Author: Issa Keshek, Regional Manager

There are several interesting examples of innovation and change in the Asian electronic payments space that we can take as indicators of the mood of the market in the region, despite its size and diversity.

The Word Payments Report 2018 has noted Asia has seen the largest overall growth in non-cash transaction volumes; accounting for over 25% of total global growth. According to the report, this was largely fuelled by India and China where government efforts to drive financial inclusion have increased, and the growth of disruptive digital payments platforms have taken hold. However, we are now also starting to see change and innovation elsewhere in the region thanks to the growing availability and, crucially, acceptance of new payments technology.

Examples of emerging trends

India: In India’s payments market there has been significant change over the last 24-months due to the rapid introduction and demand for payments wallets and P2P payments platforms, allowing money to be transferred easily and error free. Banks, financial institutions, and third parties like PayPal, are working hard to promote and build the adoption of these payment methods through various cash-back incentives. At the same time, the National Payments Corporation of India (NPCI) has several innovative payments solutions both in production and live focusing on its Unified Payments Interface (UPI) system.  In a market traditionally dominated by debit card payments (and cash), India has leapfrogged to cardless payments in a very short space of time.

Singapore: A country that is moving toward cashless payments, albeit led by contactless as opposed to digital or mobile wallet payments, although we are starting to see some change to this trend. NETS (Network for Electronic Transfers) now enables electronic payments in over 102,000 points in Singapore and more recently has embraced QR code technology, with an estimated 55,000 acceptance points, signifying an encouraging use of innovation in electronic payments. We will be attending the Seamless Asia conference in Singapore in June this year where we will present our view on how cloud-native technology is enabling payments innovation.

Indonesia: Electronic payments remain a relatively novel concept in Indonesia, with cash and transfers still the dominant modus operandi for consumers and businesses alike. However, as with a number of other countries in the region, better telecommunications networks combined with the emergence of access to smartphone technology means that’s likely to change very soon. E-commence is a lucrative market in Indonesia and anything that makes the process of paying for goods both easier and faster is likely to do well.

Malaysia: Still dominated by cash, Malaysia is too on the cusp of change – and in particular – is likely to see an increase in the use of mobile payment wallets. The Governor of Malaysia’s Central Bank recently commented: “We expect the mobile payment to continue to gain momentum with further acceleration in the migration to e-payments.” Figures from the bank show that in 2018, there were nearly 24 million mobile transactions, up from just 1.2 million the year before. Impressive. It is anticipated they too will launch QR code payments technology later this year.

Preparation is critical

Typically, Asia has very high levels of investment and uptake when it comes to the latest technology which, while exciting, makes predicting the direction of consumer behaviour really quite hard. But I hope the above sheds some light on just how much change is afoot in the region. The impact and growth of strong telecommunications networks and the change it is enabling are democratising access to financial services and payments on a scale we have never experienced before.

What all of this suggests to me is banks and other financial institutions need to be ready for changing requirements in terms of both their hardware and software. We are operating in a market that changes every three to six months. To be ready to respond to this level of sustained disruption, they need to think about the role of cloud-native technology infrastructure. Why? Because it is easy to change, easy to maintain, highly configurable and significantly reduces the time it takes to bring products to market. It is the only way they will be able to adapt to such fast and sustained demand for innovative consumer services.