In pursuit of reducing financial friction, banks and complementary service providers have begun to collaborate amongst themselves, as well as with external technology companies, on a global scale, to offer a seamless customer journey. In some cases, it is the external technology companies themselves who diversify, seeking new opportunities by entering the financial market. Reacting to consumer demand and the regional market conditions, Asian banks, fintech companies, and established tech giants from across the e-Commerce spectrum demonstrate a commitment to innovation, streamlining the payment process in hopes of reaching a wider audience.
Stanislav Panov, Business Development Manager (APAC) at international payment service provider ECOMMPAY, shares three key observations regarding business trends within the Asia Pacific region.
Frictionless payments in China and beyond: WeChat and Alipay
One of the best examples of payments integrated into everyday life is WeChat, China’s most popular messaging application. WeChat enables users to combine social communications and payments. From sending text, audio, or video messages to friends and family to booking and paying for taxis, cinema tickets, restaurant reservations, and more, WeChat offers a plethora of services through a single, unified, user-friendly application. As a result, what began as a messaging service has become a one-stop shop for any and all consumer requirements, boasting 1 billion monthly users and 800 million monthly payments.
Alipay is another popular Chinese payment method, launched by the retail conglomerate Alibaba Group in February 2004. Offering users enhanced international payment capabilities by partnering with major banks in the regions popular among Chinese tourists, Alipay enables consumers to pay for purchases abroad via mobile application. Due to a number of factors, including language barriers and their preference for travelling in groups, the most common destinations for Chinese tourists tend to be neighbouring Asian countries, which offer a familiar context. However, as Alipay expands, offering its services globally and extending the Chinese payment context, Chinese consumers will be encouraged to travel – and spend – further abroad.
e-Wallets, such as WeChat Pay and Alipay, are popular among the local population due to their speed and convenience. In addition to displaying the price of goods and services in the currency preferred by users, e-Wallets enable consumers to track their spending, as well as access a wide range of discounts and special offers. Relying on a single application, users can fulfil various personal and social needs, as well as receive targeted advertising tailored to their specifications. As a recent example, 7Eleven shops in Malaysia introduced discount coupons for Chinese tourists through Alipay, which were visible to them depending on geolocation.
Building a financial ecosystem in Southeast Asia: Grab and BIMA
Technology companies operating within the share economy acquire a vast amount of consumer data. Singapore-based Grab (formerly GrabTaxi) began as a taxi service much like Uber, but quickly expanded into logistics, food delivery, and the financial sector across the Southeast Asian region. To access the largely unbanked local population in Indonesia, Grab acquired Kudo, a popular payment platform with a network of agents (mostly kiosks) enabling consumers to make purchases or sell products online, as well as to pay for utility bills offline.
By combining and analysing the data accumulated through its ride-sharing services and various financial products, such as the GrabPay e-Wallet, the Grab Rewards loyalty programme, and the aforementioned Kudo payment platform, Grab was able to introduce Grab Financial Services in partnership with Japanese consumer financing company Credit Saison. The large amount of consumer data enables Grab to provide targeted banking products, such as loans and insurance, to a wide audience. As these services are difficult to acquire in the Southeast Asian region due to large portions of the population remaining unbanked, Grab’s insight into how Kudo agents and Grab taxi drivers earn and spend has provided the opportunity for the company to expand its business offering.
Another regional example of new players emerging to engage with the unbanked population is the partnership between microfinance and insurance provider BIMA and Malaysian telecommunications group Axiata. Analysing the data available to Axiata, the two companies tracked consumer behaviour on mobile devices. As roughly four billion people in the region are unable to apply for insurance through traditional means, BIMA and Axiata have engineered a system to enable consumers to purchase insurance via their mobile devices.
Changing perspectives in the financial sector: Development Bank of Singapore
As innovative fintech projects emerge to challenge the traditional banking institutions, the financial services sector is experiencing a significant paradigm shift. Whether the relationship between the aforementioned parties will be complementary or adversarial remains to be seen, but established banks must now contend with increased pressure regardless – both from consumers, who demand improved products and services, and from new market players, who can become competitors or potential partners.
To address consumer concerns, forward-thinking banks strive to build seamless, frictionless customer experience from start to finish. The Development Bank of Singapore (DBS), for instance, has partnered with real estate companies to simplify the process of buying property. By engaging prospective home owners at the beginning of, as well as throughout, the customer journey, DBS not only nurtures brand loyalty, but also gathers important customer data to optimise and tailor its selection of services. Much like the popular “Intel Inside” slogan, DBS uses “Powered by DBS” as an additional trust layer for both customers and partners.