With several non-banking providers such as AirAsia and Grab taking the lead in the mobile payment space in an effort to grow into full scale financial service providers in the Association of Southeast Asian Nations (ASEAN) region, incumbent banks have a lot of space to cover and need to be more adaptable, says leading data and analytics company GlobalData.
Arnie Cho, Senior Financial Analyst at GlobalData, says: “With 640 million in population, the ASEAN region has a lot of potential for many businesses. In terms of fintech, almost all competitors first enter the payment service area with the intention of expanding into other mobile financial services.”
Malaysian low-cost airline AirAsia has recently launched its own mobile wallet service–BigPay–at Money 20/20 Asia to provide low-cost financial services. According to AirAsia founder and CEO Tony Fernandes, BigPay will later be extended into cross-border remittances and online lending.
Earlier, Singapore-based on-demand transportation and fintech platform Grab announced the formation of Grab Financial Services Asia to provide payment, loans and lending services across Southeast Asia.
Go-Jek, the Indonesia-based rival of Grab, also bought three mobile payment start-ups towards the end of last year with an aim to venture into the mobile payments arena. Another big name to note is Alipay, which has planted its roots in eight countries in the ASEAN region.
According to figures from GlobalData, smartphone penetration in the ASEAN region averaged about 44% at the end of 2017 and is forecast to grow by another 10 percentage points by the end of 2020.
Cho adds: “With so many established fintech brands all trying to carve out a piece of the mobile payments markets, local banks will find it hard to make headway. These tech firms have pursued the marginal client that has struggled to get away from cash, while the incumbent banks have focused on fighting for prime affluent consumers.
“That seems to be the pattern for how mobile payment providers evolve in developing markets, banks are cautious and focus on the existing clients, missing out on mobile payment among the emerging middle class while nimble tech firms seize the opportunity.”
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