Financial Industry Research Reports

The gig economy is roughly defined as a prevalence of short-term contracts or freelance work as opposed to permanent jobs. As the global economy changes, the gig economy has been growing rapidly. According to a recent Mastercard report, the digital gig-economy generated ~USD 204 billion in revenue in 2018, or, for comparison, just over half (56%) of Malaysia’s economy in 2019. The size of gig-economy transactions is projected to grow by a 17 percent compound annual growth rate with a Gross Volume of ~USD 455 billion by 2023, or just over four-fifths (86%) of Thailand’s GDP in 2019.

Today’s financial industry is going through rapid change. Fintech companies are combining finance and technology in new and innovative ways to completely redefine existing value chains. These fintechs are launching innovative products and services that promise to disrupt one of the oldest industries in the world, shake up norms that have been in place for decades, and change the business models of everything from payments to lending.

As the financial industry has developed, it has increasingly relied on technology to facilitate the flow of capital. Although technology increases efficiency and lowers transaction time and cost, a critical underlying need is an ability for systems to communicate effectively with each other both internally within an organization and externally with other organizations. With vast amounts of data flowing throughout the financial system every second, even the smallest miscommunication can be costly.

Regulation has always been the bugbear of the financial sector. On the one hand, it is a necessary part of stable industry growth. On the other, regulatory requirements are one of the biggest challenges for banks today; the global banking industry spends an estimated US$270 billion a year on compliance-related costs. Nowhere is the regulatory challenge more acute than in Asia Pacific, where a confluence of cultures, political systems, languages, and financial systems come together daily across the region. 

Challenges for the financial industry are growing. Third party non-bank financials threaten the core businesses of traditional banks and institutions. Trade tensions are escalating between the US and China, and even the US and Canada, and threaten to take the global economy on a different path, which may ultimately have a dramatic effect on the business of banks. Further, as interest rates rise, the stark realities of a worsening economic environment may threaten existing loans and products. Finally, the biggest challenge for financial institutions over the next five years: regulations.

Since the launch of real-time payments in Japan in 1973, the financial industry has been on a path of rapid modernization as governments and financial sectors around the world move to instant payment systems. In many ways, real-time payments are a natural evolution of the industry, providing better, faster and cheaper payments domestically, and increasingly, cross-border.

As the financial industry continues to grow and innovative, banks are facing increasing challenges to keep up with the rapid pace of change, especially in the payments segment. Payment hubs could be the answer.

Asia is one of the most significant trading regions in the world including the factory of the world, China. Payment systems, cultures, and regulatory systems are all diverse which makes having a European style SEPA challenging in Asia. What is the future of cross-border payments in Asia?

Despite all of the hype around blockchain and cryptocurrency, the most impact will come from whether or not national governments will shift to a Central Bank Digital Currency (CBDC). A new report looks at the opportunities and challenges as well as the stark implications for citizens.

Even as the entire financial industry changes rapidly, nowhere has the change been as evident as in the payments segment. Around the world, banks, consumers, and businesses are making a shift in the way they exchange value.