While investing in startups in Southeast Asia often begins with pattern matching and looking for equivalents in various markets, it doesn’t stop there. In the case of digital investment platforms in Southeast Asia, the nature of the region’s retail investors and public markets across countries necessitate unique approaches. In this article, we look at three […]

Paradigm Shift from Platform to Partner: Finding Growth with Digital Retail Investors Across Indonesia and Vietnam

While investing in startups in Southeast Asia often begins with pattern matching and looking for equivalents in various markets, it doesn’t stop there. In the case of digital investment platforms in Southeast Asia, the nature of the region’s retail investors and public markets across countries necessitate unique approaches.

In this article, we look at three parallels across these unique approaches — how digital investment platforms, specifically Ajaib and Finhay, have made a dent in the investment landscapes of Indonesia and Vietnam respectively, and how they have managed to evolve and continue to grow even amidst the current market conditions (Finhay announcing its US$25M Series B round, Ajaib launching its crypto trading product):

  1. Brand of Trust for First-Time Investors: Being an early mover enables better positioning to shape investment education and bringing in first-time investors. 
  2. Mutation from Existing Models: Product-driven growth on top of strong customer engagement has led to unique models and product diversification. 
  3. Long-Term Value Creation: The digital investment platforms are not just offering cheaper or more convenient digital alternatives but really positioning themselves as the digital investment partners of their users. 

To illustrate these points further, we include insights from podcasts with Ajaib CEO and co-founder Anderson Sumarli in 2020, Ajaib CPO and co-founder Yada Piyajomkwan in 2021, and Finhay CEO and founder Huy Nghiem in 2022

Perks of Being an Early Mover

Being an early mover in the market’s digital investment space enables companies to shape investment education in the country across asset classes and lead the way in bringing first-time investors to the financial markets. 

This ability to be a trusted platform for first-time investors into financial markets rides on several market factors: (1) low investor penetration rate (e.g., 3% in Vietnam, <1% in Indonesia for stock trading accounts), (2) barriers to entry through traditional means be it due to processes, education, or costs (see table below), and (3) even the propensity for people to invest in the financial markets, taking into consideration other asset classes and savings, the financial management culture of the local society, as well as the performance of the public markets in the country (see table below).

The table below illustrates some of the market nuances digital investment platforms have to navigate unlocking the stock trading product, comparing Vietnam and Indonesia through the insights shared by Finhay’s Huy Nghiem and Ajaib’s Anderson Sumarli and Yada Piyajomkwan.

To illustrate the comparisons, we used quotes from podcasts with Ajaib’s Anderson Sumarli in 2020, Ajaib’s Yada Piyajomkwan in 2021, and Finhay’s Huy Nghiem in 2022.

Given the nuances of navigating each country’s investment landscape, there are multiple ways these platforms are able to build this brand. Finhay’s Huy Nghiem talks on our podcast about leveraging SEO and SEM amidst the Vietnamese competitive landscape filled with traditional, offline platforms, the value of investing in brand in a low-trust society like Vietnam, and the power of education-centered content from KOLs. 

“Our focus still remains to be SEO and SEM-focused. And why? Because traditional business players, do not have a strong presence on the internet, the Vietnamese internet. So that’s why we want to optimize our keywords for investing, trading, and online investment, which will be directed to Finhay…

…Vietnam is a low-trust society. So building branding and building trust are really important. I think it’s happened everywhere in the world, but for Finhay, at least in the Vietnam market, the earlier that we start, the better over the long term because the brand, the presence out there, and the awareness are strong. 

So we did a brand health check in December 2021, and it turns out Finhay has become the top of mind for online investment. So that was run by an independent brand audit checker in Vietnam. So they did surveys and a lot of user research amongst our generation and it turns out Finhay is a top-of-mind [platform]. I think that has really helped. Now when I go to random people and ask whether they know about Finhay, probably they heard about us.

So that is really important to invest in. And so that will create that awareness. And later on when they actually have the intention to invest, Finhay will become top of mind for that. So that’s the second sort of channel that we’re investing in so that more long-term awareness is [already] working for us as of right now…

…we work with mini-KOLs and top KOLs to constantly review our product, not just saying like Finhay is a really wonderful app, but instead, again, spreading the purpose of why we need an app like Finhay and what pain points we’re trying to solve and that has helped in driving traffic to our website as well as our app.”

The key here is that brand building for early movers in this space necessitates educating users, not just from a marketing standpoint but even throughout the whole product experience. This does not only allow the company to help investors used to offline processes to transition into the digital experience, but ultimately tap into the larger market opportunity of first-time investors. 

Huy continues on our podcast to share the two types of impact they have had on Vietnamese investors. “We have changed the way people think about how stock trading works, and what it looks like and changed the perspective that stock trading is not a really terrible market. So that’s one of the examples. 

