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.
Photo: Bloomberg
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.
“We start by serving the under-served, unserved customers, similar to in China,” said Douglas Feagin, the former Goldman Sachs Group Inc partner who now oversees Ant Financial’s international operations. “Then we look to expand that to a much broader customer base.”
Ma, through Alibaba and Ant Financial, is also stitching together an e-commerce and payments network in Singapore through the acquisitions of Lazada Group SA, online grocer RedMart Ltd and HelloPay, a mobile payments service now rebranded as Alipay.
Lazada, involved in payments, e-commerce, transport and storage, on Wednesday said Alibaba will invest another US$1 billion in the company to boost its stake to 83 percent.
DBS is moving to stave off the challenge by linking up with traditionally cash-heavy businesses. The bank is working with ComfortDelGro Corp, Singapore’s largest taxi firm, to equip 16,300 of its cabs with terminals that allow payments through PayLah by the third quarter of this year.
Other Southeast Asian banks are making similar pushes into digital services by introducing so-called e-wallet and payments options via mobile phones.
Malayan Banking Bhd, Malaysia’s largest lender, has introduced an e-wallet that allows clients to send money gifts on special occasions.
In Thailand, Kasikornbank Pcl has set aside 5 billion baht (US$147 million) per year for investment in digital-banking technology.
“If we don’t do anything, we believe there could be an impact to our business and revenue,” Maybank chief strategy officer Michael Foong Seong Yew said.
Among the rows of vibrators, rubber torsos and leather harnesses at a Chinese sex toys exhibition in Shanghai this weekend, the beginnings of an artificial intelligence (AI)-driven shift in the industry quietly pulsed. China manufactures about 70 percent of the world’s sex toys, most of it the “hardware” on display at the fair — whether that be technicolor tentacled dildos or hyper-realistic personalized silicone dolls. Yet smart toys have been rising in popularity for some time. Many major European and US brands already offer tech-enhanced products that can enable long-distance love, monitor well-being and even bring people one step closer to
Malaysia’s leader yesterday announced plans to build a massive semiconductor design park, aiming to boost the Southeast Asian nation’s role in the global chip industry. A prominent player in the semiconductor industry for decades, Malaysia accounts for an estimated 13 percent of global back-end manufacturing, according to German tech giant Bosch. Now it wants to go beyond production and emerge as a chip design powerhouse too, Malaysian Prime Minister Anwar Ibrahim said. “I am pleased to announce the largest IC (integrated circuit) Design Park in Southeast Asia, that will house world-class anchor tenants and collaborate with global companies such as Arm [Holdings PLC],”
Sales in the retail, and food and beverage sectors last month continued to rise, increasing 0.7 percent and 13.6 percent respectively from a year earlier, setting record highs for the month of March, the Ministry of Economic Affairs said yesterday. Sales in the wholesale sector also grew last month by 4.6 annually, mainly due to the business opportunities for emerging applications related to artificial intelligence (AI) and high-performance computing technologies, the ministry said in a report. The ministry forecast that retail, and food and beverage sales this month would retain their growth momentum as the former would benefit from Tomb Sweeping Day
Thousands of parents in Singapore are furious after a Cordlife Group Ltd (康盛人生集團), a major operator of cord blood banks in Asia, irreparably damaged their children’s samples through improper handling, with some now pursuing legal action. The ongoing case, one of the worst to hit the largely untested industry, has renewed concerns over companies marketing themselves to anxious parents with mostly unproven assurances. This has implications across the region, given Cordlife’s operations in Hong Kong, Macau, Indonesia, the Philippines and India. The parents paid for years to have their infants’ cord blood stored, with the understanding that the stem cells they contained