From left to right: Ms. Monsinee Nakapanant, the co-president, Ascent Money Co., Ltd.; Mr. Leon Chua, the executive director and the head of business development, APAC, Airwallex; Mr. Andy Li, CEO of Silot; and Mr. Lock Fan, the head of venture capital at TechNode.

TechNode gathered four industry experts at its ORIGIN Thailand Conference, during the True Digital Park Grand Opening 2019, for a discussion on “Building Southeast Asia’s Digital Payment Powerhouse.” Lock Fan, the head of venture capital at TechNode, began the talk by asking, “What are the main reasons that contribute to the high (close to 75%) unbanked population in Southeast Asia?”

“Wealth inequality is the key reason contributing to the high unbanked population,” said Monsinee Nakapanant, the co-president of Ascent Money, a Thailand-based fintech company. “Financial institutions traditionally focus on providing services and account for the top-tier segment, with minimal resources allocated to serve the unbanked,” she added, noting that close to 80% of Thailand’s wealth is controlled by 1% of the people.

Leon Chua, the executive director & head of business development APAC at Airwallex, a cross-border payment solution, said, “Banking solutions targeted at SMEs in the market proved to be costly and startups without a track record face difficulties in applying certain financial services.” “The unbanked SMEs traditionally trade gold as a wealth management strategy,” added Andy Li, CEO of Silot, a Singapore-based fintech company.

However, our speakers believe that this situation is changing rapidly with the growing adoption of digital banking, the proliferation of mobile devices and affordable internet, reducing the cost of customer services. “This poses a huge opportunity for fintech companies to serve the up and rising startups and SMEs,” said Chua.

AI, data and partnerships

“Due to the high unbanked population in Southeast Asia, there is a lack of digital footprints and historical financial data to support the banks’ decisions,” said Li. While banks are increasingly adopting AI and big data technologies to solve problems and make better decisions, AI-made decisions can’t replace human decisions entirely, but it does improve efficiency,” added Li.

“Half of Thailand’s population doesn’t have a credit history,” said Nakapanant. “Ascent Money addresses this issue through partnerships and adopting analytical technology,” she added, noting that having a partner with a huge customer base allows for past transaction data-sharing, enabling better loan-approval decisions.

“Digital payment penetration rate is on the rise and with the introduction of new technologies, more data can be captured, which will offer better insights into the SMEs,” said Li. “Moving forward, it is easier for small businesses to get financial services from the financial institutions,” he added.

Possible evolution of cross-border payments

Traditional businesses are evolving into digital firms leading to a spillover effect in terms of the challenges faced by financial technology. “Efficient processing time (same-day), FX business transparency, and scalability are the three prominent gaps cross-border payment solutions are trying to bridge,” said Chua. More mergers and acquisitions are anticipated, said Chua, citing the merger between FIS and WorldPay, and FirstData and Fiserve, as recent examples.

While it may seem that a strong player capable of consolidating all e-wallets may be the future, Chua cautioned that overcoming the various countries’ regulatory restrictions is a huge hurdle.

“Foreign workers in Thailand are struggling to send money home as there are very few affordable professional services made available to them,” said Nakapanant. “Identifying users’ pain points and providing the corresponding solution helps lower the cost of technology and improve efficiency,” she added.

Regulators’ support

Li lauded the regulators in Southeast Asia for having the right mindset and embracing innovative fintech solutions to better people’s lives. “Fintech companies should keep abreast of the emerging markets’ regulatory landscapes’ changes,” said Chua. “Regulators are equally paying close attention to new fintech solutions surfacing in the market, especially those which haven’t been regulated previously,” he added.

Chua also emphasized the importance of fintech firms looking to operate in specific markets for the long term to always finely tune their policies in accordance with the regulatory requirements and apply for the relevant license.