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.
The US dollar was trading at NT$29.7 at 10am today on the Taipei Foreign Exchange, as the New Taiwan dollar gained NT$1.364 from the previous close last week. The NT dollar continued to rise today, after surging 3.07 percent on Friday. After opening at NT$30.91, the NT dollar gained more than NT$1 in just 15 minutes, briefly passing the NT$30 mark. Before the US Department of the Treasury's semi-annual currency report came out, expectations that the NT dollar would keep rising were already building. The NT dollar on Friday closed at NT$31.064, up by NT$0.953 — a 3.07 percent single-day gain. Today,
‘SHORT TERM’: The local currency would likely remain strong in the near term, driven by anticipated US trade pressure, capital inflows and expectations of a US Fed rate cut The US dollar is expected to fall below NT$30 in the near term, as traders anticipate increased pressure from Washington for Taiwan to allow the New Taiwan dollar to appreciate, Cathay United Bank (國泰世華銀行) chief economist Lin Chi-chao (林啟超) said. Following a sharp drop in the greenback against the NT dollar on Friday, Lin told the Central News Agency that the local currency is likely to remain strong in the short term, driven in part by market psychology surrounding anticipated US policy pressure. On Friday, the US dollar fell NT$0.953, or 3.07 percent, closing at NT$31.064 — its lowest level since Jan.
The New Taiwan dollar and Taiwanese stocks surged on signs that trade tensions between the world’s top two economies might start easing and as US tech earnings boosted the outlook of the nation’s semiconductor exports. The NT dollar strengthened as much as 3.8 percent versus the US dollar to 30.815, the biggest intraday gain since January 2011, closing at NT$31.064. The benchmark TAIEX jumped 2.73 percent to outperform the region’s equity gauges. Outlook for global trade improved after China said it is assessing possible trade talks with the US, providing a boost for the nation’s currency and shares. As the NT dollar
PRESSURE EXPECTED: The appreciation of the NT dollar reflected expectations that Washington would press Taiwan to boost its currency against the US dollar, dealers said Taiwan’s export-oriented semiconductor and auto part manufacturers are expecting their margins to be affected by large foreign exchange losses as the New Taiwan dollar continued to appreciate sharply against the US dollar yesterday. Among major semiconductor manufacturers, ASE Technology Holding Co (日月光), the world’s largest integrated circuit (IC) packaging and testing services provider, said that whenever the NT dollar rises NT$1 against the greenback, its gross margin is cut by about 1.5 percent. The NT dollar traded as strong as NT$29.59 per US dollar before trimming gains to close NT$0.919, or 2.96 percent, higher at NT$30.145 yesterday in Taipei trading
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