As the COVID-19 pandemic spread worldwide, history seemed to repeat itself as well-known public health strategies were gradually introduced from one jurisdiction to another. From guidelines for social distance to prohibition, these measures have destroyed even the most supportive daily activities, resulting in small but meaningful changes in the way we work, our lives, pushes and play.
From QR codes to mobile wallets, the appeal of non-cash payment methods is becoming more and more institutionalized even in Southeast Asian markets, where cash has been historically appreciated. The move is promising given that more than 70% of adults still lack basic financial services in the region. With the aim of achieving greater financial inclusion, this infrastructure can lead to long-term changes. Besides new technologies like blockchain, a new generation of old financial infrastructure can be transformed to better serve the needy.
If the past few months indicate that the rapid adoption of innovative financial technologies is an integral part of shaping the next digital economic revolution in Southeast Asia. So where do we go from here?
From crisis to a non-critical world
Crises can make big changes. The story is far from mysterious and goes back to the seismic rise in Chinese digital payments and the e-commerce landscape that has occurred since the SARS outbreak in 2003. Today, of course, China is home to a dynamic electronic payment system. It is dominated by tech giants such as Alipay and WeChat Pay.
In developed markets such as Singapore, where there is a complex network of digital payment options, the Corona virus simply acts as a broad spread accelerator. As part of the government's public health strategy, the Monetary Authority of Singapore encourages the use of electronic payment infrastructure such as the QR code system for the mobile e-wallet code across the country to enable social exclusion and contactless transactions. In the first quarter of 2020 alone, the number of electronic payment transactions in the city-state doubled. This behavioral change in payment preferences has occurred for generations, as bank customers over 54 years of age have increased their confidence in online banking throughout the epidemic.
At the same time, other developing countries see the coronavirus as a catalyst most needed for urgent change. She can no longer lag behind her advanced peers, and here the exciting effect of financial technologies has become particularly noticeable. The country's digital payments rose 93% in March compared to the previous year, according to the Thai Central Bank – a sharp rise for a country where 90% of all cash transactions remain mostly.
Meanwhile, Indonesia, dubbed “Asia's Pacific's most untapped electronic money market”, has been struggling with a large non-bank population of 66% since 2018. Today, it has 37 domestic electronic payment methods and the government . The QRIS payment system code is expected to help bridge economic disparities.
Despite the economic tensions caused by the global health crisis, emerging markets will benefit greatly if they live under the slogan “Go to the digital world or die” in an attempt to follow a technology-based model for more economic and social movement.
It goes from top to bottom
An open finance culture is a culture that must start from top to bottom to foster a more collaborative ecosystem where financial technology companies can partner with traditional banks to provide better payment infrastructure, hassle-free KYC procedures and transparent transactions. However, there is definitely room to go one step further.
At the institutional level, the introduction of new technologies such as the blockchain could advance and make the economic system more open. Blockchain technologies backed by high-quality security through encryption can provide more innovative financial tools with a future-oriented mind. In emerging markets, which are not heavier than banks, the desire to innovate at this scale is evident.
Meanwhile, jurisdictions such as Singapore have taken an innovative approach to introducing blockchain technology into the local economic system. In July, the Monetary Authority of Singapore released its fifth and final report on the Ubin Project, highlighting the commercial viability of a blockchain-based multi-currency network.