Shareholders in the newly-named IOUpay (ASX:IOU) went on a rollercoaster in the September quarter, as the company underwent key personnel changes and a shift in strategy.

Q2 kicked off with a name-change (from iSentric), and October has been a good month so far with shares in the payments company climbing from 9c to a 2020 peak of 28c last Friday.

And as the company looks to leverage its foothold in the Malaysian market, its advisory firm Barclay Pearce is backing the firm’s regional expansion strategy.

Payments for south-east Asia

In its capacity as an advisory firm, Barclay Pearce assisted IOUpay’s July restructure which saw the CEO replaced while the company announced a $1.5m share placement.

Shortly after, a group of shareholders lobbed a S249D notice as part of an attempt to roll the new board.

But following a strong October rally in IOU shares, the 249D notice was withdrawn last Thursday.

Looking ahead, Barclay Pearce analyst Russell Wright flagged further opportunities for growth in the Malaysian market in a research note released yesterday.

He cited IOUpay’s established position in the mobile payments market, where its IOU Pay platform “processes over 17 million online payment and consumer interactions every month”.

On the B2B side, Wright said the the company serves a number of large Malaysian banks and corporate clients including Air Asia and Mazda.

But it’s on the consumer side where he said the main opportunity lies — providing mobile payment services to “under banked” customers in Malaysia and Indonesia.

“Market data indicates that consumers in Malaysia and Indonesia are ready for BNPL services, given the paucity of consumer lending and credit card solutions,” Wright said.

And like advanced Western economies, enforced COVID-19 restrictions in south-east Asian economies have prompted a surge in ecommerce activity, he added.

At the same time, over half the populations of both Malaysia and Indonesia — with a combined population of around 300m — don’t have access to banking services.

Wright cited strict banking regulations as one key factor, which leaves many people ineligible for lending services.

“The lack of bank credit options for smaller borrowers has left a large gap in the market.”

To capitalise, Wright said IOUpay has focused on developing a platform which allows its commercial partners to mine IOUpay customer data for the purpose of targeted marketing campaigns.

Assessing the market opportunity, Wright has put a “speculative buy” recommendation on IOU shares at their Friday closing price of 26.5c.

“In a region with large under-banked populations and a systemic lack of consumer credit, this demand side growth presents the company with significant supply side upside,” Wright said.

At Stockhead we tell it like it is. While IOUPay is a Stockhead advertiser, it did not sponsor this article.