There must be room in Asia for one more super app. Ride-hailing giants Grab and Go-Jek are going that route, determined to show investors that they're more than glorified high-tech taxi services. The Philippines' Yuchengco Group, a family-owned conglomerate with businesses ranging from banking and insurance to travel, healthcare and funeral services, is now throwing its hat into the super app ring, with a very different approach. Yuchengco intends to replicate its offline services online within a single app: It sounds like reverse O2O, in the sense that services which were once offline are about to go online.
Uber's recent initial public offering underwhelmed investors, as the ride-hailing juggernaut raised $76 billion instead of the $120 billion that had been once expected. Since the IPO, Uber has lost about $5 billion in market capitalization. Analysts say that it could lose another $1 billion before the year ends.
The main problem for Uber is simple: Its core ride-hailing business isn't profitable. For an early-stage startup, profitability isn't essential. But Uber has been around for a decade, and it's still in the red. In 2018, it posted a net loss of $1.8 billion. Chances are high that the company will not make a profit this year either.
Pi Pay is the largest digital wallet in Cambodia's nascent fintech space, having processed 7.5 million transactions of $170 million as of March. The company has 250,000 users and 3,500 merchant partners.
Founded in mid-2017, Pi Pay is unique among Cambodia's fintechs for its strategic partnerships with traditional financial institutions and internet financiers alike. Among its key partners are Alipay, WeChat Pay and Korea's KB Kookmin Bank. The tie-ups with Alipay and WeChat Pay allow Pi Pay to tap the sizable Chinese tourist market in Cambodia. By 2020, Cambodia expects roughly 2 million Chinese visitors per year. Partnering with Kookmin Bank gives Pi Pay access to the 76,000 users of the banks' digital platform Liiv in Cambodia. Last year, Liiv processed overseas wire transfers of $17 million and extended $19 million in loans.
In Taiwan, Japanese messaging app Line has led the ascendant mobile payments market on the back of its strong brand cachet. Among Taiwan's population of 23 million, there are 20 million Line users. More than 6 million Taiwanese have its payment app Line Pay on their handsets. Line is probably the only app with a shot at becoming the WeChat of Taiwan.
Alipay and WeChat Pay have been on a torrid expansion streak, setting up shop everywhere from Southeast Asia to Middle America. The digital wallets of Alibaba and Tencent seem intent on taking their battle for the wallet share of Chinese consumers global.
In Nepal, which is popular with Chinese visitors, the fintech giants got a little ahead of themselves. By facilitating payments by Chinese tourists in renminbi at Alipay and WeChat points of sale, the companies allowed the transactions to bypass the Nepalese banking system in violation of local law and prompted a stern rebuke from Nepalese regulators.
The Philippines is preparing to implement new legislation for mobile payments as it steps up efforts to digitalize its financial system. In a statement, the Philippines' central bank said that the National Payment Systems Act (NPSA) would support the development of a mobile payment system that can serve as the "third pillar of central banking." The Bangko Sentral ng Pilipinas (BSP) sees such as a system as crucial for controlling systemic risk and driving sustainable economic growth.
Manila aims to create a level playing field for incumbents and fintechs under one overarching set of payments regulations, officials say. The Duterte administration believes the NPSA will create the right conditions for healthy competition in the finance sector, they say.
As a near developed country with high financial inclusion, Malaysia is an outlier in Southeast Asia. Like its rich neighbor Singapore, Malaysia's need for fintech is less pressing than poorer underbanked countries like Indonesia, the Philippines, Cambodia or Myanmar. Fintech platforms can facilitate smoother banking for Malaysians, but aren't viewed as a necessity in the country yet. After all, 92% of the population has a bank account and credit cards have a strong foothold.
Axiata Group's Boost digital wallet, established in early 2018, is one of the first Malaysian fintechs to have a demonstrable impact on the country's financial system. Boost's executives say that it is Malaysia's premier digital wallet, with 4 million registered users and 80,000 merchant touchpoints. From January-December 2018, Boost users' average monthly transactions grew fourteenfold, the company says.
The WeChat super app is perhaps the best example of a made-for-China digital ecosystem that struggles beyond the Great Firewall. It's essential in China for communication with colleagues and friends, ride hailing, day-to-day purchases and online banking. WeChat puts all that and more at your fingertips - and it's not like you have a choice anyway. The competition is blocked. But outside the Chinese mainland - where there are lots of other messaging apps - WeChat's only good for one thing: keeping in touch with people back there.
Singapore is an ascendant digital finance hub, in 2018 attracting $365 million in fintech investment. That investment was double the amount raised a year earlier. Despite its small size, the city-state is still the No. 5 fintech market in APAC by funds raised.
Japan is the world's No. 3 economy and known for its tech prowess, yet the Japanese people prefer cash over other forms of payment. Just one in five transactions in Japan are cashless. Some analysts say that Japan can learn from its giant neighbor China when it comes to cashless payments. In less than a decade, China has gone from cash reliant to nearly cash free. In 2017, nearly half of the world's digital payments were made in China.
It wasn't so long ago that China's tech firms were panned as second-rate copycats. The best example might be Baidu, the search giant that is often less effective than Google in Chinese-language searches.
Tencent's WeChat messaging app changed the equation, establishing a mobile-internet ecosystem that is the envy of its global competitors. WeChat has over 1 billion monthly users (mostly in mainland China) and is the No. 5 most used app globally. Its payment platform has expanded to 25 countries. Thanks in part to WeChat business Tencent had a strong third quarter in 2018. Revenue reached $11.7 billion, up 24% over a year earlier, while profits rose 20% year-on-year to $3.4 billion.
Mobile payment adoption is accelerating in Thailand as the finance sector moves to digitize. Like its Asean peers, Thailand is keen to use digital finance to boost an underdeveloped banking sector. Without the entrenched incumbents of developed economies, Asean countries tend to view digital finance as a greater opportunity than threat. Even highly advanced Singapore has embraced fintech, with an eye towards becoming Southeast Asia's fintech hub.
In Japan, cash is still king. Indeed, the Japanese have a fondness for physical currency that has ebbed amongst their neighbors. Cash accounts for 80% of transactions in Japan, compared to 40% in China and 10% in South Korea.
On September 18th 2018 the MAS launched the Singapore Quick Response Code (SGQR). Within the next year, 27 different mobile wallet providers including PayNow, NETS, GrabPay, Liquid Pay, and Singtel Dash will incorporate the new standardised code. The SGQR is the first of its kind globally and represents a significant change to the e-payment landscape. Interoperability is seen as a key infrastructural requirement for mobile payments and will have several impacts on new and incumbent firms in the market.