Sun, Jul 02, 2017 - Page 15 News List

Jack Ma’s shadow looms over banks across Southeast Asia

The Chinese billionaire is striking up partnerships across the region to reach nearly 450 million people with limited access to banking services, threatening local lenders’ core businesses

By Chanyaporn Chanjaroen, Jun Luo and Keith Zhai  /  Bloomberg

Alibaba Group Holding Ltd chairman Jack Ma speaks at the company’s inaugural Gateway ‘17 conference in Detroit, Michigan, on Tuesday.

Photo: Bloomberg

Over the past two months, about 1,000 part-time workers for DBS Group Holdings Ltd have fanned out across Singapore’s famed food courts, trying to entice mom-and-pop hawkers to use the bank’s digital payments service, called PayLah.

“Hawkers need speed and they are afraid that using PayLah may not be fast enough when the queues are very, very long,” 19-year-old Erica Chiang, who has signed up 50 food vendors in her seven weeks working for DBS, said on a sweltering Wednesday afternoon. “Once they know the product, they become interested.”

Chiang is on the front lines of a push consuming banks across Southeast Asia these days: defending against Jack Ma’s (馬雲) Alibaba Group Holding Ltd (阿里巴巴) and its payments affiliate, Ant Financial Services Group (螞蟻金服), which are targeting the region as a major growth market.

Southeast Asia’s banks have long been spared the competitive onslaught that saw their peers in China cede that nation’s giant payments market to Ant Financial and Tencent Holdings Ltd (騰訊). That is about to change, as Ma lines up partnerships across the region to win over some of the estimated 450 million people with limited access to banking services — and then use that position to go after the lenders’ core customers.

“We view the ‘big techs’ with large platforms as the ones we should be more concerned with,” DBS head of digital banking Sandeep Lal said.

Underscoring the perceived threat, the Singaporean government on Tuesday proposed new rules to make it easier for banks to invest in non-financial businesses, including e-commerce and digital-payment platforms.

In announcing the move, Singaporean Minister of Finance Heng Swee Keat (王瑞傑) cited “increasing competition from online and non-financial players.”

Digital payments in Southeast Asia, home to about 630 million people, might reach US$62.3 billion this year, according to the research firm Statista Inc.

The transition to digital offerings will put pressure on other lucrative areas for banks, like cross-border transactions, said James Lloyd, a Hong Kong-based financial technology specialist at consultancy EY.

“Banks will not be making the same profit margins in this market in five years,” Lloyd said.

China stands as a looming reminder of what happens when banks do not respond quickly enough. Alipay (支付寶) and an offering from Tencent carved up more than 90 percent of the country’s US$5.5 trillion mobile payments market between them in just four years.

Ant Financial has set up partnerships in Thailand, Indonesia and the Philippines to offer services like lending and money transfers. Together with Alibaba, it is also piecing together a digital payments business in heavily-banked Singapore.

Ant Financial’s tie-up with Ascend Money Co, a unit of Bangkok-based retail and telecoms conglomerate Charoen Pokphand Group, illustrates its approach.

Charoen Pokphand runs the 7-Eleven franchise in Thailand, which has almost 10,000 outlets across the country. Thais can sign up for Ascend Money’s product — known locally as TrueMoney — in 7-Eleven outlets and use it to pay for online shopping or at a range of stores, even if they do not have regular bank accounts. They can top up their TrueMoney accounts in 7-Elevens with cash.

Ascend says it has more than 20 million users across Southeast Asia, mostly in Thailand.

This story has been viewed 2492 times.

Comments will be moderated. Keep comments relevant to the article. Remarks containing abusive and obscene language, personal attacks of any kind or promotion will be removed and the user banned. Final decision will be at the discretion of the Taipei Times.

TOP top