lee there are many supportive regional and local regulations and initiatives that will help Singapore move towards a cashless society. Ms Lee was also keen to stress that mobile payments of the future needs to be global first, inter-operable and secure, with global alignment being key to mobile payments going mainstream.

Rounding out the firm’s FinTech industry outlook was a focus on customer experience (CX) in the banking, financial services and insurance (BFSI) industry. According to Nishchal Khorana, Frost & Sullivan’s consulting director, ICT, Asia-Pacific, a successful CX strategy would be based on an integrated approach to people, processes and technology in the digital era.

Transformative, informative and innovative, it promises to be an exciting year ahead and beyond for FinTech in Asia-Pacific.

News: Asia-Pacific fintech market to reach US$72 billion by 2020, finds Frost & Sullivan

General Dynamics to acquire CSRA for $9.6bn

BY Richard Summerfield

US defence contractor General Dynamics Corp is to acquire CSRA Inc. for about $9.6bn – including the assumption of $2.8bn in CSRA debt. The deal will see General Dynamics pay $40.75 per CSRA share – a 32 percent premium to its Friday closing price of $30.82. The transaction is expected to close in the first half of 2018.

The acquisition of CSRA is General Dynamics' largest ever deal, easily eclipsing the $5.3bn the company paid for Gulfstream Aerospace Corporation in 1999.

“The acquisition of CSRA represents a significant strategic step in expanding the capabilities and customer base of GDIT,” said Phebe Novakovic, chairman and chief executive of General Dynamics. “CSRA’s management team has created an outstanding provider of innovative, next-generation IT solutions with industry-leading margins. We see substantial opportunities to provide cost-effective IT solutions and services to the Department of Defence, the intelligence community and federal civilian agencies. The combination enables GDIT to grow revenue and profits at an accelerated rate. It will allow us to deliver even more innovative, leading-edge solutions to our customers.”

Larry Prior, chief executive and president of CSRA, said, “Our combination with General Dynamics represents an excellent outcome for CSRA’s stockholders, employees and customers. It builds on strong shared values, culture and a passion for serving our customers’ missions. We believe that this combination creates a clear, differentiated leader in the Federal IT sector, with a full spectrum of enterprise IT capabilities, including unique depth in Next-Gen offerings in conjunction with our commercial IT alliance partners.”

The deal for CSRA comes at a delicate time for General Dynamics. The company’s revenue over the last two quarters has disappointed investors. General Dynamics reported sales of $31.35bn in the year ended 31 December. CSRA generated revenue of $4.99bn in the fiscal year ended 31 March. Ninety-four percent of CSRA’ revenue last year was derived from US government contracts.

CSRA provides IT, mission and operations-related services to the Department of Defence, the intelligence community and homeland security. With defence spending expected to rise in the coming years, the timing of the deal for CSRA will likely be advantageous for General Dynamics.

News: General Dynamics to buy federal services provider for $6.8 billion

Rise of the robots

BY Richard Summerfield

Automation is coming. Recent reports have suggested that millions of people around the world will be impacted by the wave of automation and other new technologies which are currently emerging.

A new report from PwC – 'Will robots really steal our jobs?' – suggests that while the financial services industry in particular could be vulnerable to automation in the short term, a variety of industries, including those in the transport space, are much more vulnerable in the longer term in the UK. Less well educated workers, too, will be increasingly susceptible to replacement. Female workers are also more likely to be replaced than their male counterparts.

PwC has identified three distinct waves of automation which will impact the global economy up to 2030: the algorithm wave, the augmentation wave and the autonomy wave.

The algorithm wave is already underway and will last until the early 2020s. It involves automating structured data analysis and simple digital tasks, such as credit scoring. This wave could see just 2-3 percent of UK employees affected – 4 percent of women and 1 percent of men.

The augmentation wave, which centres on the automation of repeatable tasks and exchanging information, as well as further development of aerial drones, robots in warehouses and semi-autonomous vehicles, could impact 20 percent of UK jobs – 23 percent of women and 17 percent of men. This wave will last until the late 2020s.

The third wave, the autonomy wave, suggests that AI will have developed to the point that it will be able to analyse data from multiple sources, make decisions and take physical actions with little or no human input. This wave will last until the mid 2030s and could affect 30 percent of the workforce – 26 percent of women and 34 percent of men.

Euan Cameron, UK Artificial Intelligence leader at PwC, said: “Our research shows that the impact from automation and AI will be felt in waves, with more routine and data tasks hit first. But just because businesses and people aren’t feeling the impacts right now, there is no excuse not to start planning for the future. AI technology is getting more sophisticated every day and businesses need to understand how, where and when their people are likely to be affected in the future. Those that understand the risks and opportunities can start upskilling their people and adapting their businesses, rather than simply reacting when it’s too late.”

