The changing digital landscape has transformed the way people communicate, travel and conduct financial transactions. Accelerated by the pandemic, the main beneficiaries of automation and analytics in this technological revolution have been the banking and fintech sectors.
Innovative fintech products have helped individuals and businesses adapt to the new normal during these uncertain times. Today, digital currency is demonstrating its ability to overcome fundamental obstacles to the advancement of finance for inclusive and sustainable development through neobanks, e-wallets and Buy Now Pay Later (BNPL) players in the market.
The way forward for marketers
Despite the digital surge, ASEAN countries are home to an unbanked population of around 290 million adults. Only 18% of the region has access to credit, financial services or investment products.
Of which, India has 190 million adult individuals, who do not have a bank account – making it the largest country by mass in the ASEAN bloc, home to the second largest unbanked population after China – a envious geography for aggressive business. Marketers of these companies, especially fintech, have a great opportunity to educate and encourage the unbanked population to be part of the digital banking system, through online advertising.
While the approach should be educational and intent-driven, marketers need to consider the low financial literacy and limited bandwidth environment in developing countries. Regional advertising campaigns with innovative ideas to familiarize the target audience with the benefits and positive impact of digitizing the payment and banking system – both for personal and professional use – using online media can be a engine to build trust influencing consumer behavior.
Neobanks, like the UK-headquartered Wise (formerly Transferwise) and Singapore-based ASPIRE, are all-digital banking solutions providers with the intention of building an ecosystem that supports online banking. travel, via mobile or desktop applications, while remaining light and avoiding the costly networks of physical agencies.
Neobanks can be launched by a traditional financial company (for example – Octo in the Philippines and Beat Banking in Thailand are neobanks launched by a traditional financial company, Malaysia-based CIMB Group) or like Revolut, which started with a flagship then added services gradually. Tech-savvy millennials and micro, small, and medium-sized enterprises (MSMEs) make up a large portion of neobanks’ customer base.
Europe has been a pioneer in opening doors to neobanks by providing regulatory support. In recent years, neobanks have started to gain market share globally in countries such as the United States, United Kingdom, Germany, Australia and China, where banking services online and mobile are the preferred mode of transaction.
Statista estimated the neobank market size at $47.1 billion in 2021 and forecasts the global neobank market to grow at a CAGR of 47.7% from 2021 to 2028.
As Google is synonymous with search, Venmo is synonymous with electronic wallets in the United States. These two brands have managed to create such strong recognition that they are used both as a noun and as a verb! E-wallets in mobile apps have gained immense popularity among the Gen Z population. They are simple and allow instant money transfers and payments to vendors without physical cards.
There is a range of digital wallets available around the world which makes this space very competitive. Consumers choose e-wallets based on their convenience and preferences. Apple phone users prefer Apple Pay which uses fingerprint or Face ID for verification. Android devotees generally prefer Google Pay which uses NFC technology to encrypt card information. Some prefer Paypal because of its international acceptance. MatchMove, headquartered in Singapore, and NIUM are prominent providers of digital wallets in Southeast Asia.
The penetration of smartphones has encouraged digital transactions in both developed and developing countries.
India has witnessed a digital revolution among developing countries due to the overnight announcement of demonetization in November 2016. Fintech startups have developed innovative payment solutions to ride out the tide. Paytm is one such success story that was at the forefront of providing digital wallets at your fingertips. The company had gained the most extensive subscriber base and a $20 billion valuation when it went public in November 2021.
Buy now, pay later (BNPL)
Credit cards introduced everyone to cashless transactions. BNPL has a head start in offering microcredit to consumers. It offers interest-free short-term credit for online purchases of goods and services. BNPL offers the flexibility of a one-time refund or an EMI facility. Repayment of credit must be made on time to avoid late fees and interest.
The APAC region has joined the BNPL movement like its global counterparts. Players such as Hoolah, Razer, Grab, and Traveloka have seen their volumes increase in several ways over the past two years.
However, there is a considerable caveat to BNPL. Most players do not consider borrowers’ credit ratings and are accessible even to those who may have poor credit ratings. This can have a ripple effect on the economy when microcredit defaults start to spike.
Global fintech companies have shown resilience during the covid-19 pandemic and subsequent waves. The trend was most apparent in emerging economies trying to catch up with the rest of the world. Digital marketing has accelerated the growth and penetration of innovation in financial services among the unbanked population. But in a dynamic landscape, the new kid on the block – blockchain-backed crypto, NFT and other DeFi banking solutions has caught everyone’s attention.
Marketers need to be transparent about the benefits and risks implied by new-age banking solutions to retain long-term customers. Digital bankers and digital marketers will need to find ways to seamlessly collaborate and go hand in hand to create more innovative success stories, in the region!