And the other example that I can think of right now is we have seen users from traditional players actually using our platform for the simple reason that our fees are much more competitive and more straightforward because they’ve been using other players and they charge a number of fees…SMS fees, trading fees, margin fees…brokerage fees, all kinds of fees.”

Also worth sharing once more is Anderson’s story of a memorable user from his podcast conversation with us back in 2020, emphasizing the value in early movers unlocking these types of services once largely inaccessible to the vast majority of people. 

“So there’s this one user that was very memorable to me. We had this one user who kept talking to our customer service team. We also offer personalized financial advice. So we had this one user that just kept on talking to our customer service team, our financial advisers, through WhatsApp. And she wouldn’t stop. She would just keep on texting us night and day for many weeks on end. She actually started developing a relationship with our customer service agents, getting to know them, and joking with them. 

And it was a couple of weeks later that we discovered that she said that she’s actually mute and she also cannot hear, so she’s deaf. And she said that she’s always wanted to invest, but she’s never gotten a chance to because she cannot go to an agent, she cannot go to a branch, she cannot express herself and ask them these complex questions on how to invest, how to start investing, all these things. 

We realized that she found us to be useful for her because we provided a lot of great learning materials online as well as we serviced her very well with our financial advisers on WhatsApp, and digital advisers which we actually give for free to everybody. We actually started developing a relationship with her, and I invited her to our office. One of our customer service agents coincidentally was able to do sign language. We actually communicated with each other, and I found her to be a very funny individual, a very lively individual, and you know, these kinds of stories really touch us — our efforts are able to really open up access to investment, no matter where they are, no matter what their circumstances are.”

Diversification into Uniquely Southeast Asia Models

Navigating these unique markets as we’ve illustrated, to build strong relationships with users that go beyond access to specific asset classes and towards a brand of trust as an investment platform has resulted in these models mutating from their comparables in the West.  

This phenomenon can be seen with Ajaib, which while seeing success on top of the stellar growth of their stock trading app, cannot be considered a pure “Robinhood equivalent.” In fact, they have evolved to become a hybrid of several key financial services, thanks to their investments into Bank Bumi Arta as well as the development and recent launch of their crypto product. 

Think of their evolution as a combination of Chime, Robinhood, and Coinbase, placed into a market like Indonesia where they also have the advantage of shaping the education of first-time or underserved investors, who by far outnumber regular, long-time retail investors and operating in a market where the costs of making these investments are lower than in more developed markets in the West. 

Then in Vietnam, our portfolio company Finhay has also recently seen similar massive growth with their stock trading app launched end of last year with their acquisition of a local stock brokerage, but this is ultimately part of an ecosystem of asset classes and investment channels users can access including mutual funds, gold trading, cash accounts, and even basic savings products. 

A focus on product-driven growth has also led to Finhay rapidly building an entire ecosystem of investment products including mutual funds, gold trading, cash-wrapped accounts, basic savings products, and of course, stock trading. This has built flexibility and optionality into Finhay’s platform, strengthening its long-term value proposition for users, which is not just to be a digital version of a stock brokerage, but ultimately the most accessible investment partner for their users. 

Just as a common piece of advice for investors is to diversify, what we’ve learned is that it is just as important for these platforms to diversify their business model and approaches to retaining users. Users of Ajaib and Finhay are not purely exposed to the public markets in using these apps and have the option to diversify. 

Huy explains this from the user’s perspective on the podcast. “So given that the environment that we are in right now with all the things happening around the world, at least luckily from the Vietnam market, we do see the impact, but then the financial market is not significantly impacted, which is a good thing for our end users. 

And for us at Finhay, because we already have a wide range of products for end-users where they can let’s say during the market turmoil, they can switch their assets from stock to let’s say mutual funds or even start buying gold on our platform. So we have now asset classes for users to switch around on our app. We also have what we call the daily cash account with CIMB Finhay, where users, just in case, say, “I don’t want to expose my money to even bonds. Then I can put it under cash and wait for the opportunity and then go back to the market.”

So we had that sort of cash-wrapped accounts on our platform. So the user can switch around and that has helped retain users on the platform. And even with…what happened in Europe, we don’t see a big impact [where users] would draw money out the system, but instead they still leave it there it to go. And recently we have seen them switching from cash to going back to the stock market.”

That said, this is the result of product-focused growth and seizing opportunities before the rest of the market did, which is not an overnight affair. 

The Paradigm Shift from Platform to Partner

The diversification in the previous point goes beyond offering multiple investment products. It is centered around what users need and being more than just “a digital investment platform.” As we’ve seen with fintechs, real value goes beyond offering  digital version of the status quo. In the case of Ajaib, their focus on first-time investors has not only allowed them to tap into a significantly larger market than incumbents, but also provide value beyond “digital stock brokerage” and actually be their users’ long-term investment partner.

