June 08, 2023 Panel - Programmable Money & the Future of Cross-border Payments |
June 27, 2023 Seamless Asia 2023 |
August 28, 2023 Fintech Connect Leaders Summit 2023 |
BNPL, or buy now pay later, is a type of payment option that allows customers to purchase items now and pay for them later in installments. This type of payment option has been gaining popularity in recent years, especially among younger shoppers. In fact, a recent study showed that BNPL usage has increased by 400% among millennials in the past two years.
BNPL first emerged in Asia in 2014 and has since become extremely popular in countries like China, South Korea, and Singapore. In China, for example, the BNPL market is expected to grow from $30 billion in 2020 to $750 billion by 2025. It could be argued that Australia was the epicentre of BNPL in Asia with such previous market leaders including Afterpay and Zip. So, what is driving this massive growth? Let's take a closer look at BNPL in Asia and how it works.
The Hong Kong financial center lexicon is ever expanding. Depending whom you ask, Hong Kong is an international financial center, Asia’s most important financial center, China’s offshore financial center or some combination of all three. Historically, Hong Kong liked to stay out of politics and thrived on its combination of laissez-faire capitalism, strong, independent legal system and knack for acting as a bridge to the Chinese mainland. Going forward, those factors will remain integral to Hong Kong’s success, but important questions remain about how economic and financial policy choices on the mainland will affect the city’s fortunes.
The Philippines recently experienced a setback in its fight against financial crime: The Financial Action Task Force (FATF) declined to remove the Southeast Asian country from its grey list, on which it was placed in June 2021 for having inadequate money-laundering and counterterrorism financing controls. After a two-day plenary in October, Paris-based FATF decided to keep the Philippines on the list along with 22 other jurisdictions.
The newest digital bank in Singapore stealthily came into existence, flying below the radar in contrast to the high-profile race for digital banking licenses that ended with victories by Grab-Singtel, Sea, Ant Group and a consortium headed by China’s Greenland Holdings. Now competing with these four digital banks is Trust Bank, launched in September by Standard Chartered and NTUC FairPrice, Singapore’s largest supermarket chain.
Thailand has never been in a rush to introduce digital banks. After all, the kingdom is neither a financial center like Hong Kong or Singapore, nor does it have a huge unbanked population likes Indonesia and the Philippines. About 81% of Thais have a bank account. However, it is possible that introducing online banks could improve competition in Thailand’s financial sector – and that appears to be one of the key goals of the Bank of Thailand (BoT) as it moves forward on digital banks.
Being placed under increased monitoring by the Financial Action Task Force’s (FATF) is never welcome news for a country. Besides the reputational damage that comes along with such a designation, there are many practical problems caused by the restrictions that may be put on financial transactions as well as burdensome compliance requirements. Most countries are put on FATF’s gray list due to inadequate money laundering and counterterrorism financing controls. However, occasionally a country is added to the blacklist – reserved for the countries that pose the most serious financial crime risks – including North Korea and Iran – which is what happened to Myanmar last month.
A commentary in collaboration with Banking Circle.
Cross-border payments are increasingly characterized by a dynamic and challenging market environment. On the one hand, the market is booming and expected to reach US$156 trillion this year. On the other, traditional international correspondent banking networks are shrinking at the same time that alternative rails that execute payments in real time are increasingly common. Thus, financial institutions (FIs) have more choice than ever, but being able to connect seamlessly to all the rails is not straightforward.
The proof of the tentative state of Australia’s bid to introduce greater competition into its financial services sector is in the pudding: The country’s big four incumbent lenders have increased in size despite the high-profile launches of different neobanks in recent years. Of that crop of upstarts, the last one left standing is Judo Bank. The others have either collapsed or been acquired. Meanwhile, the big four are arguably stronger than ever.
China’s largest ever tech crackdown has failed to dethrone Alipay and WeChat Pay from their dominance of the country’s fintech sector, even if it has reduced their profitability. For better or worse, the duopoly seems to have staying power, especially in payments, the stickiness of the respective super apps evident. However, there has long been a line of thinking that payments interoperability and the digital renminbi together will pose a threat to the duopoly. Following recent comments by a senior People’s Bank of China (PBoC) official about the need to standardize QR codes, there is renewed speculation that the payments hegemony of China’s fintech juggernauts could be waning.
Ever since news of the 1MDB scandal broke, Singapore has been on heightened alert for financial crime. As Southeast Asia’s premier financial hub, it faces certain risks. In the past few years, it has been grappling with a rise in digital financial crime that has dovetailed with the timeline of the coronavirus pandemic. While online scams and phishing remain a vexing problem, the city-state now also has to contend with bad actors in the cryptocurrency sector in which it has invested considerable resources.
In recent years, digital banks have become increasingly common in Asia Pacific, including in the region’s advanced economies. Though these markets are well banked, regulators have sought to introduce greater market competition and promote digital transformation among oft-complacent incumbents.
A commentary in collaboration with Banking Circle.
Cross-border payments in Asia Pacific have made significant strides in recent years, buoyed by strong economic growth and steady digitization of financial services. Estimated by McKinsey & Co. to have grown at 6% annually from 2011-2019, the region’s cross-border payments account for an increasingly large share of a global market expected to reach US$156 trillion globally this year.
Singapore-based B2B payments firm Thunes is stepping up its global expansion. Following its securing of a major payment institution license in France in late 2021, Thunes has continued to grow its global footprint. This has included partnering with Alipay, broad expansion in Greater China and establishing operations in Saudi Arabia.
Southeast Asian countries have for several years been interested in establishing a regional cross-border payments system. Full payments interoperability could be possible in Southeast Asia as early as November 2022, Fitch Solutions Risk and Industry Research said in a recent research note, citing comments made by Southeast Asian central bankers in July. Yet if we take a closer look, we find that the linkages are predominantly bilateral and there are still some kinks to be ironed out before a truly multilateral system of real-time retail payment rails can be established.
Given the ever-more complex geopolitical situation, it is well worth examining the state of renminbi internationalization. Lofty goals mooted in the early 2010s, such as a free float of the Chinese currency, and full convertibility of the capital account, seem out of reach for the foreseeable future. Nor is the renminbi becoming a dominant global reserve currency. Rather, its use is rising in specific use cases, such as bilateral trade settlement, often due to geopolitical considerations.