Automation is expected to be a boon for the economy, however. PwC believes it could contribute as much as 10 percent to UK GDP and 14 percent to global GDP by 2030.

Report: Will robots really steal our jobs?

Beleaguered Bon-Ton files for Chapter 11

BY Fraser Tennant

Debt ridden and struggling to grow sales, Bon-Ton Stores, Inc. (Bon-Ton), one of the largest regional department store chains in the US, has filed for Chapter 11 bankruptcy protection.

Having filed a number of customary motions with the US Bankruptcy Court for the District of Delaware, Bon-Ton, along with its subsidiaries, is currently engaged in constructive discussions with potential investors and its debt holders regarding the terms of a financial restructuring plan.

The beleaguered retailer intends to use this court-supervised process to explore potential strategic alternatives to maximise value for the benefit of its stakeholders, which may include a sale of the company or certain of its assets as part of the plan of reorganisation.

In addition, Bon-Ton has received a commitment from its existing ABL lenders for up to $725m in debtor-in-possession (DIP) financing which, subject to court approval, is expected to support its operations during the financial restructuring process. Bon-Ton has also requested court approval to pay wages and provide health and other employee benefits, as well as pay vendors in the ordinary course for all goods and services provided on or after the Chapter 11 filing date.

“The actions we are taking are intended to give us additional time and financial flexibility to evaluate options for our business,” said Bill Tracy, president and chief executive of Bon-Ton Stores. “Bon-Ton has seven well-loved brands and associates that have remained committed to delivering excellent service to our customers for decades. During this court-supervised process, we plan to continue operating in the normal course and executing on our key initiatives to drive improved performance.”

Headquartered in York, Pennsylvania and Milwaukee, Wisconsin, Bon-Ton operates 256 stores, which includes nine furniture galleries and four clearance centres. The stores offer a broad assortment of national and private brand fashion apparel and accessories for women, men and children, as well as cosmetics and home furnishings.

Acting as Bon-Ton’s legal counsel during the restructuring process is Paul, Weiss, Rifkind, Wharton & Garrison LLP. AlixPartners LLP is serving as restructuring adviser and PJT Partners, Inc. is acting as financial adviser.

Mr Tracy concluded: “We appreciate the ongoing dedication of our associates, whose hard work in serving our loyal customers is critical to our success and the future of our company. Importantly, we look forward to continuing to provide our customers with quality merchandise and an exceptional shopping experience in our stores and across e-commerce and mobile platforms as we move through this financial restructuring process.”

News: U.S. department store chain Bon-Ton files for bankruptcy

GDPR compliance a major concern for business leaders, claims new survey

BY Fraser Tennant

Increasing regulatory pressures such as the forthcoming EU General Data Protection Regulation (GDPR) are a major concern for business leaders, according to an EY survey published this week.

According to the third biennial EY Global Forensic Data Analytics Survey – ‘How can you disrupt risk in an era of digital transformation?’ – which examined the responses of 745 executives from 19 countries, 78 percent of respondents expressed increasing concern about data protection and data privacy compliance issues, specifically the GDPR.

Indeed, with less than four months to go until the GDPR comes into force on 25 May 2018, only 33 percent of survey respondents said they have a plan in place to comply with the EU legislation. Moreover, while the average response of respondents in Europe was more positive, with 60 percent indicating they have a GDPR compliance plan in place, the survey notes that much work remains to be done in other markets, including Africa and the Middle East (27 percent), the Americas (13 percent) and Asia-Pacific (12 percent).

“The pace of regulatory change continues to accelerate and the introduction of data protection and data privacy laws, such as GDPR, are major compliance challenges for global organisations,” said Andrew Gordon, EY global fraud investigation & dispute services leader. “But businesses that adopt forensic data analytics (FDA) technologies can achieve significant advantages, benefiting from more effective risk management and increased business transparency across all of their operations.”

The survey also found that 42 percent of businesses believe that data protection and data privacy regulations have a significant impact on the design or use of FDA. EY’s examination further revealed that 13 percent of respondents indicated that they currently use FDA to achieve GDPR compliance, with more than half (52 percent) of the respondents indicating that they are currently in the process of analysing exactly which FDA tools they would use to assist them with achieving compliance.

Overall, survey respondents stated that increased adoption of, and spending on, advanced FDA technologies, needs to be matched with greater investment in skilled resources.

Mr Gordon concluded: “While it is encouraging to see that investment in advanced FDA is increasing, companies need to hire the right talent and invest in core skills such as domain knowledge and data analytics in order to be successful in managing their risk profile.”

Report: How can you disrupt risk in an era of digital transformation? – Global Forensic Data Analytics Survey 2018

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