Ajaib CEO Anderson speaks to this in our podcast with him all the way back in 2020, and this just goes to show how dedicated they have been to this unique mindset through the ups and downs of the market. 

“There’s just something about our product that first-time investors appreciate. The kind of features we provide for them, the kind of educational resources we provide for them. We really pride ourselves in taking this approach of “Let me give you all these resources for you to learn, for you to understand. If you feel comfortable about it, come on board and we’d be honoured to be your first investment partner” whereas maybe many others approach it the other way around, where they say, “Alright, give me your money. You gotta be able to spend this much money before I take care of you, then I might actually teach you how to invest.” So it is a really different way of thinking.” 

Thinking of one’s platform as an investment partner rather than an investment avenue or stock trading platform opens up opportunities to easily expand while still being aligned with user expectations. 

A second part to sustainable growth for investment platforms, especially amidst the current market conditions, is engineering “product-driven growth”. This means that the value proposition of the product should be enough to drive adoption (this also goes back to the previous point of having a more long-term value proposition than just digitization). This ensures marketing dollars, if and when needed, generate maximum impact, while also building trust in the product, rather than extrinsic factors like market conditions. 

In our podcast conversation with Ajaib CPO and co-founder Yada Piyajomkwan in early 2021, she shares, We believe that if the product is right, the product markets itself. We have a discipline at Ajaib where we don’t spend our marketing until we get to the exact product-market fit. And I think this is something important to watch out for because if you have marketing money, you can actually fake growth and you can fake product-market fit, which is kind of not something that you would like to do. 

You would really like to understand where that point [of product-market fit] is. And because of that, there was a huge period last year for several months that we literally spent nothing on marketing because we were experimenting and all our effort went into experimenting with products.”

Read more about the key fundamentals that have led to Ajaib’s current growth trajectory in this case study

On the podcast, Huy adds on to that point of becoming an investment partner for first-time investors in the context of Vietnam’s evolving financial markets and digitalization push.

“Based on the current sort of news are still going around, plus a lot of decisions coming from the government saying that Vietnam wants to push the tech transformation really hard in a good way. So it means a lot of services in the country will become online and self-service [platforms]…

…And when it comes to the financial market, we believe it’s still going really well. In 2020, I have seen the traction, so we expected to onboard back then 3.5 million accounts. By the end of 2025, we expected to have 5 million trading accounts in the entire country. But as of today, it’s 4.3 million already. So the growth has increased significantly.

So in the next three years, probably we’re gonna reach maybe 7 or 8 million and Finhay will be a part of it. So I think again that’s a good opportunity at least for Finhay, and a lot of money we call FDI or foreign direct investment coming from Japan, coming from Korea, and other countries around the world as well [going] into Vietnam creating more pressure on the government to improve the infrastructure.”

Decoupling Growth from Market Conditions

This combination of being an early mover, rapidly building up a portfolio of services, importantly with stock trading, and building a brand of trust in the Vietnam market has enabled these digital investment platforms to position themselves sustainably amidst market conditions, grow their ecosystems even further, and take these businesses even beyond expectations from models in other markets. 

It is even worth considering that the global market slowdown could actually be beneficial for early movers that have (1) become market leaders in investment education and acquiring first-time investors and (2) developed flexibility and optionality in their offerings. This could actually be an opportunity for early movers to actually pull ahead of the competition amidst the market correction and solidify their leadership.

Compared to their Western counterparts, most players in the region are privately funded at this point and operate in markets where costs of investing are not as high (or have been lowered precisely by these same platforms). There is also the factor of Southeast Asian economies withstanding the impact of global inflation with economic growth decoupled from the global markets. This could either significantly slow down the adverse effects of current market conditions or even insulate the companies to a significant degree. 

Finally, when it comes to Southeast Asian market conditions, the outlook on investment apps is not just a function of public market performance but also investor education and importantly, the propensity for these investors to invest in this asset class vis-a-vis other asset classes (e.g. for example property or gold in Vietnam). 

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Paulo Joquiño is a writer and content producer for tech companies, and co-author of the book Navigating ASEANnovation. He is currently Editor of Insignia Business Review, the official publication of Insignia Ventures Partners, and senior content strategist for the venture capital firm, where he started right after graduation. As a university student, he took up multiple work opportunities in content and marketing for startups in Asia. These included interning as an associate at G3 Partners, a Seoul-based marketing agency for tech startups, running tech community engagements at coworking space and business community, ASPACE Philippines, and interning at workspace marketplace FlySpaces. He graduated with a BS Management Engineering at Ateneo de Manila University in 2019.