Now and then a paradigm shift occurs that can totally change the landscape of an entire industry.
A recent example of this was telecommunications in Indonesia. Until the 1990’s, Indonesia had one of the lowest levels of telephone connectivity in the world. Now, Indonesia is one of the most connected nations on the globe. Put simply, mobile telephones allowed the nation to leapfrog the stage of land-line connections and now it has the most number of mobile phones per head in the developing world.
Another paradigm shift is occurring that will bring huge benefits to the millions of people living in the developing world – the availability of high speed internet accessed through mobile and smartphone devices. Both Google and Facebook are currently working on projects to beam high-speed internet from low-level satellites or drones to areas of the population which are not currently supplied by regular telephone and internet service providers.
Smartphones have a computing capacity today many times that of a personal computer just five years ago. These mobile devices are replacing laptops and PCs as the access point to the world of information available on the internet.
These changes in technology have an enormous democratizing effect on people living in the developing world. Education, health information and legal services will be available online, hopefully lifting millions out of poverty. The most positive outcome may be that millions of unbanked people in the developing world, who have no access to payment services, capital, financial advice or who suffer at the hands of unscrupulous non-bank lenders, may receive financial services for the first time.
Many of these people may in fact by-pass the stage of ever going to a bricks-and-mortar bank, as technology enables them to freely access a variety of financial services at any time and on any device. Not only will they benefit from the access to financial services and advice, but the competition from digital financial service providers will drive down the cost.
New digital financial services in Asia
Online loan marketplace
For people with no or little credit history, getting a short term loan to cover something as necessary as a child’s school fees or a family emergency can be an uphill battle. Millions of such people in Asia fall prey to loan sharks and opportunistic money lenders.
A new company based in Singapore, Onelyst, has turned the tables on this situation. By creating an online marketplace for borrowers and licensed non-bank lenders to meet, their technology levels the playing field – allowing price discovery for the borrowers and encouraging lenders to compete. The marketplace enables borrowers to quickly identify the cheapest loan from potentially hundreds of possible lenders. The competitive environment created by this market place forces the lenders to show their best offers. It also simplifies the marketing process and enables lenders to reach customers at lower cost.
Philippines-based Coins.ph is meeting the needs of another unbanked section of the population. The company enables people with no bank account or credit card to be able to deposit money into a digital wallet and pay utility and other bills on their smart device. This might seem rudimentary to many of us who have bank accounts but in countries where over 50% of the population have no bank account these services fill an important void.
Digital wealth management
Wealth management may not be a concern for the world’s poorest communities but an entire generation is emerging that will be the first to save for their own retirement. Wealth is growing faster in Asia than anywhere in the world and it is growing fastest in the emerging and mass affluent sectors.
Until recently, these two sectors – characterised by lower account values – have been underserved by traditional wealth management providers. In the past, it simply wasn’t profitable for financial institutions to provide them with a face-to-face service.
This situation is about to change. Companies such as Quantifeed are enabling financial institutions to offer powerful wealth management solutions on digital devices. These applications enable the investor to self-direct an investment experience. The online investment journey takes the client from an assessment of their goals and needs, through to the recommendation of a suitable portfolio. After an investment is made, it can be reviewed and managed. Financial institutions across Asia now realize that by deploying digital wealth management services, they can profitably service customers with smaller amounts to invest. This connects with a new generation of tech-savvy consumers that expect to be able to get their wealth services online.
Services for the mass affluent will be high-quality and affordable as banks compete in an increasingly transparent market to offer wealth management services that were previously only available to those in the high net worth bracket.
Onelyst, Coins.ph and Quantifeed have all recently graduated from the OCBC Open Vault Fintech Accelerator programme, which took place between May and August in Singapore. Eight companies from across the globe were chosen from over two hundred applicants, with the purpose of helping entrepreneurs build promising Fintech companies of the future, faster and more efficiently.