Financial inclusion is key for the Asia Pacific where more than one billion people still do not have access to formal financial services. As the COVID-19 pandemic hit, it was more urgent than ever that the disparity in financial inclusion be addressed so that small businesses could access financial support that the government was extending to them, or to ensure a smooth transition of their businesses online. Within the region, we have seen a slew of payment platforms and digital banking services being introduced. From ride hailing apps (GrabPay) to ecommerce firms (Lazada Wallet), each platform aims to attract users that are already on their platform and create a user base.
Commercial banks have even launched their own e-wallets or, in some cases, partnered with superapp companies. In 2019, Thailand’s Kasikorn Bank partnered with Grab to launch an e-wallet for unbanked customers called GrabPay by KBank. Indonesia-based Bank Jago also became the country’s fourth most valuable listed bank last year after receiving investments from Gojek and is now planning on partnering with Gojek to embed its financial services on the company’s platform.
On 15 June 2021, as part of our Fair Tech Forum, we spoke to experts on the ground on “Promoting Financial Inclusion to Accelerate COVID-19 Recovery.” Dr. Vacharakoon Jivakanont, Deputy Director, Payment Systems Policy, Bank of Thailand; Alison Eskesen, Vice President, Mastercard Center for Inclusive Growth; and Katie Mitchell, Vice President, Global Head of Government Relations, NIUM, shared their perspectives.
- For better or worse, COVID-19 has proved to be game changer, especially for the digital payments industry. It has encouraged more people to adopt contactless payments to minimize physical contact. At the same time, merchants became more willing to accept new forms of payments so that more customers could be served in line with social distancing regulations. One of the panellists raised that with the right incentives, the adoption of financial inclusion can be driven among people from all walks of lives. The Bank of Thailand also demonstrated how the public sector can play an important role as an innovator in the digital space with government e-wallet and cross-border QR code payment.
- While COVID-19 created a tipping point to scale up the adoption of digital payments, cash is still king for many folks in the Asia Pacific. We discussed whether the current spur of activities around fintech products is a product of the pandemic or whether it is part of a longer-term structural change. The panellists agreed that it all boiled down to these elements to keep up the new behaviour: (i) continue to improve financial and digital literacy; (ii) provide good customer experience; (iii) be clear on the value proposition; and (iv) create trust and provide assurance over the security of a product.
- Developments in the digital payments space has been beneficial to many within the region. Yet, there are still gaps due to the lack of ubiquitous connectivity resulting in digital divide or cultural norms that result in gender divide. It is important to remember that Asia is not monolith and different countries, as well as regions, have unique characteristics that would need tailored solutions.
- Across the board, there is a consensus that regulations should be fit for purpose. One great point highlighted was how ASEAN, as a grouping, has demonstrated their ability to innovate in the regulatory space, especially on areas like cross-border data flow and the model contractual clauses. There is an appetite for the private and public sector to continue to work together and deepen financial inclusion across the Asia Pacific.