Alibaba and Tencent (Wechat) have long been part of our everyday lives. These technology companies are representative of the extremely powerful digital economy in our region, whose diverse offerings are enthusiastically accepted by smartphone-loving consumers. Such markets offer ideal conditions for open banking.
Southeast Asia alone is home to 630 million people, 60 percent of whom are under 35. The mobile user penetration rate is over 140 percent, according to The Business Times, Singapore. For the financial industry, this opens up a huge market for services such as e-wallets, money transfers via smartphones and p2p (peer-to-peer) payments. While Open Banking opens up a huge market for providers, observers see the development of API-based technologies for the integration of third-party providers as a huge opportunity for the population, paving the way for greater financial inclusion. Financial institutions thus hold the key to offering a better life to Asia’s unbanked population of approximately one billion people. This underbanked population can, for example, take out microinsurance and tend to be less financially burdened if they require medical assistance. With the help of loans, they can better shape the future; for example, by investing in their children’s education.
The digital transformation of the financial industry is having a much faster and more pronounced effect in Asian markets than in Europe. Technology companies such as Alibaba, Tencent and Kakao Corporation began integrating financial services into their portfolios early on. Furthermore, studies show that customers are open to offers from insurers and other companies through their banks. The financial institutions are now called upon to define their own position in the platform economy and to create the technological framework conditions to adopt it.
In Part 2 of our series “Open Banking in Asia” they read how widespread digital and mobile banking in Asia has already become.
Read our white paper “Open Banking: The future for the finance industry lies in the platform economy”, which you can download here.